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Investment trust insider on BlackRock Smaller and Downing Strategic Micro Cap

Investment trust insider on North American Income Trust

Investment trust insider on BlackRock Smaller and Downing Strategic Micro Cap – James Carthew: BlackRock and Downing show the two sides to small-cap investing

Both BlackRock Smaller Companies (BRSC) and Downing Strategic Micro-Cap (DSM) reported results last Friday. The two UK small-cap trusts had very different years. Both lost money – it would have been quite hard not to in an environment where the Numis Smaller Companies ex Investment Companies index fell 5.2% and the FTSE AIM All-Share index slid 12.4% – but the BRSC report showed it was the 16th year of benchmark-beating returns while DSM unveiled the further decline in net asset value (NAV) left investors nursing a 27% loss since the trust’s launch two years ago.

BRSC’s manager over the past 16 years has been Mike Prentis. He is bowing out after a 32-year career and having built an impressive track record for the £700 million trust. Over 16 years to the end of February 2019, its shareholders have made a 1,543% return – 1,190% from underlying investment performance and the rest from a re-rating in the shares and a narrowing in its discount to NAV. This compares to a 337% from its Numis Smaller Companies plus AIM ex-Investment Companies benchmark.

Normally manager changes make investors nervous. I’m not sure this is justified in this case. It’s a shame to see Prentis go but he leaves a strong team behind him at BlackRock.

The new manager is Roland Arnold, who has worked with Prentis for 14 years. The UK smaller companies team is led by Dan Whitestone, manager of BlackRock Throgmorton (THRG) investment trust, which has been outperforming BRSC thanks to the value Whitestone is adding from his ‘short’ positions in companies whose shares he thinks will do badly.

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