Standard Life Investments

Standard Life UK Smaller Companies Trust PLC

Mex ID: ITSLS SEDOL: 0295958 Reuters: SLS.L

Price
464.25
NAV
483.15
Premium/(Discount)
-3.91%
Daily Price Change
0.25p (0.05%)
Change date
20/09/2017

Figures above are updated every business day after the close of trading and those displayed are to the close of the previous business day. Figures are shown in pence (GBP) and the data is provided by, and copyright @2016, FE.

General Trust Information

Objective

To achieve long-term capital growth by investment in UK quoted smaller companies.

Profile

The Company intends to achieve its investment objective by investing in a diversified portfolio consisting mainly of UK quoted smaller companies. The portfolio will normally comprise around 50 individual holdings representing the Investment Manager’s highest conviction investment ideas. In order to reduce risk in the Company without compromising flexibility, no holding within the portfolio should exceed 5 per cent. of total assets at the time of acquisition.The Company may use derivatives for portfolio hedging purposes (i.e. only for the purpose of reducing, transferring or eliminating the investment risks in its investments in order to protect the Company’s portfolio). Within the Company’s Articles of Association, the maximum level of gearing is 100 per cent of net assets. The Directors’ policy is that gearing will be between -5 per cent. and 25 per cent. of net assets (at the time of drawdown) in normal market conditions. The Directors have delegated responsibility to the Investment Manager for the operation of the gearing level within the above parameters.The Investment Manager’s investment process combines asset allocation, stock selection, portfolio construction, risk management, and dealing. The investment process is research intensive and is driven by the Investment Manager’s distinctive “focus on change” which recognises that different factors drive individual stocks and markets at different times in the cycle. This flexible, but disciplined, process ensures that the Investment Manager has the opportunity to perform in different market conditions.

Fund Manager

Harry Nimmo

Harry Nimmo

Harry graduated with an MBA from the University of Edinburgh in 1984 and joined Standard Life as an Investment Analyst with responsibility for UK equity funds in 1985. He became Senior Investment Analyst with sector responsibility for larger UK-quoted companies funds in 1990 and Investment Manager responsible for the UK equity smaller (quoted) company funds in 1993. Harry has managed our UK Smaller Companies Fund since its launch in January 1997.

NMPI Status

Standard Life UK Smaller Companies Trust plc (‘the Company’) currently conducts its affairs so that securities issued by it can be recommended by financial advisers to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The Company’s securities are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are securities in a UK listed investment trust.

Performance

Trust Performance (on a bid to bid basis)

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Past performance is not a guarantee of future returns. The value of investments may go down as well as up and you may receive back less than you invested. Your capital and income is not guaranteed.

Trust Performance & Returns

(on a bid to bid basis)
Fund performance
Sector performance
 Last 1 month*Last 6 months*Last 1 year*Last 3 years*Last 5 years*
Fund performance
Sector performance

Past performance is not a guarantee of future returns. The value of investments may go down as well as up and you may receive back less than you invested. Your capital and income is not guaranteed.

* Values to-

Performance (on a bid to bid basis)

Powered by data from FE

Trust Performance(on a bid to bid basis)

(on a bid to bid basis)
Fund performance
Sector performance
 Last 1 month*Last 6 months*Last 1 year*Last 3 years*Last 5 years*
Fund performance
Sector performance

Past performance is not a guarantee of future returns. The value of investments may go down as well as up and you may receive back less than you invested. Your capital and income is not guaranteed.

* Values to -

** n/a indicates that fund performance information is not available for this period due to the date the fund was launched.

Current details

All prices displayed in p (GBP). Figures below updated at 07:15 pm. Figures are provided by, and copyright @2016, FE on a delayed basis.
EPIC code:SLS
Market sector:
Mid price:464.2500
Bid price:0.0000
Offer:0.0000
Opening price:0.0000
Daily high:0.0000
Daily low:0.0000
Previous day's close:464.2500
Daily change:0.0000 (0.00%)

LSE Announcements

Video

Harry Nimmo talks about investment trusts in general, the specifics around the Smaller Companies Trust he manages and gives a short-term outlook for the sector.

UK Smaller Companies

How to Invest

Shares in Standard Life Investments' range of investment trusts are listed on the London Stock Exchange. As with any public quoted company, investment trust shares can be bought and sold on the stock market. This can be done through directly through a platform provider such as Standard Life or via a stockbroker, financial adviser or wealth manager.

We recognise professional financial advice is important before taking any investment decision. We recommend investors seek financial advice before taking any decisions. If you'd like to find an adviser in your area, take a look at www.unbiased.co.uk.

Alternatively, there are a number of platform providers who offer an online ‘execution only’ service, some of these are listed below.

You should note that by clicking any of the above links, you will leave Standard Life Investments' website and go to another website. We are not responsible for the content or accuracy of external websites.

The value of investments and the income from them can go down as well as up and is not guaranteed; an investor may get back less than their original investment.

Insight

AIMing for profits

July 2017

The Alternative Investment Market (AIM), the junior market of the London Stock Exchange, is home to 'hidden gems' that fund managers with a disciplined stock-picking framework are well placed to unearth.

"Most AIM companies either don't grow or they fall by the wayside – but within the market there are those hidden gems that do succeed," said Adrian Lowcock, an investment director at Architas. “AIM investing is risky, but the [potential] rewards are huge."

Had you invested in online fashion retailer ASOS, the largest AIM stock with a market value of more than £4 billion, you would have made 160 times your investment from trough to peak.

It is the best investment Harry Nimmo has made in his 14 years of managing the Standard Life UK Smaller Companies Trust. He made investors 50 times their money on ASOS during an eight-year holding period from 2006 to 2014, ultimately selling the stock after it grew beyond the Trust's size range.

"We don't like any one holding to become more than 5% of the portfolio, so ASOS became a bit big for us and we recycled the money into smaller things," he said. That spectacular performance has helped the Trust's ordinary share price grow 285% over the decade to June 2017.

Stock selection

It is at the AIM end of the market that Nimmo is increasingly finding strong investment opportunities. Some 40% of the portfolio is invested in AIM-listed companies, following a significant increase over the past year.

In part, this has been driven by the strong performance of AIM: the index is up more than 15% in the year to date*, while the FTSE 250 is up 9% and the FTSE 100 just 5%.

Moreover, it is reflective of his disciplined stock-picking process. Nimmo recognises that a greater allocation to AIM may seem counterintuitive given his focus on risk management.

"Equity investment is risky and AIM is probably slightly riskier than traditional large cap investing, but these are proper businesses," said Nimmo.

"Many investors, and indeed our clients, see smaller companies as risky and we try to mitigate that. We prefer to invest in lower-risk smaller companies – companies where we see earnings visibility, strong balance sheets and good cashflow. Many of them pay dividends."

"Lower risk can mean higher reward; that flies in the face of traditional academic research, but more recent research validates our way of thinking."

While this approach may mean that the Trust underperforms during strong bull markets, it has proven resilient during more challenging market conditions; for example, the downturn caused by the banking crisis or bursting of the dotcom bubble.

International flavour

Having previously been very weighted to resources, AIM has evolved to become much more broadly based.

Standard Life UK Smaller Companies Trust has no exposure to oil and gas or mining, and instead has biases towards healthcare, food and drink, software, retailers and sports services.

Increasingly, the Trust's holdings have an international flavour, again a result of the manager's clearly defined investment process that encompasses comprehensive screening – Standard Life Investments' 'Matrix', a quantitative screening tool that is focused on a number of factors including quality, value, growth and momentum – and fundamental research.

Positions he has recently initiated or added to include RWS Group, a patent translation business that has a strong foothold in the US and China; veterinary service provider CVS Group, which is expanding into Holland; Fever-Tree, a producer and exporter of premium drink mixers; chocolatier and cocoa grower Hotel Chocolat; Nichols, whose lead brand Vimto is a favourite in the Middle East during Ramadan; and Accesso, which provides virtual queuing technology and point-of-sale and ticketing software to top attractions around the world.

"This shows the diversity of the AIM market and the scale of some of these UK businesses that are doing well in overseas markets," said Nimmo. "If successful internationally, the growth potential is massively higher. That's often what we look to tap into."

Conversely, recent sells include a handful of UK-focused firms, including Dunelm, Computacentre, Secure Trust Bank and Rightmove.

Active managers

Despite some clear winners, the broader AIM market has been somewhat disappointing: since its launch in 1995. Launched at 1,000, the FTSE AIM All-Share index stands at 965.70 today – and even that is after a 35% recovery over the past year.

"This is why active managers are essential," said Lowcock. "It takes a huge amount of work to identify those potential opportunities, but more than that a lot of knowledge to understand what you are looking for, as well as experience to recognise when companies have maximised their potential or perhaps failed to achieve and sell out."

While you can invest in single AIM stocks in an Isa, Darius McDermott, managing director of Chelsea Financial Services, believes that a good fund manager investing in AIM is a "better bet for most people". "Good stock-picking and thorough research are necessities," he added.

Nimmo and his team perform fundamental research to test the conclusion of a stock's Matrix scores. They also place great emphasis on performing a comprehensive analysis of a company's market position, as well as meeting its management.

Nimmo is conscious of other factors at play, too. "AIM has benefited handsomely from inheritance tax and capital gains tax advantages over fully listed companies and that's something the Chancellor could change at any time," he said. "We keep a weather eye on these idiosyncrasies of tax."