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BlackRock Smaller Companies Trust Plc - Results Analysis from Kepler Trust Intelligence

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·4-min read
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Blackrock Smaller Companies

20/05/2021

Results analysis from Kepler Trust Intelligence

Blackrock Smaller Companies (BRSC) has faced a challenging financial year, but long-term returns remain strong…

Blackrock Smaller Companies (BRSC), released its annual results for the 12 months ending 28th February last week, a period covering the worst of the COVID-19 related market sell-off in 2020 and also the subsequent market recovery.

Kepler View

Blackrock Smaller Companies (BRSC) may have underperformed the benchmark Numis Smaller Companies Index over the financial year to 28/02/2021, but this seems more a circumstance of timing than anything else. In our most recent research update, we estimated that “if investors had bought BRSC at any daily point in the previous five years, they would have subsequent 12-month NAV outperformance to the peer group NAV average and benchmark on c. 92% and c. 95% of occasions, respectively”. Underperformance over the financial year (which saw events of an exceptional nature) in our view represents the exception, rather than the rule, as seen by this being the first instance in 18 financial years where BRSC has underperformed.

We note that BRSC underperformed in the market drawdown in March 2020, but outperformed in the market recovery. Gearing and stock selection contributed positively. The manager notes that they are identifying a notable depth of stock-specific opportunities at this time, and the number of stocks held has increased in reflection of this.

Despite a challenging FY 2020, long-term returns remain very strong, and we believe there remains a robust process in place which can continue to lend itself to strong stock selection.

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