The Lemon Fool

Hello wise ones,

I have two trusts that don't seam to be on form anymore and I am not sure what's at the route of their recent poor performance. I've been holding out waiting for a turn around but I am losing patience. I keep hoping BREXIT will lift things. I am also wondering if value may finally make a return although it has been absent for a long time.

1. Blackrock Smaller Companies (BRSC) - should I swap for Throgmorton (THRG)? What's driving the difference in performance.
2. BMO Global Smaller Companies (the trust formerly known as FCSC.L) -- alternatives include ISP6 (US Small cap tracker) however US valuations have been heady for some time and although they look cheap compared with US Large Caps they aren't cheap by any other measure. Smithson is on a premium (I have a smaller holding of this) and the house style has had a good run for a long time. Once again struggling to emotionally and literally buy into an alternative.

Any observations on what's driving the poor performance and consequently what a sensible response would look like?

I have large caps covered and small caps are an important part of my retirement strategy (large caps are my ballast, like other people buy bonds).

Thanks,
AWOL (but not confined to camp)

AWOL wrote:.....

1. Blackrock Smaller Companies (BRSC) - should I swap for Throgmorton (THRG)? What's driving the difference in performance.
......
Any observations on what's driving the poor performance....

AWOL (but not confined to camp)

Not sure about what is driving the difference, but one thing to be aware of is that THRG is (I think) unusual in that it does a lot of shorting. They say this helps their performance - plausible, but DYOR.

I have a modest holding in THRG, but my main small company IT is EWI, which has done far better this year - over 50% up.

AWOL wrote:Hello wise ones,
...
1. Blackrock Smaller Companies (BRSC) - should I swap for Throgmorton (THRG)? What's driving the difference in performance.
...
Any observations on what's driving the poor performance and consequently what a sensible response would look like?
...

Thanks,
AWOL (but not confined to camp)

I hold Blackrock smaller companies (BRSC) in preference to the Throgmorton Smaller Companies (THRG), but only purchased on October 2018.
For a while after the coronavirus dip the performance has not been good but my holding has made good very recently and overall, including the 2.2% trailing yield, I am up 15% so I can't be that disappointed and have another dividend to be paid next month.

I looked over the differences and can see THRG trust is roughly half the value (at £669 million) of BRSC (at £1,517 million) in NAV but it's gearing is at 23% with 1.75% management charge if they outperform their benchmarks Vs 5% with 0.74% ongoing management charge for BRSC .
Also the emphasis on technology is 23% at THRG Vs 14% with BRSC. Technology seems to be the sector with momentum.
All figures from the AIC website - which I agree is not straight from the fund manager .

Apart from different managers there are similar stocks in the portfolio but the emphasis more on technology and more gearing.
So anybody's guess then


With so much similarity would not be surprised if Blackrock consolidate the two trusts in the future.

midgesgalore

77ss wrote:I have a modest holding in THRG, but my main small company IT is EWI, which has done far better this year - over 50% up.

I will have a look at EWI I think. I had completely forgot about it's existence but it should be interesting. If the rotation towards value continues there may be a chance to pick it up a bit cheaper soon.

midgesgalore wrote:
I looked over the differences and can see THRG trust is roughly half the value (at £669 million) of BRSC (at £1,517 million) in NAV but it's gearing is at 23% with 1.75% management charge if they outperform their benchmarks Vs 5% with 0.74% ongoing management charge for BRSC .
Also the emphasis on technology is 23% at THRG Vs 14% with BRSC. Technology seems to be the sector with momentum.
All figures from the AIC website - which I agree is not straight from the fund manager .

midgesgalore

Your comment on Technology is tempting me to hang on to BRSC for a little longer while there is some sector rotation going on in the market with a view to entering THRG later to benefit from the long term trend of Technology thriving and proving resilient.

Thank you both for stimulating commentary.