Fund in Focus: SLI UK Smaller Companies

Morningstar's Sam Meakin on why the discount on the Standard Life UK Smaller Companies trust has widened recently

Samuel Meakin 15 November, 2018 | 3:18PM

 

 

Samuel Meakin: I’m here to discuss the UK Smaller Companies strategy at Aberdeen Standard Investments, which is managed by the highly experienced Harry Nimmo.

He manages an open-ended fund and a closed-ended investment trust using his very well-established approach, and both vehicles are now rated Gold by Morningstar analysts.

The investment trust currently trades at a discount to its net asset value that is broadly in line with the wider peer group of smaller companies investment trusts.

However, over the past 10 years it has generally traded at a narrower discount than its peers.

So why has it fallen back into the middle of the pack recently?

Firstly, there was the announcement of the merger with Dunedin Smaller Companies, which put pressure on the share price – but actually we believe the merger can bring longer-term benefits for investors, such as a reduction in overall fees and better liquidity in the trust itself.

Secondly, as you are probably aware, is the volatility we’ve seen in markets over the past six weeks or so, where some highly valued growth stocks have fallen in price.

Now, given the strong growth bias of this strategy, this may have had an influence on the trust’s share price too.

Nonetheless, we continue to have high conviction in the strategy. We know that the manager will stay true his approach through such periods in the market, and that the approach has served investors very well over the long term.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
SLI UK Smaller Companies Inst S Acc84.96 GBP1.01
Standard Life UK Smaller Co. Ord409.00 GBX-0.24

About Author

Samuel Meakin  is a fund analyst for Morningstar