GLOBAL SMALLER COMPANIES TRUST (GSCT) – Investment Trusts
| Price: 177.3p n/c | NAV: 190.7p |
| Market Cap: £770m | Yield: 1.75% |
The Columbia Threadneedle-managed trust put in a reasonable performance in the half-year to 31 October with a 15.6% increase in NAV, although this lagged the total return benchmark of 21.6%.
As the chair remarks, and as we can attest, this year has been tough for investors in good quality growing businesses at attractive valuations, with the market chasing more speculative stocks or those already trading at elevated valuations (see Goodwin).
The trust continued to buy back shares, but the discount still widened to 11.6% as the stock price lagged the NAV return.
Our View
The trust is underweight US smaller companies (13.5% weighting vs 25% for the index) and marginally underweight the UK (11.1% vs 14.6%), whereas it is overweight Europe and Japan, which may explain the underperformance.
Buying back shares doesn’t seem to be helping narrow the discount so maybe the board might consider a switch to an open-ended structure per Smithson.
Read the press release here:
