Interactive Investor

Fund Spotlight: Henderson Smaller Companies IT

20th September 2021 11:32

Dzmitry Lipski from interactive investor

Our head of funds research offers a view on one of our Super 60 choices.

The Super 60 trust: listen to the Fund Spotlight extract from our most-recent Funds Fan podcast

Henderson Smaller Companies (LSE:HSL) investment trust is a member of interactive investor’s Super 60 as a UK Smaller Companies recommendation. The trust aims to maximise total returns by investing in UK small and mid-cap companies.

The trust is managed by highly experienced investor Neil Hermon, who is director of UK equities Janus Henderson, and has overseen the trust since its launch in 2002. The manager and analyst team employ bottom-up research to find quality growth companies, but will only invest at a reasonable price, often described as ‘growth at a reasonable price’ (or GARP) investing. The team uses a process called the ‘4Ms’ to assess companies and look for a strong business model, managers with a good track record, strong balance sheets and cash flow and good earnings momentum.

What does it invest in?

The manager runs a well-diversified portfolio of more than 100 holdings and takes a long-term approach, holding stocks for more than five years on average. Sector allocations are driven by stock selection and the largest allocations are to Industrials, Consumer Discretionary, Financials and Technology. Among its top holdings are media company Future (LSE:FUTR), Impax Asset Management (LSE:IPX), and housebuilder Bellway (LSE:BWY).

How has it performed?

Trust/Index/Sector 01/09/2020 - 31/08/2021 01/09/2019 - 31/08/2020 01/09/2018 - 31/08/2019 01/09/2017 - 31/08/2018 01/09/2016 - 31/08/2017
Henderson Smaller Companies Trust 61.41 2.91 -10.82 16.07 27.19
FTSE Small Cap Ex Invest Trust Index 71.45 -7.19 -10.50 1.89 18.09
Morninstar CE UK Small-Cap Equity Sector 55.86 0.34 -9.59 10.68 21.57

Source: Morningstar, Total returns in GBP.

What makes it special?

Henderson Smaller Companies Trust is one of the largest, most liquid UK smaller company trusts and charges relatively low fees.

The manager and analyst team behind the trust are very experienced and have consistently outperformed the market and other funds in the sector over both the short and longer term.

The trust has outperformed the Numis Smaller Companies index in all but two years since the manager’s appointment in 2002.

What sort of investors will it particularly suit?

Henderson Smaller Companies Trust is a compelling offering run by Janus Henderson team of experts. It should appeal to someone who is looking for an active core exposure to UK small and mid-cap equities.

Once restrictions surrounding Covid-19 are fully lifted, the trust should be a good way for investors to play a potential UK stock market recovery.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.