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About this investment trust

The Company aims to achieve long-term capital growth for shareholders through investment mainly in smaller UK quoted companies.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Why choose it?

We aim to find the ‘hidden gems’ within the small cap universe, investing in high-quality growth companies that are able to shape their own futures regardless of the wider economic environment. As active managers, we believe this area presents us with an attractive hunting ground: these companies are often under-researched, and pricing is inefficient. This gives us great opportunities to generate returns for our clients over the long term.

Suited to…

Investors looking for carefully selected opportunities among the UK’s vibrant small cap sector for long-term capital growth. Investors need to be able to tolerate variation in their capital.


Morningstar Rating: Since January 2012.
Money Observer Award: As at 7 February 2020.
Moneywise Award: As at 29 March 2020.
Awards/Ratings have not been superseded to date.

The Morningstar Analyst Rating is subjective in nature and reflects Morningstar’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, Morningstar does not guarantee that a fund will perform in line with its Morningstar Analyst Rating. Likewise, the Morningstar Analyst Rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision.

Past performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.

What are the risks?

  • Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
  • Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.
  • The Trust’s investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Trust may not be able to realise the investment at the latest market price or at a price considered fair.
  • Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
  • Smaller company investments are often associated with greater investment risk than those of larger company shares.

Useful information

Fees & Charges

Annual Expenses as at Date: 28/02/2021

Ongoing Charge (including any Performance Fee): 0.8%

Important Notice: Key Investor Document (KID) – Costs disclosures error

During the period 5th March 2021 – 5th July 2021 the KID contained incorrect costs data as set out in the Previously stated costs tables below. The figures that should have been published are set out in the Corrected costs tables.

Previously stated costs (as per KID published 5 March 2021, based on data as at December 2020):

Costs over time

If you cash in after 1 year If you cash in after 3 years If you cash in after 5 years
Total costs (GBP) 145 527 1,065
Impact on return (RIY) per year 1.45% 1.45% 1.44%

Composition of costs

Ongoing costs Portfolio transaction costs 0.63
Other ongoing costs 0.74

Corrected costs (based on data as at December 2020):

Costs over time

If you cash in after 1 year If you cash in after 3 years If you cash in after 5 years
Total costs (GBP) 161 587 1,187
Impact on return (RIY) per year 1.61% 1.61% 1.61%

Composition of costs

Ongoing costs Portfolio transaction costs 0.48%
Other ongoing costs 1.13%

An updated KID with cost data as at 31 March 2021 was published on 5th July 2021.

The corrected costs figures for Other ongoing costs include borrowing costs on long-term debt held by the Investment Trust.  Following a recent assessment of these instruments, BlackRock has deemed these costs to be within the scope of Other ongoing costs, however please note that prior to the KID published on [2 July 2021] these costs were not included in Other ongoing costs in the KIDs published for the Company.

There has been no financial impact to the Company as a consequence of this error.

Please accept our apologies for any inconvenience that may have been caused as a result of this matter. You are not required to take any action as a result of this statement. If you have any queries regarding the above, please contact our Investor Services Team by email at Alternatively, please feel free to contact us by telephone on 0800 44 55 22, quoting the relevant account number where applicable.  Our lines are open from 8.30am to 6.00pm, Monday to Friday. For your protection, telephone calls may be recorded.

Management Fee Summary: BlackRock receives an annual fee which is calculated based on 0.60% in respect of the first GBP 750m of the Company's total assets less current liabilities, reducing to 0.50% thereafter. There are no performance fee arrangements in place.

  • ISIN: GB0006436108

    Sedol: 0643610

    Bloomberg: BRSC:LN

    Reuters: BRSC.L

    LSE code: BRSC

  • Name of Company: BlackRock Fund Managers Limited

    Telephone: 020 7743 3000



    Correspondence Address: Investor Services

    BlackRock Investment Management (UK) Limited

    12 Throgmorton Avenue


    EC2N 2DL

    Name of Registrar: Computershare PLC

    Registered Office: Exchange Place 1

    1 Semple Street

    Edinburgh EH3 8BL

    Registrar Telephone: +44 (0)370 707 1649

    Place of Registration: Scotland

    Registered Number: 006176

  • Year End: 28 February

    Results Announced: October (interim), April/May (final)

    AGM: July

    Dividends Paid: November (interim), June (final)

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The Board's approach to ESG

Environmental, social and governance (ESG) issues can present both opportunities and threats to long-term investment performance. These ethical and sustainability issues cannot be ignored, and your Board is committed to ensuring that we have appointed a manager that applies the highest standards of ESG practice. The Board believes effective engagement with management is, in most cases, the most effective way of driving meaningful change in the behaviour of investee company management. This is particularly true for the Manager given the extent of BlackRock’s shareholder engagement (BlackRock held 3,040 engagements with 2,020 companies based in 54 markets for the year to 30 June 2020). As well as the advantages afforded by its scale, the Board believes that BlackRock is well placed as Manager to fulfil these requirements due to the integration of ESG into its investment processes, the emphasis it places on sustainability, its collaborative approach in its investment stewardship activities and its position in the industry as one of the largest suppliers of sustainable investment products in the global market.

Sustainable investing: BlackRock's approach

Sustainability is BlackRock’s standard for investing, based on the investment conviction that integrating sustainability can help investors build more resilient portfolios and achieve better long-term, risk-adjusted returns. BlackRock believes that climate change is a defining factor in companies’ long-term prospects and that it will have a significant and lasting impact on economic growth and prosperity. BlackRock believes that climate risk equates to investment risk and this will drive a profound reassessment of risk and asset values as investors seek to react to the impact of climate policy changes. This in turn is likely to drive a significant reallocation of capital away from traditional carbon intensive industries over the next decade.

ESG: integration into BlackRock’s investment management process

Environmental, Social and Governance (ESG) investing is often conflated or used interchangeably with the term “sustainable investing.” BlackRock has identified sustainable investing as being the overall framework and ESG as a data toolkit for identifying and informing its solutions. BlackRock has defined ESG Integration as the practice of incorporating material ESG information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. BlackRock recognises the relevance of material ESG information across all asset classes and styles of portfolio management.  ESG information and sustainability risks are included as a consideration in investment research, portfolio construction, portfolio review, and investment stewardship processes. The Investment Manager considers ESG insights and data, including sustainability risks, within the total set of information in its research process and makes a determination as to the materiality of such information in its investment process. ESG insights are not the sole consideration when making investment decisions and the extent to which ESG insights are considered during investment decision making will also be determined by the characteristics or objectives of the Company. The Investment Manager’s evaluation of ESG data may be subjective and could change over time in light of emerging sustainability risks or changing market conditions. This approach is consistent with the Investment Manager’s regulatory duty to manage the Company in accordance with its investment objectives and policy and in the best interests of the Company’s investors. The Investment Manager’s Risk and Quantitative Analysis group will review portfolios to ensure that sustainability risks are considered regularly alongside traditional financial risks, that investment decisions are taken in light of relevant sustainability risks and that decisions exposing portfolios to sustainability risks are deliberate, and the risks diversified and scaled according to the investment objectives of the Company.

BlackRock’s approach to ESG integration is to broaden the total amount of information the Investment Manager considers with the aim of improving investment analysis and understanding the likely impact of sustainability risks on the Company’s investments. The Investment Manager assesses a variety of economic and financial indicators, which may include ESG data and insights, to make investment decisions appropriate for the Company’s objectives. This can include relevant third-party insights or data, internal research or engagement commentary and input from BlackRock Investment Stewardship.

Sustainability risks are identified at various steps of the investment process, where relevant, from research, allocation, selection, portfolio construction decisions, or management engagement, and are considered relative to the Company’s risk and return objectives. Assessment of these risks is done relative to their materiality (i.e. likeliness of impacting returns of the investment) and in tandem with other risk assessments (e.g. liquidity, valuation, etc.).

ESG integration does not change the Company’s investment objective or constrain the Investment Manager’s investable universe, and does not mean that an ESG investment strategy or exclusionary screens has been or will be adopted by the Company. Similarly, ESG integration does not determine the extent to which the Company may be impacted by sustainability risks.

Investment Stewardship

BlackRock undertakes investment stewardship engagements and proxy voting with the goal of protecting and enhancing the long-term value of clients’ investments for relevant asset classes. In our experience, sustainable financial performance and value creation are enhanced by sound governance practices, including risk management oversight, board accountability, and compliance with regulations. We focus on board composition, effectiveness and accountability as a top priority. In our experience, high standards of corporate governance are the foundations of board leadership and oversight. We engage to better understand how boards assess their effectiveness and performance, as well as their position on director responsibilities and commitments, turnover and succession planning, crisis management and diversity. BlackRock takes a long-term perspective in its investment stewardship work informed by two key characteristics of our business: the majority of our investors are saving for long-term goals, so we presume they are long-term shareholders; and BlackRock offers strategies with varying investment horizons, which means BlackRock has long-term relationships with its investee companies. For further detail regarding BlackRock’s Investment Stewardship approach please refer to the website here.

Engagement with portfolio companies

The Board receive regular updates from the Investment Manager in respect of engagement activity undertaken in respect of portfolio companies. Over the year to 28 February 2021, 53 total company engagements were held with the management teams of 40 portfolio companies representing 40% of the portfolio by value at 28 February 2021. To put this into context, there were 123 companies in the BlackRock Smaller Companies Trust plc’s portfolio at 28 February 2021. In total 1,548 proposals were voted on at 128 shareholder meetings.

Fund manager commentary

30 November 2021

Please note that the commentary below includes historic information on the Company’s NAV performance and index performance. 

The figures shown relate to past performance. Past performance is not a reliable indicator of future results.

During November the Company’s NAV per share fell by -3.7%1 to 2,062.58p, which equalled our benchmark index, Numis ex Inv Companies + AIM Index, which also fell by -3.7%1; for comparison the FTSE 100 Index fell by -2.5%1 (all figures are on a capital only basis).

November was a difficult month across many global markets as investor concerns were focused on the recurring themes of supply chain disruption, inflation and rising interest rates. The second half bought the return of an unwelcome theme as Covid-19 reasserted itself across Europe, lockdowns were once again imposed, and volatility increased.

Whilst the market may have been volatile, we saw significant positive returns from the two biggest positions in the portfolio; Impax Asset Management and Watches of Switzerland. Impax rallied as investors anticipated the flows published in monthly reports would lead to an upgrade with the preliminary numbers, a prediction that proved correct when numbers were released on the 2nd December. Watches of Switzerland once again showed how changes to their operating model have not only allowed the group to weather Covid-19 pandemic but have produced enduring improvements to the business leading to further upgrades.

The two biggest detractors to relative performance came from shares we don’t own, as a bid for Vivo Energy, and decent numbers from index heavyweight Investec saw both companies deliver positive returns. Auction Technology and Grafton both drifted through the course of the month, with no significant news flow to provide support for the shares. The only trading disappointment of note was from Avon Protection, which surprised the market with a new product certification issue.

The market continues to react to short term news, one moment fixating on inflation, the next supply chain, flitting from lockdown fears to the re-opening trade. This volatility is symptomatic of a lack of consensus from investors on the outlook. Is the world still suffering from the Covid-19 hangover, have industries fundamentally changed, will supply chains ever be fixed, are interest rates going up or will central bank support be maintained in the face of rising covid numbers?

This is precisely why we try not to think too much about the short-term macro picture. Ultimately, we believe we own well-invested firms with pricing power, in markets where latent demand is high. Whilst the confusing and chaotic backdrop brings challenges, we believe the businesses we invest in have the capability to rise above the short-term noise. There is no financial crisis, consumers don’t have masses of debt, corporates are well capitalised and banks have capital. We don’t believe any rate rises will derail the recovery, and most importantly we are confident that we own market leading businesses. We thank shareholders for their continued support.

1Source: BlackRock as at 30 November 2021.

Source: Unless otherwise stated all data is sourced from BlackRock as at 30 November 2021. 

Any opinions, forecasts represent an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research, investment advice or a recommendation.

Risk: Reference to the names of each company mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies.

Portfolio manager biography

Roland Arnold is manager of BlackRock Smaller Companies Trust plc and a member of the UK Equity Team. Mr Arnold has been co-manager of the BlackRock UK Special Situations Fund since August 2012, and manager of Small & Mid Cap UK Equity Portfolios since 2006. Roland’s service with the firm dates back to 2000, including his years with Merrill Lynch Investment Managers (MLIM), which merged with BlackRock in 2006.

Roland Arnold
Portfolio Manager
Roland Arnold

Board of directors

All of the Directors are independent of the management company and are members of the Management Engagement Committee. With the exception of the Chairman all Directors are members of the Audit Committee.

Ronald Gould (Chairman) was appointed to the Board in April 2019 and became chairman of the Company in June 2019. He is currently a Non-Executive Director of ONE Re Ltd and Chairman of Think Alliance Asia and Compliance Science Ltd, and was previously a Non-Executive Director of the JPMorgan Asian Investment Trust plc. He was also previously Managing Director and Head of the Promontory Financial Group in China, CEO of Chi-X Asia Pacific, Senior Adviser to the UK Financial Services Authority, CEO of investment bank ABG Sundal Collier and Vice Chairman of Barclays Bank asset management activities.

Caroline Burton was appointed to the Board in July 2011. She is a member of the committee of management of Hermes Property Unit Trust. She was previously a non-executive director of Liverpool Victoria, LVGIG Limited and TR Property Investment Trust plc. She has almost forty years of investment experience across a wide range of asset classes and geographies acting with a variety of different types of investor. She has been involved with investment trusts for many years, as well as with insurance companies, wealth managers and pension funds.

Susan Platts-Martin (Senior Independent Director) appointed on 21 April 2016, is the Chairman of Baillie Gifford China Growth Trust plc and sits on the Advisory Board of the Barings Targeted Return Fund. She previously acted as Protector of Power to Change Trust. A qualified chartered accountant with 26 years' experience in financial services, she was the first head of investment trusts at Fidelity International, responsible for establishing and growing a successful investment trust business. She has experience of both open and closed ended funds having also been director of product development and head of fund accounting at Fidelity.

Mark Little (Chairman of the Audit Committee) was appointed to the Board on 1 October 2020. He is a non-executive director and also chairs the audit committees of the Majedie Investment Trust Plc and Securities Trust of Scotland Plc. He was also previously Investment Director at Seven Investment Management and a non-executive director (and audit committee chairman) of Sanditon Investment Trust plc as well as a non-executive director for the start-up business UWI Technology and the charity Winning Scotland Foundation. Mr Little has a wealth of experience in the financial services sector, and began his career as a fund manager with Scottish Widows Investment Management after qualifying as a chartered accountant with Price Waterhouse in 1991. He subsequently worked as Global Head of Automotive Research for Deutsche Bank and joined Barclays Wealth in 2005, where he became Managing Director of Barclays Wealth (Scotland and Northern Ireland).

James Barnes was appointed to the Board on 31 July 2021. He is a Non-Executive Director and is also currently the Chairman of Vestey Holdings, the Horticultural Trades Association, Thirlstane Castle Trust and the Crieff Food Company and was previously a Director and Chairman of Dunedin Smaller Companies Trust plc. Mr Barnes was also previously a Director of Dobbies Garden Centres plc; he was instrumental in growing the business and leading its sale to Tesco in 2007. Mr Barnes has a wealth of experience in the financial services and UK smaller companies sector and began his career in corporate finance and investment banking.

Investment strategies targeting growth and income
Investment strategies targeting growth and income
Over 28 years of proven experience running investment trusts (Dec 2020)
Over 28 years of proven experience running investment trusts (Dec 2020)
Unparalleled research capabilities
Unparalleled research capabilities and experienced stock pickers
To get in touch contact us on:
Telephone: 020 7743 3000