Business & Investment

GLOBAL SMALLER COMPANY TRUST: A big record for dividends

Global Small Companies Trust: A £ 758m fund aimed at providing shareholders with a combination of income and capital interests

Mutual Fund BMO Global Small Companies, which has just changed its name, is a normal business for a £ 758 million fund aimed at providing shareholders with a combination of income and capital interests.

The fund, run by long-time manager Peter Ewins, is now known as the Global Small Companies Trust. This follows the acquisition of the Bank of Montreal’s (BMO) investment business in Europe, the Middle East and Africa by Columbia Threadneedle, with over £ 530 billion in asset management companies under its wings.

“We had to change the name of the trust,” says Ewins. “The board overseeing the fund felt that it was best for the new name to accurately reflect what I was doing as a manager. As an investor, you did what you said. Get – Trust in the widespread exposure of smaller companies around the world.

The fund has 190 holdings, 180 of which are in the enterprise. The remaining 10 equities are primarily in investment trusts with exposures in Asian or emerging markets.

According to Ewins, the use of these funds dates back to a time when trusts were part of the investment group Foreign & Colonial and their asset skill sets did not extend to Asia. As a result, it used expert funds to gain market exposure. “Maybe this will change under the Columbia Thread Needle,” says Ewins.

The Trust was founded primarily to provide capital returns, but has an impeccable dividend record. Throughout the economic and financial crisis, we have been able to increase dividends each year for the past 51 years. And while the outlook for the global economy is not particularly good, confidence will continue this record.

In the trust fiscal year ending in April, it has paid a dividend of 0.57pa so far, slightly higher than last year’s payment of 0.55pa. But last week, the Trust Commission said it had a full-year dividend of 1.84p, 5.1% higher than last year.

Encouragingly, the trust has more than a year and a half of income. This is money that can be used to support dividends to shareholders if income from the portfolio is under future pressure as a result of the global recession. Economy.

Ewins says the best way to overcome current difficult market conditions and build trust is to assess the quality of individual holdings rather than a comprehensive view of the global economy. .. “The important thing is to ensure that the fund-owned companies have sufficient pricing power to continue to grow their earnings and profits against the backdrop of rising inflation,” he says.

Companies he believes should continue to grow include UK-listed Treatt, which manufactures flavors and fragrances used in consumer goods. Ewins said: “There is room to raise the price, as what is supplied is only a small part of the overall cost of the product.”

Hotel Chocolat is another UK company that he likes, primarily because he operates in the luxury market, where demand remains strong and there is room to push prices up without restraining sales. In contrast, Swedish caravan maker Dometic was a stock that was dropped from its portfolio due to supply chain problems and rising costs and could not be passed on to customers thereafter.

The annual membership fee of the trust is 0.78%, the stock market code is BKLXD97, and the ticker is GSCT. Overall revenue over the last five years has been modest at 10.7%. One of the attractive features is that stocks are trading at £ 1.39, which is below the value of the trust’s assets. In other words, they are cheap.


GLOBAL SMALLER COMPANY TRUST: A big record for dividends GLOBAL SMALLER COMPANY TRUST: A big record for dividends

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