Thursday, 29 January 2015

Aberforth Smaller - Final Results

The objective of Aberforth Smaller Companies Trust plc (ASCoT) is to achieve a net asset value total return (with dividends reinvested) greater than that of the Numis Smaller Companies Index (excluding Investment Companies) over the long term.

The trusts portfolio is diversified and will normally consist of investments in over 80 individual companies. They are currently overweight in Industrials which account for 35% of the portfolio, Consumer Services 21% and Technology 11.5%.

In seeking investments the approach will be fundamental in nature involving regular contact with the management of prospective and existing investments in conjunction with rigorous financial analysis of these companies. The emphasis within the portfolio will reflect the desire to invest in companies whose shares represent relatively attractive value and a preference for holdings with low or no gearing.

The trust was by far the best performing IT in my portfolio over the past 3 years with returns of over 30% p.a. Share price return last year alone was 62%.

They have today published final results for the full year to 31st December 2014.(link via Investegate)

Share price total return for the past year is a more modest 0.1% compared to its benchmark index - Numis Smaller Companies index - Total Return down -1.9%.

The board are proposing a final dividend of 17p making a full year increase of 5.3% to 24.75p per share. Revenue reserves have increased by a further 6% to £53m.

At the current price of around £10.25, the trust has a yield of 2.4% - obviously this has fallen in percentage terms over the past three years as the share price has risen so strongly.

I would not advocate a large holding of small caps in any portfolio, however a weighting of between 5% - 10% is likely to boost total returns for the long term investor.

Although currently not one of the highest yielders in my SIPP, I am happy to continue with Aberforth for the long term for delivery of growth and steadily rising income which has more than doubled over the past 10 years.

As ever, slow & steady steps…..

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