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The Global Smaller Companies Trust
Unlike most of its peers , this Threadneedle-managed trust is well placed to outperform if conditions continue to favour value investors
The dominance of the US in world markets and the strength of the dollar have left some investors wary about adding exposure to any global vehicles at this moment in time . However , the composition of
The Global Smaller Companies Trust , managed by Threadneedle , can assuage both of these concerns . While the trust ’ s exposure to the US stands at 45.4 % of the portfolio , which is similar to that of its peers in the IT Global Smaller Companies sector , this is well below the 70 % figure of the MSCI World index . In addition , the trust is on a relatively wide discount of 12.3 %. If this figure narrows , it should act as a cushion if the dollar weakens from its current highs .
There are other reasons to be wary about investing in small caps : they are more economically sensitive than their larger peers and fall furthest when the market crashes . However , the market tends to lead the economy , and this year ’ s correction suggests it has already priced in a recession . In addition , analysts at Kepler noted the trust ’ s manager Peter Ewins has more of a bias to value stocks than his peers , and these are better placed to cope with higher inflation and interest rates than their growth counterparts . Ewins looks for three characteristics when picking a stock : it needs to be a “ winning business ”, have a strong management team , and be available at an attractive price . According to analysts at RSMR , a
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