The Lemon Fool

I already hold ASCI - Aberdeen smaller companies trust and am thinking about topping up. It pays a reasonable dividend yield @ 3.47% and is currently at a discount of some 21.6%. Whilst it is in the UK High Income sector, it has been intentionally reducing its holdings of bonds (currently at about 10%) and focusing on equities and has dropped the word "high" (income) from its title.

I am attracted to it as I see it as in a somewhat (temporarily) out of favour sector and the discount is particularly attractive. The TER may be a bit high at 1.58%, probably in part due to the small size of the trust at £43m. I take the view that it gives me exposure to smaller companies, an area more difficult for me to research and invest in directly.

http://citywire.co.uk/money/investment- ... undID=3206

http://www.aberdeen-asset.com/doc.nsf/L ... osedASCHIT

https://www.trustnet.com/Factsheets/Fac ... Code=ITSHD


I do also hold Mercantile trust for its midcap exposure.

richfool wrote:I already hold ASCI - Aberdeen smaller companies trust and am thinking about topping up. It pays a reasonable dividend yield @ 3.47% and is currently at a discount of some 21.6%. Whilst it is in the UK High Income sector, it has been intentionally reducing its holdings of bonds (currently at about 10%) and focusing on equities and has dropped the word "high" (income) from its title.

I am attracted to it as I see it as in a somewhat (temporarily) out of favour sector and the discount is particularly attractive. The TER may be a bit high at 1.58%, probably in part due to the small size of the trust at £43m. I take the view that it gives me exposure to smaller companies, an area more difficult for me to research and invest in directly.

Is ASCI the best place for your money? Rightly or wrongly, I would be put off by its small size

Almost exactly two years ago, I bought the Henderson Smaller Companies IT (HSL) for reasons similar to those you cite.

Lower yield (2.42%) but much larger (£464m) and the TER is much lower at 0.47%. About 13.4% discount (remember that a particularly high discount may be for a very good reason). All data from Citywire.

Significantly better capital performance than ASCI - after 2 years I am sitting on an XIRR of 10% - which will do for me.

A purchase/top-up here would surely reflect an optimistic view of the UK economy's prospects (or 'brave', as Sir Humphrey might say).

I had picked ASCI originally (when it was somewhat out of favour) for the added diversification of smaller companies, its higher yield, the large discount and in the knowledge that I was getting some exposure to bonds.

I've recently topped up Schroeder uk mid cap and henerson smaller companies. Discount of c20% and c16% respectively. The discount wasn't the only consideration but to an extent I think the uncertainty is priced in and I'm willing to take a gamble on the uk economic outlook

I'm not familiar with the Aberdeen fund but the charges would put me off.

I was thinking about buying some shares in this IT recently, as I was attracted by its high discount to NAV of about 21% and its above average 5-year past performance in terms of its NAV total return of +130% (according to Trustnet).

However, I decided not to buy shares in it, due to its large bid-offer spread of about 4.5% (which is probably a consequence of its relatively small market capitalisation of £43 million). If one bought and then immediately sold its shares, one would suffer a capital loss of at least 5%, due to the bid-offer spread plus stamp duty of 0.5%.