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Turn to defensive small-caps to protect against a slowdown

Mike Prentis, manager of BlackRock Smaller Companies, picks out some of the companies he's banking on
December 8, 2016

UK smaller companies investment trusts have derated due to fears over the UK domestic market, but that means now is a good time to buy into them, argues Mike Prentis, manager of IC Top 100 Fund BlackRock Smaller Companies Trust (BRSC).

The trust has recently hit its widest discount in four years, with its shares at times trading at a discount to net asset value (NAV) in excess of 19 per cent, as investors worry that uncertainty over the UK's exit from the European Union and slowing economic growth could take its toll on smaller, domestic-facing companies.

But 50 per cent of the earnings in BlackRock Smaller Companies' portfolio are derived from overseas. Mr Prentis is targeting a mixture of UK-listed stocks likely to benefit from the election of Donald Trump as US president, as well as smaller companies he thinks will be able to perform even if UK consumers stop spending.

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