A period of near double-digit inflation and mounting fears of recession might feel like one of the worst times to turn to smaller companies to store your wealth. But investors taking a long-term view might do well to take a closer look at the value-oriented Aberforth Smaller Companies Investment Trust (ASL).
- Disciplined value approach
- Experienced management team
- Robust balance sheet
- Sensitive to a recession
- Gearing can heighten losses
By and large, UK-listed small-caps have had a tough six months as concerns over the health of the economy have risen. Over the period, the Numis Smaller Companies Index (ex investment trusts) is down 12 per cent. Given smaller companies’ sensitivity to the domestic economy and limited economies of scale, there is an understandable worry that a possible recession in the UK will hit them hard, and some may not survive if we suffer a prolonged slowdown. However, this is not to writie-off the sector entirely.