H1 2025 scorecard – strong NAV rise but behind a hot benchmark
The Global Smaller Companies Trust delivered a punchy half-year, with NAV per share (debt at fair value) up to 190.7p and a total return of 15.6%. That is a solid gain, but the benchmark was even hotter at 21.6%, so GSCT underperformed in a market that favoured speculative, high-valuation names.
The share price finished the period at 168.6p, a total return of 15.1%. The discount widened to 11.6%, despite active buybacks, as the market’s enthusiasm gravitated to racier stocks and AI winners.
Key numbers investors should know
| Period | Half year to 31 October 2025 |
| NAV per share (debt at fair value) | 190.7p |
| NAV total return | +15.6% |
| Benchmark total return | +21.6% |
| Share price at period end | 168.6p |
| Shareholder total return | +15.1% |
| Discount to NAV | 11.6% |
| Interim dividend | 0.70p per share |
| Ex-div / Record / Pay dates | 29 Dec 2025 / 30 Dec 2025 / 29 Jan 2026 |
| Buybacks in H1 | 11.4 million shares at an average 10.8% discount (c.0.3% NAV accretion) |
| Gearing | 4.5% (5.3% at April 2025) |
| Net assets | £821.5 million |
| Revenue per share | 1.46p (up 0.7% vs H1 2024) |
| NAV per share (debt at par) | 188.40p |
Why the underperformance happened
GSCT sticks to a conservative playbook – buy good quality, growing businesses at attractive valuations. Over the six months that style was out of fashion, while the lowest quality and most expensive small caps led the charge. AI-related euphoria and hopes that US tariffs would be rolled back lifted the benchmark more than the trust’s more measured portfolio could keep up with.
Asset allocation had a very slight negative effect relative to the benchmark. The trust upped exposure to Europe, Japan and Rest of World, and trimmed North America and the UK. Overweights in Europe and Japan helped, but North America’s smaller companies index was particularly strong.
Regional performance – where GSCT beat and where it lagged
- North America: portfolio +13.5% vs index +25.0% – lagged in a momentum-heavy market.
- UK: +11.1% vs +14.6% – modest lag as UK small caps rallied.
- Europe: +16.4% vs +13.8% – outperformed, aided by industrials and financials.
- Japan: +19.3% vs +16.4% – outperformed, helped by defence and infrastructure exposure.
- Rest of World: +19.7% vs comparators +28.1% (Asia ex Japan) and +17.6% (Latin America) – mixed, with third party funds a drag overall.
Stock highlights – winners and losers by region
North America
- Winners: Advanced Energy Industries (+111.9%) on data centre demand, Curtiss-Wright (+75.8%) on aerospace, defence and nuclear exposure, Boot Barn (+84.8%).
- Detractors: Molina Healthcare (-52.4%) on Medicaid funding fears, Graphic Packaging (-35.1%) on weak volumes and pricing, Brown & Brown (-26.5%) as premium growth slowed.
United Kingdom
- Winners: Oxford BioMedica (+127.7%) on strong orders and upgraded targets, FD Technologies (+36.6%) after a takeover bid, WAG Payment Solutions (+67.3%).
- Detractors: Auction Technology Group (-46.9%), GlobalData (-38.5%), Marshalls (-38.0%) as housing and consumer-related names stayed tough.
Europe
- Winners: Bank of Ireland (+44.3%), Kardex (+52.2%) as orders resumed post tariff uncertainty, Konecranes (+50.3%).
- Detractors: CTS Eventim (-21.6%) on integration costs and lower margins, IMCD (-20.5%) as organic growth slowed.
Japan
- Winners: Furuno Electric (+217.2%) with strong pre-tariff demand, IHI (+90.7%) on portfolio streamlining, Kinden (+58.8%).
- Detractors: Sanwa Holdings (-14.2%), WingArc1st (-15.7%), NSD (-7.6%).
Rest of World – third-party funds
- Scottish Oriental Smaller Companies Trust (+1.4%) was a notable relative drag as a lower-beta stance lagged a fast-rising market.
- Utilico Emerging Markets Trust (+20.2%) was underexposed to AI and overweight utilities.
- Schroder ISF EM Smaller Companies (+27.5%) helped with tech selection and underweight India.
- PineBridge Asia ex Japan Small Cap (+33.5%) contributed positively with China and tech exposure.
Dividend held, balance sheet steady, buyback firepower increased
The interim dividend is maintained at 0.70p per share, despite revenue per share being up 0.7% year on year. That is conservative and sensible given the macro noise, and preserves flexibility.
Gearing is modest at 4.5% and down from 5.3% in April. Net assets stand at £821.5 million, with investments of £858.3 million, cash of £15.5 million and £35.0 million of long-term loan notes.
Buybacks remained active – 11.4 million shares repurchased in H1 at an average 10.8% discount, adding c.0.3% to NAV. Since period end, a further 2.45 million shares were bought back. Importantly, the court-approved cancellation of the share premium account and capital redemption reserve became effective on 4 December 2025, creating additional distributable reserves to fund future buybacks, dividends and other returns of capital if needed.
Discount at 11.6% – opportunity or value trap?
With the discount widening to 11.6%, investors have a larger margin between the portfolio value and the share price. If performance converges back towards the benchmark and buybacks stay busy, there is scope for that discount to tighten. The structural buyback capacity after the capital reduction is a clear positive for discount control.
The flip side is style headwinds. If markets continue to reward speculative growth and the most richly valued small caps, GSCT’s quality-at-a-reasonable-price bias may continue to lag. That is the crux of the investment case right now.
Manager’s outlook – cautious near term, constructive on fundamentals
The team flags a narrow market leadership and a speculative tone, plus lingering uncertainty from tariffs and corporate credit. AI capex is supportive in the near term, but returns could take longer than the market hopes. On the supportive side, there are potential tailwinds from US tax changes, European infrastructure programmes, Japanese fiscal initiatives and lower inflation feeding into rate cuts.
The message is clear: this is not the time to be aggressive. GSCT will stick to its conservative approach, which has delivered over the long term – including a dividend that has risen for 55 consecutive years.
What this means for retail investors
- Quality tilt vs hot momentum: recent underperformance reflects a market mood swing, not a strategy shift. If leadership broadens, GSCT should fare better.
- Discount and buybacks: an 11.6% discount combined with active buybacks and fresh distributable reserves is supportive for future shareholder value.
- Regional mix: overweights to Europe and Japan worked this half. Underweight North America hurt while US small caps sprinted.
- Income: interim dividend held at 0.70p, with ex-div on 29 December 2025. Revenue cover remains sensible.
- Risk management: low gearing and broad diversification are intact in a choppy macro environment.
Final take
A good half in absolute terms, a frustrating one in relative terms. If you believe the speculative phase will ebb and quality at fair valuations will re-rate, GSCT’s widened discount, proven buyback discipline and long dividend history make the trust worth a close look. If you think the market stays in full-throttle AI-and-beta mode, patience may be required.
