Global Smaller Companies Trust (GSCT), an £808m trust managed by Nish Patel at Columbia Threadneedle, underperformed its benchmark despite generating a 21% investment return in the year to 30 April. The manager’s focus on higher quality, profitable companies meant it trailed the 31.3% from the MSCI All Country World index which advanced on the back of the boom in artificial intelligence. Shareholders saw a 28.8% return as the share price discount narrowed from 11% to 5.4%. Dividends rose from 3p to 3.15p, the 56th consecutive year of an annual increase.

Matthew Read, senior analyst at QuotedData, said: “A 21.0% NAV total return is a strong absolute result and shareholders will welcome the recovery after last year’s negative return. However, it appears that GSCT was caught up in the agentic AI selloff in software stocks and was underexposed to the AI winners in the IT hardware sector, this was a factor in it lagging its benchmark by more than 10 percentage points. That said, the narrowing of the discount from 11.0% to 5.4% suggests that buybacks and marketing efforts are having an effect, and simplifying the benchmark should make performance assessment clearer. Smaller companies remain an attractive hunting ground, and GSCT’s quality bias should prove its worth if markets become less forgiving of speculative growth. For now, this is a good absolute return, but the managers know they need to do better against the index.”