Aberforth Smaller Companies Trust (ASL) invests in UK small-caps with a disciplined value investment style. While its portfolio has been under pressure in 2020, the announcement of good results from a candidate vaccine in late October saw its NAV rally and share price rally even harder than the market, which the managers believe indicates strong rebound potential. ASL has been managed to the same style since launch in 1990 and has outperformed the Numis Smaller Companies ex IT Index by over 1.5% p.a. since then according to Morningstar data (c. 56% cumulatively). With value falling out of favour in recent years, ASL’s returns have been positive but behind the index and ‘growthier’ peers. In common with other value portfolios around the world ASL’s portfolio has a strong cyclical tilt, which means its companies have seen their earnings put under pressure by lockdowns and the accompanying recession. However, as we discuss in the Performance section, the Pfizer vaccine announcement saw a sharp pop of absolute and relative performance which may indicate the performance potential once the recovery comes. The discount has since halved to 6.3%. ASL has only taken on significant gearing on three other occasions (see Gearing section) but, in response to the extreme valuations in the market and the portfolio, the managers have brought net gearing up to 7% and have the facilities to double this. Aside from total-return potential, ASL is also in a strong position with regards to the dividend. The board entered the year with 2.4 times last year’s dividend in reserve and raised the interim pay out by 4% in July. The yield is 3%.