Standard Life Investments has confirmed that the UK Smaller Companies investment trust is considering issuing a convertible bond to raise capital.

If approved by the investment company’s board, it would drop the gearing facility currently in operation in favour of raising capital through unsecured loan stock.

In a market statement, Standard Life Investments said the company and its advisers will make a further announcement in due course.

Speaking to What Investment.co.uk earlier this week, Harry Nimmo, head of smaller companies at Standard Life Investments said it is time investors recognised that some smaller companies funds are not as high risk as they may think.

He said, ‘This smaller companies fund should be considered a core proposition by some investors. It should not be pigeon-holed as high risk.

‘I can demonstrate a long track record of success in different market conditions. You don’t have to take on more risk to get more return. In fact, you can do the opposite.’

A £1,000 investment in the closed-ended vehicle would have grown to £2,713 over a five year period, based on an offer to bid basis with net income reinvested, according to Trustnet.

As at the end of December the fund was trading at a negligible discount to its net asset value at 0.7 per cent.