Nimmo took over the trust on 1 September 2003 and has more than doubled the returns of the Numis Smaller Companies (ex IT) index since then, with gains of 592.3 per cent.
The index has made 236.69 per cent in this time, according to data from FE Analytics, while the FTSE 100 has made 122.16 per cent.
Performance of trust vs sector and index since 1 Sep 2003
Source: FE Analytics
Nimmo says that while he can see a market pull-back in the short-term, investors with a longer time horizon should benefit from secular changes in the industry that are giving smaller companies a huge boost.
The larger cap part of the market is being hit by growing regulatory scrutiny and the secular slowdown in the mining industry, while the growth of 4G and digital business is forcing a lot of established businesses into extinction. "These themes remain bad for large companies and generally good for smaller companies," Nimmo said.
"Banking and the extractive industries are to be found in the FTSE 100 to a much greater extent than further down the market capitalisation range."
"Furthermore, on the issue of the internet, it is newer, smaller companies that can build their businesses with new technologies and methodologies in mind."
"Older, established businesses find it very difficult to adapt to the new environment. This all suggests to us that smaller and medium-sized companies are likely to outperform larger companies for another 10 years."
"Our strong view is that investors should rebalance their portfolios to reflect this likelihood."
Nimmo’s trust has kept at least 35 per cent in online businesses for the duration of the last year.
However, he is more cautious about the short-term. He adds his voice to those who are worried that the sharp increase in share prices over the past year has not been accompanied by earnings growth.
Performance of UK indices over 1yr
Source: FE Analytics
"While the business outlook is significantly better than a year ago, valuations are undoubtedly higher and not as compelling, as investors have rushed into equities," he said.
"It is therefore possible that equities may have to tread water to allow earnings to catch up with valuations."
He also warns that the dormant euro crisis has not gone away.
"The euro has managed to survive a number of minor emergencies in the past year but fundamental issues remain," he said.
"It is becoming common wisdom that greater integration of banking regulation, monetary and fiscal policy is required before a unified and stable currency can be considered a healthy entity."
"Many seemingly intractable issues have to be overcome before that is achieved. Extreme dangers lurk along this route."
In the past year, the manager says that having no exposure to mining companies and banks has been a significant contributor to good performance.
However, he also shunned housebuilders, which held him back in an excellent year for the sector; overlooking plant-hire companies was also a negative, he explained.
The trust significantly increased its exposure in the past year to the real estate, financial, insurance and media industries for the first time since 2007.
Nimmo explains that these decisions were driven by Standard Life’s “Matrix” system for evaluating stocks, which also led to the decision to reduce exposure to the electrical, engineering, food and drink and mining sectors – the decisions being made on a stock-by-stock basis.
However, Nimmo says that the process he has used to produce his sector-leading gains has not changed and will not in the future.
"It has worked well over the past 10 years and we see no reason for this to change," he continued. "The vast majority of our companies have net cash positions and can grow from internally generated cash-flows in a predictable way."
"Dividend growth is strong and special dividends are quite plentiful without compromising growth prospects."
"This all gives us great confidence in the long-term outlook for the company. Our aim is to be exposed to predictable growth, but in a lower risk way as there is always risk out there, particularly in this inter-dependent global financial system."
"Given that uncertainty remains behind every corner, our emphasis on risk aversion, resilience, growth and momentum still feels right for the future."
The trust made 32.3 per cent in NAV terms in the year to 30 June, and 40.1 per cent in share price terms.
The benchmark made 31.8 per cent over the same time, and Nimmo’s trust ranked seventh out of 15 AIC smaller companies trusts.
Standard Life UK Smaller Companies IT has ongoing charges of 0.98 per cent. The open-ended Standard Life UK Smaller Companies fund, also run by Nimmo, has ongoing charges of 1.69 per cent and has made 339.25 per cent since 1 September 2003.
