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FIRST 1000 STOCK FOR ASI GLOBAL SMALLER COMPANIES FUND

26 Sep 2019

One of ASI Global Smaller Companies Fund’s initial investments at launch has become the first return to 1000% for investors in the Fund.

The £1.4 billion Fund first invested in Shenzhou International in January 2012. The company produces, dyes, finishes, prints, embroiders, cuts and sews knitwear for the likes of Nike (Flyknit trainers being a key product), Adidas, Uniqlo and Puma. In what is a fiercely competitive market, the company has been able to differentiate itself through relationships with customers, their ability to innovate and its ability to combine multiple stages of production.

The ASI Global Smaller Companies Fund has been managed by Alan Rowsell – part of ASI’s smaller companies team, led by Harry Nimmo - since launch. The eight-strong team look to identify the highest quality smaller companies with sustainable growth that they can find. They search for emerging winners – those under-researched, relatively undiscovered disruptors and innovators in line to become leading companies in future.

Their quantitative screening tool, the Matrix, helps to reduce the 6,000+ global small-cap universe to a more manageable size. The Matrix electronically tracks 13 factors, such as quality, earnings growth, momentum and valuation, which our backtesting has found can help to predict share price performance. Each company is given a total score, with the higher the score the potentially more interesting the idea. 

Team members research the most interesting opportunities from their respective region, with the culmination of the process being the ‘best ideas’ list of around 100 stocks. From this we select our highest conviction ideas, building a diversified portfolio of companies that are held for the long term.

Close company contact is a key part of the process, with the team holding more than 400 company meetings per year, which allows them to cross-check the veracity of our investment thesis, assess the strength of a company’s business model as well as any ESG risks and opportunities. Team-based peer review is key to determine how much we like a company and identify risks.

Alan Rowsell, manager of the ASI Global Smaller Companies Fund, said: “Without the Matrix we would never have invested in Shenzhou, as we simply would not have known about the company. The vast c.6000 Global Small Cap universe is home to the large cap leaders of tomorrow, with this proprietary tool giving us continuous coverage and highlighting to us stocks that are displaying the quality, growth and momentum characteristics we deem attractive.

“The Matrix is a key part of the process, but it can never tell us the quality of management, how attractive the industry is, how sustainable their competitive advantage is or any ESG risks or opportunities – this can only be achieved by fundamental research and meeting with management.

“Within small and mid-caps momentum is a winning strategy, with the greatest returns generated by holding outstanding companies for extended periods. We have found that companies that have a strong competitive advantage can sustain this for many years.

“Linked to running our winners is the flexibility the strategy has to hold up to 30% in names that have moved through the top of the small cap index – the Small Cap Graduates. All stocks purchased by the strategy will be small cap, but having the flexibility to hold a select number of favoured names has been has been key to our success and allows us to continue to benefit from the sell-side consistently underestimating the long term growth potential of these names.

“Our approach is to just focus on the stocks, investing in high quality businesses with sustainable growth prospects. That is where we think we can add value, not in the big macro decisions. This often leads us to market leaders which have a strong competitive advantage in their niche and unique drivers that will sustain earnings growth for years to come, regardless of what happens in the global economy.”

 Since launch the Fund has returned 204% versus 123% from the IA Global Sector (source; FE Analytics, 19/01/2012-30/08/2019. Retail Platform 1 Acc in GBP).

Discrete performance (%)

Year end

30/06/19

30/06/18

30/06/17

30/06/16

30/06/15

Retail Fund Performance

-1.2

26.4

31.2

13.0

14.1

IA Global Sector

7.3

9.4

23.5

7.4

8.0

Source: Aberdeen Standard Investments (Fund) and Morningstar (Sector)

Note: Past Performance is not a guide to future performance. The price of shares and the income from them may go down as well as up and cannot be guaranteed; an investor may receive back less than their original investment.

For further information please contact:

James Thorneley, Global Head of Media Relations
Tel: 020 7463 6323
james.thorneley@aberdeenstandard.com

About Aberdeen Standard Investments

  • Aberdeen Standard Investments (ASI) is a leading global asset manager dedicated to creating long-term value for our clients, and is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments. 
  • With over 1,000 investment professionals we manage £525.7 billion (as at 30 June 2019) of assets worldwide. We have clients in 80 countries supported by 50 relationship offices. This ensures we are close to our clients and the markets in which they invest.
  • We are high-conviction; long-term investors who believe teamwork and collaboration are the key to delivering repeatable, superior investment performance. We are resolute in our commitment to active asset management.
  • ASI is the asset management business of Standard Life Aberdeen plc, one of the world’s largest investment companies.
  • Standard Life Aberdeen plc is headquartered in Scotland. It has around 1.2 million shareholders and is listed on the London Stock Exchange. The Standard Life Aberdeen group was formed by the merger of Standard Life plc and Aberdeen Asset Management PLC on 14 August 2017.

www.aberdeenstandard.com

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The value of investments and the income from them can go down as well as up and your clients may get back less than the amount invested.

Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.

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This article is strictly for information purposes and should not be considered as an offer, investment recommendation or solicitation to deal in any of the investments mentioned herein. This article does not constitute investment research. The issuing entities listed below (together ‘Aberdeen Standard Investments’) do not warrant the accuracy, adequacy or completeness of the information and materials contained in this document and expressly disclaims liability for errors or omissions in such information and materials.

Any research or analysis used in the preparation of this article has been procured by Aberdeen Standard Investments for its own use and may have been acted on for its own purpose The results thus obtained are made available only coincidentally and the information is not guaranteed as to its accuracy. Some of the information in this document may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies.

These statements are only predictions and actual events or results may differ materially. Readers must make their own assessment of the relevance, accuracy and adequacy of the information contained in this document and such independent investigations as they consider necessary or appropriate for the purpose of such assessment. Any opinion or estimate contained in this article is made on a general basis and is not to be relied on by the reader as advice. Neither Aberdeen Standard Investments nor any of its employees, associated group companies or agents have given any consideration to, or made any investigation of, the investment objectives, financial situation or particular need of the reader, any specific person or group of persons. Accordingly, no warranty is given and no liability is accepted for any loss arising, whether directly or indirectly, as a result of the reader or any person or group of persons acting on any information, opinion or estimate contained in this article.

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‘© 2019 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. For more detailed information about Morningstar's Analyst Rating, including its methodology, please go to:
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The Morningstar Analyst Rating for Funds is a forward-looking analysis of a fund. Morningstar has identified five key areas crucial to predicting the future success of a fund: People, Parent, Process, Performance, and Price. The pillars are used in determining the Morningstar Analyst Rating for a fund. Morningstar Analyst Ratings are assigned on a five-tier scale running from Gold to Negative. The top three ratings, Gold, Silver, and Bronze, all indicate that our analysts think highly of a fund; the difference between them corresponds to differences in the level of analyst conviction in a fund’s ability to outperform its benchmark and peers through time, within the context of the level of risk taken over the long term. Neutral represents funds in which our analysts don’t have a strong positive or negative conviction over the long term and Negative represents funds that possess at least one flaw that our analysts believe is likely to significantly hamper future performance over the long term. Long term is defined as a full market cycle or at least five years. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detailed information about the Morningstar Analyst Rating for Funds, please visit http://global.morningstar.com/managerdisclosures

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