UK Investor Magazine
Identifying high-quality UK small caps with abrdn UK Smaller Companies Growth Trust
Jul 23, 2024
Abby Glennie, Deputy Head of Smaller Companies at abrdn, shares her insights on identifying high-quality UK small caps. She discusses a disciplined bottom-up investment strategy focused on quality, growth, and momentum. Abby highlights how macro influences shape stock selection, forecasting that an interest rate cut could benefit the small-cap space. The conversation dives into standout holdings like Cairn Homes, praised for its competitive edge, alongside other exciting stocks like Raspberry PI, making for a compelling exploration of the UK smaller companies landscape.
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Quick takeaways
- The investment strategy of abrdn UK Smaller Companies Growth Trust emphasizes a disciplined bottom-up approach focused on quality, growth, and momentum metrics.
- Macroeconomic factors like potential interest rate cuts are seen as key drivers for enhancing opportunities within the UK small-cap investment landscape.
Deep dives
Investment Strategy and Process
The investment strategy for the Aberdeen UK Smaller Companies Growth Trust revolves around a consistent focus on quality, growth, and momentum, guided by a bottom-up stock-picking approach. The team utilizes clear metrics such as Z scores and Patroiski scores to assess companies, while also evaluating qualitative factors like management quality and competitive advantages. Typically, the portfolio consists of around 50 stocks, with major positions representing no more than 5% of the total, allowing for concentrated yet diverse investments. This disciplined method has enabled the trust to navigate through five economic cycles successfully over approximately 25 years.
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