abrdn UK Smaller Companies Growth: Edison research note
The latest comprehensive research note published by Edison for abrdn UK Smaller Companies Growth Trust.
abrdn UK Smaller Companies Growth Trust is an investment trust with a premium listing on the London Stock Exchange.
The Company's objective is to achieve long-term capital growth by investment in UK-quoted smaller companies.
The Company intends to achieve its investment objective by investing in a diversified portfolio consisting mainly of UK-quoted smaller companies. The portfolio will normally comprise between 50-60 holdings representing the Investment Manager’s highest conviction investment ideas. In order to reduce risk in the Company without compromising flexibility, no holding within the portfolio should exceed 5% of total assets at the time of acquisition.
The Company may use derivatives for portfolio hedging purposes (i.e. only for the purpose of reducing, transferring or eliminating the investment risks in its investments in order to protect the Company’s portfolio).
Within the Company’s Articles of Association, the maximum level of gearing is 100% of net assets. The Directors have set parameters of between 5% net cash and 25% net gearing (at the time of drawdown) for the level of gearing that can be employed in normal market conditions. The Directors have delegated responsibility to the Investment Manager for the operation of the gearing level within the above parameters.
The Directors have set additional guidelines in order to reduce the risk borne by the portfolio:
· Companies with a market capitalisation of below £50 million should not represent more than 5% of total assets.
· Companies involved in “Blue Sky” products should not represent more than 5% of total assets.
· No more than 50% of the portfolio should be invested in companies that are constituents of the FTSE AIM All-Share Index.
The Investment Manager’s investment process combines asset allocation, stock selection, portfolio construction, risk management, and dealing. The investment process has evolved out of the Investment Manager’s “Focus on Change” philosophy and is led by Quality, Growth and Momentum. The Investment Manager’s stock selection led investment process involves compiling a shortlist of potential investments using a proprietary screening tool known as “The Matrix” which reflects Quality, Growth and Momentum based factor analysis. The final portfolio is research intensive and includes face to face meetings with senior management of these potential investments. This disciplined process has been embedded, trialed and tested for many years through economic and market cycles.
The value of investments and the income from them can go down as well as up and you may get back less than the amount invested.