abrdn UK Mid-Cap Equity

abrdn UK Mid-Cap Equity is a high-conviction strategy which invests in medium-sized companies for the long term. It invests in businesses when they are well established, but still have a long runway of growth potential. The process leans on ASI’s quant screening tool, ‘The Matrix’, and is backed up with rigorous fundamental research and regular company meetings.

Previously ASI UK Mid-Cap Equity

Our opinion

Abby Glennie is an impressive manager who has delivered excellent performance across a number of strategies. This fund is no exception. The abrdn small and mid-cap team, aided by the powerful quantitative tool, ‘the Matrix’, continue to deliver great results for investors. The fund does have a natural style bias in favour of growth, meaning it may struggle in some types of market. Overall, this is a very strong candidate for investors looking for UK mid-cap exposure.

Fund manager

Abby Glennie is the lead fund manager of the abrdn UK Mid-Cap Equity fund. She has 14 years investment experience. Abby joined abrdn in 2013 as a member of the UK equities team, having previously worked at Kames Capital. She has a joint first class degree in Economics and Finance and is a CFA charterholder.

I often find in life you get what you pay for; buy cheap, buy twice! Maybe cheap is ok if you’re buying for the short term, but long-term owners and investors are best placed with something they can rely on that will survive, grow and thrive with them. It’s worth paying up for quality.

Abby GlennieFund manager

Investment process

The abrdn UK Mid-Cap Equity fund moved to the management of the smaller companies team in July 2018 and follows the same investment process as the other well-established funds managed by the desk.

The team invests in high-quality, resilient businesses that it believes offer the prospect of long-term sustainable growth. The team has known many of these companies for years, investing in the most successful companies that have graduated from its small-cap portfolios. It believes passionately in the value of fundamental research and active management, and thinks the market frequently underestimates the ability of quality companies to grow into the future for many years. These rare businesses are not subject to ‘mean reversion’ as traditional financial theory would suggest.

Idea generation begins with the Matrix screen which highlights the strongest quality, growth and momentum stocks in the universe. The Matrix includes 13 different factors, which back-testing has shown to be predictive of future share price performance. The factors are then weighted, and stocks are assigned a total score. This provides a focused list for the team to research in more detail. The team covers more than 300 stocks.

Individual regional analysts are responsible for constructing a ‘best ideas list’ of the highest conviction ideas. The team visits over 750 companies a year and all investment ideas are subject to rigorous peer review which is a critical part of the process. This acts as a disciplined check and helps build conviction.

Positions are typically initiated at 1% and the team will add to the position as conviction grows. Portfolios are built from the bottom up with the greatest weight given to the highest-conviction ideas. New cash is generally targeted towards the highest matrix scoring companies. Redemptions are typically met by selling the lowest matrix scores. Given its bias to growth, the fund typically has an overweight to technology and an underweight to industrials and real estate.

ESG

ESG - Integrated  

ESG factors are embedded into the investment process. The goal is for the team to make better, more informed decisions which enhance returns and reduce risk. ESG factors can be financially material and need to be considered.

ESG research is primarily conducted internally by the central ESG investment function. In addition, the team makes use of external third-party research to aid its own analysis and highlight historic controversies. The team believes that the importance of ESG factors is underestimated by the market. They think ESG is a critical component of fundamental research and stock selection. They also believe in the importance of actively engaging with their companies on ESG issues.

Risk

Risk is carefully monitored with quantitative tools. Portfolio risks can be broken down into industry, country, sector and factor risk. Any risk must be appropriately sized and managed. Risk consideration begins at the stock level with rigorous company research.

See more

Read more about this fund

The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund nor of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.