Winter 2020/21: the funds gaining and losing their Elite Ratings
Following FundCalibre’s Winter investment committee, two investment trusts have gained an Elite...
Aberdeen Standard SICAV I – Global Mid-Cap Equity
This fund is an extension of ASI’s successful small and mid-cap desk and targets the ‘next 15%’ in market cap size up from smaller companies. The process is based around ASI’s powerful screening tool 'Matrix', which co-manager Harry Nimmo helped create. The fund is an actively managed portfolio of around 40-80 companies.
Our opinion
The mid-cap space is a growing segment, but with few funds directly investing in it. This is where this fund steps in, and it does so with great credentials. ASI has an excellent small-cap product already, and this fund captures the ‘graduates’ from there, as well as new ideas from ASI’s global resource and from the excellent matrix system. For pure exposure to a quality growth portfolio of medium-sized companies, this is a very competitive option.
Company description
Aberdeen Standard Investments (ASI) is a brand of the combined investment businesses of Aberdeen Asset Management and Standard Life Investments. The merger of these two businesses was completed in August 2017 to achieve operational economies of scale, and the group now boasts 1,000+ investment staff in more than 50 locations across Europe, the Americas, Asia and beyond.
Fund manager
ASI Global Mid Cap is co-managed by Anjli Shah and industry veteran Harry Nimmo. Anjli started her career at the Bank of England on the graduate scheme as a banks analyst. She then moved to the broker Stifel, covering general retail before moving to ASI in January 2016. She has been contributing to many products on the desk as a generalist analyst and has now stepped up to lead this fund from its launch.
Harry is a veteran of the smaller companies industry and helped build the Matrix tool. He joined what was then Standard Life in 1985 and has worked on the UK equities team ever since, managing multiple funds. He held the role of Head of Smaller Companies for nearly 30 years before standing down to focus on running his funds.
Investment process
ASI Global Mid Cap fund is an evolution of ASI’s successful small and mid-cap desk and is designed for investors who have a lower risk appetite, but still like the growth profile associated with companies towards the smaller end of the market.
The fund’s process is led by ASI’s proprietary Matrix system which looks for quality, growth and momentum factors. There are three sources for ideas to populate the investment universe.
The first of these are the ‘small cap graduates’. These are companies the team knows but which have grown out of the small cap universe.
The second source is ideas from the global Aberdeen Standard network, which has become a useful resource since the merger in 2017. Here, the managers lever the work already completed by their colleagues, and simply adding their own analysis.
Thirdly, there will be some totally new ideas from the Matrix, or as spin-offs from research into other companies. This creates an ideas shortlist of around 300 companies. From here, the managers will conduct their own deep-dive analysis, including contacting the company to question the strategy and a full ESG analysis.
Once these ideas are analysed, they are debated amongst the whole team, with the best ideas going through to a preferred list which will populate the portfolio. Anjli and Harry will consider a variety of factors when deciding on stocks, including what level of diversification they add to the portfolio, risk analytics, and a weighted average Matrix score to ensure the portfolio has a balance of factor exposures.
ASI Global Mid Cap is unlikely to have holdings in utilities and communication services as they are highly regulated industries with low growth, and will have limited exposure to energy, materials, real estate and financials sectors which are cyclical and driven by external factors. Instead, the process will favour the likes of consumer staples, consumer discretionary, health care, technology and industrials, which are more innovative sectors with niche industry leaders.
At least 70% of the fund will be in the mid-cap benchmark at all times, but the managers will hold stocks for up to a year once they graduate from mid-cap index into larger companies.
Risk
The fund has a quality growth approach and therefore is expected to underperform in value driven rallies. The definition of mid-cap will also vary globally, meaning the holdings may vary by size depending on the relative size of their country indices.
Read more about this fund
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