This fund is an extension of abrdn’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 abrdn’s powerful screening tool 'Matrix', which former co-manager Harry Nimmo helped create. The fund is an actively managed portfolio of around 40-80 companies.
Previously called Aberdeen Standard SICAV I - Global Mid-Cap Equity
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. abrdn has an excellent small-cap product already, and this fund captures the ‘graduates’ from there, as well as new ideas from abrdn’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
abrdn is the new brand of Aberdeen Standard Investments (ASI). It unifies the merger of Aberdeen Asset Management and Standard Life Investments, which took place in August 2017. With more than 30 locations worldwide, abrdn seeks to find the most sustainable investment opportunities globally.
Fund manager
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 abrdn in January 2016. She contributed to many products on the desk as a generalist analyst and then stepped up to lead this fund from its launch in April 2020.
Goldilocks wasted her time going round the houses to find out what was best. I’ve always known mid-caps are just right!
Anjli ShahFund manager
Investment process
abrdn SICAV I - Global Mid-Cap Equity fund is an evolution of abrdn’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 abrdn’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 abrdn 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 add 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 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.
abrdn SICAV I - Global Mid-Cap Equity 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.
ESG
ESG - Integrated
ESG analysis is embedded in the process for this fund. The approach is founded on the belief that understanding the impact of ESG factors leads to better investment decisions. The work is done as part of the fundamental analysis, where the managers consider the ESG risks that are most material to the stock and build them into the analysis alongside other financial metrics incorporated in the Matrix system. This is designed to assess whether ESG risks are being reflected in the stock valuation, or not. The process also highlights ESG opportunities, such as products or services addressing societal or environmental issues which could lead to performance upside or a new avenue for the company. This work goes beyond simple analysis, with engagement from Anjli and team about how the firm manages the key risks and opportunities that exist, as well as judging the management’s governance approach on an ongoing basis. This analysis allows the team to factor in the impact of ESG factors in the investment case, although it isn’t used to limit the universe.
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.
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