Five of my favourite smaller company shares

TL;DR

This interview discusses the investment strategy of the Aberdeen Standard Investments Global Smaller Companies Fund, which focuses on investing in around 50 high-quality sustainable growth businesses. The fund uses a quant screening tool to narrow down the universe of smaller companies and is currently investing in themes like green initiatives, digitization, and lifestyle changes. It highlights some of the top holdings in the UK and the US.

Transcript

hello and welcome to our latest fund manager interview today i have with me ksd destin who is the co-fund manager of the aberdeen standard investments global smaller companies fund kirsty thank you for joining me you're welcome so ksd the the fund is a concentrated portfolio of around 50 high quality sustainable growth businesses so what sort of qu... Read More

Key Insights

• 💯 Quality, growth, and momentum are the core characteristics that the fund looks for in businesses.
• 😒 The fund uses a quant screening tool called the matrix to objectively screen and prioritize research efforts within the universe of smaller companies.
• 💚 Current investment themes include green initiatives, digitization, and lifestyle changes.
• 🥹 Top holdings in the UK include Keyword Studios and Genus, while in the US, the fund invests in Insulet and Dolby Labs.
• 💗 The UK market is looking interesting post-Brexit, and the US market offers a diverse and entrepreneurial environment for small-cap companies to grow.
• 🎭 Companies like Insulet and Dolby Labs are expected to perform well in 2021 due to their innovative products and partnerships.
• ❓ The fund believes that the vaccine rollout and attractive valuations make the UK market appealing.

Questions & Answers

Q: What qualities does the Aberdeen Standard Investments Global Smaller Companies Fund look for in businesses?

The fund focuses on businesses with strong balance sheets, competent management teams, and clear competitive advantages. They prioritize companies that can grow independently of external financing and have sustainable, consistent growth with upward earnings momentum.

Q: How does the fund narrow down the thousands of smaller companies in the global market?

The fund uses a quant screening tool called the matrix, which assigns each stock a relative score based on the key investment philosophies of quality, growth, and momentum. This tool helps prioritize research efforts and objectively screen the entire universe of smaller companies.

Q: What are some of the current investment themes of the fund?

The fund is investing in green initiatives, such as environmentally friendly solutions in industries like packaging and food. It also focuses on digitization across various sectors, including banking and education. Additionally, lifestyle changes, like increased spending on home improvements and outdoor activities, are areas of interest.

Q: Can you provide examples of top holdings in the UK and the US?

In the UK, the fund holds stocks like Keyword Studios, a leading provider of outsourced services in the gaming industry, and Genus, one of the largest genetics companies globally. In the US, the fund invests in companies like Insulet, which manufactures tubeless insulin pumps, and Dolby Labs, a provider of sound and visual equipment.

Summary & Key Takeaways

• The Aberdeen Standard Investments Global Smaller Companies Fund seeks high-quality sustainable growth businesses that have strong balance sheets, competent management teams, and clear competitive advantages.

• The fund uses a quant screening tool called the matrix to narrow down the universe of smaller companies and prioritize research efforts.

• Themes the fund is currently investing in include green initiatives, digitization, and lifestyle changes such as home improvements and outdoor activities.

• Key holdings in the UK include Keyword Studios, a leading provider of outsourced services in the gaming industry, and Genus, one of the largest genetics companies in the world.

• In the US, the fund invests in companies like Insulet, which manufactures tubeless insulin pumps for diabetes treatment, and Dolby Labs, a provider of sound and visual equipment.