Smaller companies: Bigger potential
Invest today. Change tomorrow.
Smaller companies account for around 66%* of all listed companies and offer a wealth of choice to investors. Relative to larger peers, they typically provide exposure to:
- Companies that generate a higher proportion of revenues from local markets
- An alternative set of risks
- Companies with the potential to grow rapidly
These distinct features provide strong diversification benefits when added to a large-cap equity portfolio. Smaller companies also tend to attract less analyst coverage than their larger peers. This means there may be greater and more frequent discrepancies between their fundamentals and their market valuations. This creates a rich environment for fundamental, active stock-pickers such as ourselves. At ASI, we offer local investors both Australian and Global small-cap equity funds. We believe stock-specific insights drive returns. As active investors, we therefore build our portfolios from the bottom up. This research-intensive process gives our clients direct access to our best small-cap investment ideas.
*Source: Stocks in MSCI ACWI Small Cap as a percentage of stocks in MSCI ACWI Small Cap and MSCI ACWI. As at end June 2020
Local presence – global insight
abrdn has a strong history of managing equity portfolios across multiple market cycles. We now manage more than £121.1bn / A$228.5bn* in client equity mandates.We maintain a deep local presence across markets. Our 149 equity investment professionals cover around 3,000 stocks globally and conduct around 7,500 company meetings a year. Insight is shared and rigorously peer-reviewed, within and across teams, so only those we consider the strongest investment opportunities are included in client portfolios.
Focus on client goals
Our disciplined research-driven approach is applied to meet distinct client goals – from ‘high active’ portfolios aiming to deliver long-term outperformance, to income strategies targeting a premium yield, and values-based strategies designed to meet specific ethical, socially responsible and impact-investing goals.*Source: abrdn.
*Source: abrdn as at 30 June 2019
Our ESG approach to equity investing
We believe that ESG factors are financially material and can impact a company’s performance – either positively or negatively. Understanding ESG risks and opportunities, alongside other financial metrics, is therefore an intrinsic part of our research process.
We actively engage with the companies in which we invest. We combine information from these meetings with the insights of our investment managers, ESG equity analysts and central ESG investment team. This comprehensive approach means we can build a richer, more holistic view of each company. It also means we can consistently evaluate one company against another.
This approach is all part of our responsible stewardship of our clients’ assets – helping us mitigate risks, unlock opportunities and enhance long-term returns.
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