Bangkok--12 Oct--Aberdeen
Aberdeen Asset Management Company Limited ('Aberdeen') has launched a new fund investing in American Small Caps, the Aberdeen American Growth – Smaller Companies Fund (ABAGS).
It will invest into an existing fund, the Aberdeen Global – North American Smaller Companies Fund (Master Fund), listed in Luxembourg. That fund, which is managed by Aberdeen's US equities team in Philadelphia, ranks in the first quartile among its peers for returns over the past one, three and five years.
Aberdeen is launching ABAGS as fresh doubts emerge over the state of the US economy and there has been a further deferral of a long-expected US interest rate hike. But the company says conditions for small caps are attractive and suit its long-term, research-led investment style.
Small caps are creating the jobs in America, they are less exposed than large caps to today's global economic uncertainty (and currency fluctuations) and usually do well when the economy improves. Aberdeen notes that corporate fundamentals are solid, sales are picking up and there is scope for margins to improve – especially for financials once interest rates do rise.
Unlike big caps, which have used cheap money to buy back shares and raise dividends, thus helping share prices, small caps tend to be more conservative with their balance sheets. Good management teams can be more effective too. When they spot opportunities they can act quickly, sometimes with relatively low capital outlay.
The US remains innovative and part of that is down to its support for entrepreneurs and a culture that accepts occasional failure as the price of growth creation. Aberdeen believes that by doing its own research it is able to keep its finger on the pulse of companies not just in new industries but in niche areas or which are turnaround stories.
ABAGS brings the number of funds in Aberdeen's FIF range to xx. It is the first pure American small caps fund in the market (American Small Caps have a market capitalisation in the base currency of the fund, as at the first date of investment, of under US$5 billion.)
Timothy Skiendzielewski, Assistant Investment Manager, Aberdeen Asset Management, comments:
"The US economy is sending out mixed signals. The next phase will need investors to be more careful. Easy money will fade as a market prop. But it should not take much of a following wind to help smaller companies improve their earnings, as they have been quietly investing all along. That we own only around 40-60 stocks at present of the hundreds we visit annually shows the rigour behind our investment process. We only pick those with good balance sheets and cashflow, run by managers we trust."
Adithep Vanabriksha, Chief Investment Officer, Aberdeen Asset Management, adds:
"We have seen the same phenomenon in market globally: liquidity has benefited stocks without much regard for their fundamentals. This has created an urge among investors to follow the crowd and pay more than is sensible for future growth. Our approach is doggedly different. We are patient in identifying companies with real and sustainable earnings, and we are patient on price – and that goes for funds we manage here in Bangkok or Philadelphia or London or anywhere else."
The IPO of Aberdeen American Growth – Smaller Companies Fund (ABAGS) is from October 19-30th, 2015. Get free bonus units in Aberdeen Cash Creation Fund worth 100 baht for every 100,000 baht when invested in Aberdeen American Growth – Smaller Companies Fund during IPO period 19-30 October 2015.
Conditions apply. The Fund risk is level 6.
Aberdeen American Growth – Smaller Companies Fund (ABAGS)'s Information:
Fund Type: Equity (Mid-Small Cap)
Investment policy: Aberdeen American Growth – Smaller Companies Fund will mainly invest in units of a foreign fund, Aberdeen Global – North American Smaller Companies Fund (Master Fund), at least 80% in average of its NAV in any accounting period. The Master Fund will invest at least two-thirds of the fund's assets in equities of Smaller Companies, with their registered office; and/or have the preponderance of their business activities in the United States of America, with a market capitalisation in the base currency of the fund, as at the first date of investment, of under US$5 billion.
Benchmark: Russel 2000
Based Currency (Master Fund): USD