Funds in Focus – Where to invest?

Aberdeen Standard European Smaller Companies Fund

For our Fund In Focus we are looking at the Aberdeen Standard European Smaller Companies Fund (previously the Standard Life European Smaller Companies Fund before the merger of Standard Life Investment Managers and Aberdeen Asset Management).

The European Smaller Companies Fund aims to provide long term growth by actively investing in the shares of smaller companies listed on European stock markets, including the UK.  The fund was launched in 2007 and has built an exceptionally strong outperformance record since then. Current assets under management are valued at €719m. It is important to note that while the fund invests in smaller companies, no company held by the fund has a market capitalisation of less the €1 billion.

Geographic and Sectoral Exposure

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Historic Performance Data

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* Source – Financial Express

Over the past five years, the unit price of the fund has risen by almost 120%,  compared with a rise of just 42% for the overall MSCI Europe Index. In addition, this outperformance has been achieved at a lower volatility than the broader index.

Investment Rationale
In our view all pension funds and other long term savings vehicles should carry some exposure to the smaller companies sector for the following reasons:

  • Over the longer term, smaller companies grow faster than their larger counterparts.
  • The ideal time to purchase smaller companies is when economies are recovering which would appear to be the case in Europe at the moment.
  • Despite, the outperformance in recent years, smaller companies are still rated lower than the average market rating i.e. they are relatively speaking less expensive.
  • The comparative disadvantages to investing in smaller as against larger companies include lower yields (companies tend to reinvest rather than distribute to shareholders) and lower liquidity (not a material consideration for longer term investors).

If you are interested in finding out more about this investment please contact us on  01 2375500 or email and we will explain more about the investment and discuss if it is suitable for your portfolio.

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