London, UK, 19 October 2023

Edison issues review on abrdn UK Smaller Companies Growth Trust (AUSC): Performance setback providing good entry point?

abrdn UK Smaller Companies Growth Trust (AUSC) is managed by Abby Glennie and Amanda Yeaman. The strategy of using the proprietary Matrix screening tool to search for stocks that fulfil strict quality, growth and momentum criteria has proved very successful over the long term but has been challenged since the start of 2022, as macroeconomic factors rather than company fundamentals have driven stock markets. Despite their frustrations, the managers are sticking with their tried-and-tested strategy and are highly confident that the trust will resume its record of outperformance when there is a change in the investment backdrop. This may already be underway as UK inflation is moderating, interest rates may be close to peaking and, in recent months, AUSC’s NAV performance versus the reference index looks to have stabilised.

Despite the trust’s performance, the managers highlight that, at the fundamental level, AUSC’s prospects are bright. Its top 10 holdings are a diverse mix of businesses and, at 31 August 2023, seven companies had upwards earnings trends, while three were flat. The trust’s portfolio offers a broad exposure to both international growth (51% of total revenue) and domestic (49%), which includes dominant UK operators and global leaders, or those companies able to expand into adjacent businesses or geographies.

 
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