Aberdeen UK Smaller Companies Growth (AUSC)

abrdn UK Smaller Companies Growth (AUSC) owns a portfolio of equities, which managers Abby Glennie and Amanda Yeaman identify by looking at three key factors: quality, growth and momentum. They are supported by the team’s in-house proprietary screening tool, Matrix, which is a multi-factor model that filters the universe by these factors, based on fundamental analysis (see Portfolio).

This approach gives the portfolio a strong growth bias, which has had an impact on Performance. Whilst this style bias has been positive since the trust’s launch, it has been a headwind in the past couple of years as higher inflation and interest rates have led to a value rally. However, the managers believe the outlook for their companies is improving, and that valuations are very compelling. In order to capture this, they have increased the Gearing of the trust to one of the highest levels in the past five years.

The trust has fallen to a wide Discount in the past two years as economic conditions have impacted the prospects for growth stocks and smaller companies. The board has been active with buybacks, with the aim of keeping the discount narrower than 8%.

One outcome of the widening discount and low valuations is an improved income picture for AUSC. Dividends have not traditionally been a major feature but have now grown to over 11p per share, representing a yield of c. 2.5% (see Dividend).