Aberdeen UK Smaller Companies Growth (AUSC)

Aberdeen UK Smaller Companies Growth (AUSC) aims to provide exposure to quality companies in the UK small-cap space with sustainable growth potential and a track record of beating earnings expectations. For that purpose, the managers, Abby Glennie and Amanda Yeaman, utilise their in-house proprietary screening tool, Matrix, which focusses on the quality, growth, and momentum factors as well as valuation. This approach has delivered strong long-term Performance, with AUSC having delivered significantly higher returns than its benchmark since its launch in 2003.

Abby and Amanda have been looking to enhance their process since the end of last year to reflect structural shifts in the market environment, such as a higher interest rate regime. Measures include a tweak to their quality definitions, a greater emphasis on valuation discipline, and a reduced focus on factor exposure in favour of greater emphasis on stock selection, with the aim of generating a more consistent return profile.

Several mining companies have begun to screen favourably, both as a result of these process enhancements as well as operational improvements, leading to their inclusion in the Portfolio. As such, the trust now has exposure to areas such as copper mining, which has strong demand dynamics. Abby and Amanda have also added to their holdings in Helios Towers, a provider of telecommunications towers in Africa, seeing long-term revenue streams and growth opportunities from expanding demand. In addition, they have selectively increased their allocation to companies exposed to the domestic economy, including Shawbrook, a specialist lender that notably serves small- and medium-sized enterprises (SMEs).

The trust repaid £10m of its revolving credit facility in March, reducing Gearing from nearly 10% to c. 6%. Meanwhile, the trust is currently trading at a c. 9% Discount, with the board using share buybacks in an effort to maintain it below 8%.