Aberdeen Smaller Companies Income

ASCI offers investors both capital appreciation and income from a portfolio of high-quality UK smaller companies…

Add to watchlist Request a meeting Download View key data

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Aberdeen Smaller Companies Income. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Aberdeen Smaller Companies Income

Aberdeen Smaller Companies Income Trust (ASCI) offers investors a chance to access the growth potential of UK smaller companies, whilst enjoying a diversified source of income.

After Aberdeen Asset Management and Standard Life merged, the trust was overhauled by the former Standard Life UK smaller companies team in 2018. Abby Glennie took over the portfolio, incorporating the proprietary screening system (known as the Matrix) developed within Standard Life Investments prior to the merger.

As Abby only took over the portfolio in September 2018, it is still premature to fairly judge performance. However, the early signs are promising, and the process is based on the approach tried and tested over the long term by Standard Life Smaller Companies Trust (SLS). SLS is run by the renowned manager Harry Nimmo, who also supports Abby with the portfolio. Alongside capital growth, a key focus for the ASCI team is generating an income for investors, and the yield is currently 3.9%. The most recent full-year dividend was increased by 12.2% from the prior year, and was fully covered by reserves.

The discount narrowed over 2019, likely due to the strong performance relative to peers and continued attractive levels of income. However, the coronavirus pandemic has seen the discount slip to 25.2%.

Kepler View

The new team has brought a breath of fresh air to the trust (which was previously part of the Aberdeen stable) since taking over in 2018. We think the distinctive approach, using proprietary screens, allows Abby to be objective and have fewer external biases or influences impacting her investment decisions. The move to focussing on higher-quality companies could also benefit investors during the difficult environment caused by the coronavirus. Although to long-term investors of ASCI this is a totally new approach, it has been tried and tested on Harry Nimmo’s Standard Life Smaller Companies Trust (SLS).

Although similar in process, ASCI is different to SLS and the broader UK smaller companies sector in several ways. Firstly, with net assets of £60m the trust is considerably smaller than SLS (£467m) and the sector average (£257m), which allows the manager to be very nimble. Another key difference is ASCI’s focus on income. Currently the trust yields 3.9% on a historical basis, in comparison to a dividend yield of 2.6% for SLS and 3.8% for the broader sector.

2019 saw the discount narrow considerably as performance improved, although this has since reversed with concerns surrounding coronavirus and the associated economic slowdown. We think once the dust has settled, if the improvement in performance continues it should over the long term lead to a discount narrower than peers’. Despite the economic picture being exceptionally cloudy, the discount to NAV potentially offers an attractive entry point.

bull bear
Utilises the same approach as SLS, an approach which has an excellent track record for capital appreciation At c. £65m in net assets, the trust will be too small for some wealth managers
Strong dividend growth and an attractive yield relative to peers The OCF is above average, a result of the small size of the trust
A diversified income stream relative to other equity-income vehicles The 7% gearing increases risks
William Sobczak
William joined Kepler Partners in February 2018 as an investment trust analyst. Prior to joining, William graduated from the University of Western Australia, with a BSc in Psychology.

Fund History

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm’s internal rules. A copy of the firm’s Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 9/10 Savile Row, London W1S 3PF with registered number OC334771.



Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase. We do not share your personal information and your answers are not linked to your identity for marketing purposes.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.