Standard Life UK Smaller Co: Strong Track Record Of Outperformance
Edison | Mar 28, 2018 08:28AM ET
Standard Life (LON:SLA) Uk Smaller Co Trust (LON:SLS) is managed by Harry Nimmo, who aims to generate long-term capital growth from a portfolio of smaller-cap UK equities. The trust has a strong performance track record; it has meaningfully outpaced its benchmark over one, three, five and 10 years. SLS has also outperformed the majority of its peers over these periods, ranking second out of 10 funds over one and three years, fifth over five years and first over 10 years. The trust has recently changed its benchmark to include AIM stocks, reflecting SLS’s increasing exposure to this area of the UK stock market, as the board and manager consider the quality of these companies has improved in recent years.
Investment strategy: Long-term, high-quality focus
Nimmo uses Aberdeen Standard Investments’ proprietary stock-selection Matrix to screen the investible universe of c 650 companies, seeking quality firms with the potential for sustainable growth. Factors include earnings revision and share price momentum, as well as balance sheet strength. The manager believes that valuation is a secondary consideration, as you often “get what you pay for”. Potential investee companies undergo rigorous fundamental analysis and meetings with managements are a key part of the process. Nimmo invests for the long term and the portfolio is unconstrained by benchmark weightings. At end-February 2018, net gearing was 7.4%, which is towards the higher end of the historical range and compares with the maximum permitted 25% of NAV. Gearing includes £11.1m in convertible unsecured loan stock whose final conversion date is 29 March 2018.
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