Aberforth UK Small Companies

Disciplined value style investment approach from a well respected team.

  • 19093.00p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • 26161.00p
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.80%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.80%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 2.80%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 13 December 2019, fund data last updated 27 February 2012

Aberforth are a privately owned, boutique fund management organisation, specialising in UK smaller company investing. This fund has the benefit of low charges and an extremely experienced management team. They aim to outperform the Numis Smaller Companies index over the long term and, like the index, invest in smaller FTSE 250 companies in addition to traditional small caps, favouring quality growth businesses at value prices.

Fund summary

Sector UK Smaller Companies
Structure UNIT TRUST
Launched March, 1991
Size £185m
Yield 2.80%
Charging basis 37.5% Income 62.5% Capital
Dividends paid 28 Feb, 31 Aug

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 2.14%
Annual management charge 0.80%
Ongoing charges figure 0.80%

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Investment process

The trust has no specific tracking error targets or formalised risk controls, however a diversified portfolio is maintained, sector bets are monitored and companies are subject to intensive internal research. Aberforth's attribution analysis of historical returns indicates that performance is driven 70% by stock selection and 30% sector allocation. The investment style is associated with unfashionable companies, misunderstood franchises, good companies that are undervalued on a cash flow basis, and previously poorly run companies where there is evidence of a turnaround. The team use a combination of valuation methods: DCF and EV / EBITDA as a means of relative sector values and P/E as more of an absolute measure, they are unlikely to pay more than 15x earnings for a company.

This fund benefits from a stable and respected investment team who specialise in smaller companies. Their value biased investment philosophy has served them well over a long period and typically provides a degree of resilience in falling markets. More recently the fund has lagged its peers as investors have focused on growth companies on higher valuations. This open-ended fund is similar to the London-listed closed-ended Aberforth Smaller Companies Trust (LSE:ASL) run by the same manager. Aberforth's assets under management are relatively high for a small cap manager which can act as a drag on returns.

Manager research

Average monthly relative returns

  • 14/15 -0.10%
  • 15/16 -0.77%
  • 16/17 0.35%
  • 17/18 0.39%
  • 18/19 -0.18%

Bestinvest MRI

  • 3 years 0.19%
  • 5 years -0.06%
  • Career 0.19%
  • 3 years 88.30%
  • 5 years 52.00%
  • Career 99.70%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Aberforth Partners

Aberforth Partners manage their funds on a team basis, with sector responsibility split amongst the team: Andrew Bamford, partner from May 2004, joined the firm in April 2001. Euan Macdonald joined in May 2001 and became a partner in May 2004. Keith Muir joined the firm in March 2011 from the Standard Life small cap team. Richard Newbery, David Ross and Alistair Whyte were all founding partners in 1990.

Track record

Aberforth Partners has 28.3 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.19%. During the worst period of relative performance (from July 1996 - February 2000) there was a decline of 22% relative to the index. The worst absolute loss has been 51%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is more than 99%.

Periods of worst performance

Absolute -51.00% (May 2007 - November 2008)
Relative -22.00% (July 1996 - February 2000)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

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Top 10 holdings

Data accurate as at 31 August 2019

4.4589% Firstgroup
3.5512% Urban&Civic Plc
3.4203% Ultra Electronics Hldgs
3.3151% Mitchells & Butlers Plc
3.3023% Future Plc
2.8792% Brewin Dolphin Hldgs
2.8762% Ei Group Plc
2.809% Grainger Plc Ord 5p
2.554% Vitec Group Plc (The)
2.3358% Sdl
Source: Trustnet

Portfolio

The fund holds around 100 companies and the top 10 stocks will generally account for a fifth of the portfolio. The fund does not invest in AiM listed companies.

Constraints

There are no formal risk controls although an individual holding greater than 4% would be unusual.

Key Investor Information - Income

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Key Investor Information - Accumulation

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