How we invest
- First-hand company research
- Bottom-up investment style, emphasising company fundamentals
- Team approach, with asset managers based in the regions where we invest
- Low portfolio turnover, buying stocks and holding them for the long term
- No investment made without having interviewed the company’s management first
- We aim to add value by identifying good quality stocks that are attractively priced and avoid businesses that we do not understand
Our equity investment process
We follow a bottom-up process based on a disciplined evaluation of companies through direct visits.
Stock selection is the major source of alpha. No stock is bought without our managers having first met management, and detailed notes then written. We estimate a company’s worth in two stages, quality then price. Quality is defined in reference to management, business focus, balance sheet and corporate governance. Price is calculated relative to key financial ratios, market, peer group and business prospects.
Top-down factors are secondary in portfolio construction, with diversification rather than formal controls guiding geographical and sector weights. Aberdeen portfolios are generally conservatively run, with an emphasis on traditional buy-and-hold, with top-slicing/topping up preferred to outright trades, resulting in low turnover. Typically they have higher return on equity/assets and lower debt to equity than market average.
Portfolios are managed on a team basis, with investment managers doing their own research and analysis. Desks operate independently but each has a model portfolio that contains its best ideas, and forms the basis for portfolios, be they retail or institutional. All ideas are shared via formal committees and common databases, with desk heads and the CIO enforcing consistency across the Group.
Emerging market equities
Emerging markets offer:
- Encouraging potential for growth over the medium and long term
- An increasing number of well-managed companies. Companies have become more transparent. They now have stronger balance sheets and are more profitable and committed to maximising shareholder value.
- Diversification benefits for your portfolios
- Many are far less indebted than developed countries
- Stability and growth nurtured by governments’ prudent fiscal and monetary policies
- Strong local demand: Emerging markets benefit from young and growing populations, durable consumer spending and a growing middle class
- Growing exports to other emerging economies, and increased spending and investment at home
We provide capability across a broad range of regional strategies, including:
Our teams are located in several key offices across the globe which gives us a distinct information advantage.
We’re aware that many of our clients want their portfolios to have an ethical bias. Our Socially Responsible Investing (SRI) funds provide them with the chance to avoid investing in companies they consider inappropriate.
We have been managing SRI products since the early 1990s. Since then, our SRI screening service has expanded to include engagement with companies on environmental, social and corporate governance issues.
Our commitment to SRI was highlighted when we became a signatory to the United Nations Principles for Responsible Investment in 2007.