Key Morningstar Metrics for abrdn Global Smaller Companies Fund
- : NeutralMorningstar Medalist Rating
- : AverageProcess Pillar
- : Below AveragePeople Pillar
- : AverageParent Pillar
Following a number of changes to Aberdeen’s Edinburgh-based smaller companies team last year, we downgraded the People Pillar to Below Average from Average, and for now, our view remains unchanged. While we acknowledge the structured and consistently implemented approach, our conviction in the process, particularly in the US, which represents a significant part of their universe, has weakened. As a result, we have downgraded the Process Pillar to Average from Above Average.
The process leverages the group’s proprietary quantitative screening tool, the Matrix, which the team has used to good effect for more than two decades in UK equities. The Matrix has long been considered a key component of Aberdeen’s competitive advantage. While it can still provide a valuable analytical edge in several regions, such as the UK, Europe, and Japan, its efficacy in the US has been notably weak and remains a continued headwind for the portfolio. As a result, our conviction in its edge on a global level has diminished, particularly given the team’s inability to consistently add value in the US, which represents a material portion of the benchmark.
The portfolio has long tilted toward growth and exhibited a quality bias, with metrics such as return on equity and return on assets materially above the Morningstar Global Markets Small-Mid Cap Index on a rolling basis. The fund also exhibits lower levels of leverage. Individual stock positions are limited to plus or minus 5% relative to the benchmark—though in practice this has rarely breached 3%—while sector and country positions are limited to plus or minus 20%. At least 70% of assets must be invested in stocks listed on the MSCI ACWI Small Cap Index.
Kirsty Desson has led this strategy since late 2021, following veteran small-cap investor Harry Nimmo’s retirement. Desson has been with Aberdeen since 2012 and in the industry since 2000. She knows the Matrix extremely well and has strong analyst experience covering Asia and emerging-market smaller companies.
Team turnover has been elevated in recent years, with two departures in 2025, including investment director and global mid-cap manager Anjli Shah and analyst Angus Johnson, who had himself replaced Domantas Butvilas after his departure in 2024. This prompted a formal restructuring, with the team now working much more closely with the Philadelphia-based US small-cap team on idea generation, a shift from their previously informal relationship. Interactions between the two teams have become more formal, and two additional hires, Darren Milne (Edinburgh-based) and Sameen Farooki (US-based), are in regular communication with Desson to feed ideas through and act as a bridge between the two teams, which appears to be a positive development. That said, the overlap between the US small-cap fund and this global fund has not changed materially. There are some nuances in their investable universe; however, we would have perhaps expected greater alignment given the closer ties between the two teams. It’s still early days, and we will continue to monitor this going forward, as in time this could prove to be a positive development for the team.
Desson is supported by the global SMID portfolio construction group, which includes investment director Liam Patel and the two new analysts, Milne and Farooki. Ideas and challenges are also provided by the broader Edinburgh-based smaller-companies team, which includes some experienced investors, notably head of smaller companies and European small-cap manager Andrew Paisley. In total, the team numbers seven, comprising Desson, Patel, Milne, and Farooki alongside their Edinburgh-based colleagues, with geographic coverage across the group, plus senior quant analyst Laura Odikanekwu, who oversees the Matrix.
Since Desson became named manager in March 2020 through the end of June 2026, the I ACC clean share class has underperformed its primary prospectus benchmark and the global small/mid-cap equity Morningstar Category average by 8.73% and 4.64% annualized, respectively. The sharp decline in growth stocks and momentum reversal in early 2022, along with further style headwinds from 2025 onward, notably in the US, have significantly weighed on the fund’s near- and long-term track record. Since its inception, the fund has underperformed its benchmark considerably.
Abrdn Global Smaller Companies Fund: Performance Highlights
Since Kirsty Desson became named manager in March 2020 through the end of June 2026, the I ACC clean share class has underperformed its primary prospectus benchmark and the global small/mid-cap equity category average by 8.73% and 4.64% annualized, respectively.
The sharp decline in growth stocks and momentum reversal in early 2022, along with further style headwinds from 2025 onward, notably in the US, have significantly weighed on the fund’s near- and long-term record. Since its inception, the fund has underperformed its benchmark quite considerably.
After a tough 2022, the strategy regained some lost ground but still trailed its category and index in 2023. In 2024, the fund showed further signs of recovery, with the I ACC share class returning 9.65% versus 6.72% for the global small/mid-cap equity category average, though both underperformed the MSCI ACWI Small Cap Index’s 11.32% return.
Given its focus on high-quality growth companies with momentum, we expect the strategy to excel when these factors are in favor and to underperform when value stocks lead or markets rotate out of growth. The fund will likely struggle in “dash-to-trash” or more cyclical market conditions.
This has been the case more recently. Over the past year (to the end of June 2026), the I ACC share class has underperformed its benchmark and category by 34.59% and 24.50%, respectively. Lower-quality, high-beta names in the US drove returns, an area where the managers don’t tend to invest. While there have been some style headwinds, particularly the underperformance of quality stocks, stock selection has generally been poor. Moreover, several self-inflicted issues, including portfolio construction challenges, have exacerbated the underperformance, with the magnitude ultimately significantly worse than anticipated.
