abrdn Global Smaller Companies: April 2026 fund update

• Kirsty Desson has over 20 years of industry experience and has been the fund’s lead manager since 2021

• The team use a disciplined and time-tested process to uncover hidden gems around the globe

• The fund’s recent performance has been weaker

• This fund doesn’t currently feature on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The abrdn Global Smaller Companies aims to grow an investment over the long term by investing in smaller companies across the globe.

By investing globally, the fund could offer further diversification to an investment portfolio with exposure to different regions and themes. It could also complement an adventurous growth-orientated portfolio investing in large companies. While smaller companies typically have more room to grow than larger ones, they are higher risk.

Manager

Kirsty Desson became the fund’s co-manager in February 2020, before being promoted to lead manager in December 2021. Her career began at Martin Currie in 2000 where she analysed companies across Asia and emerging markets. In 2012, she joined Aberdeen (which was then Standard Life) to focus on smaller companies within Asia, including Japan and emerging markets. Over this time, she’s built analytical experience and been heavily involved in the fund’s success.

Desson is supported by analysts across the Aberdeen business, including Darren Milne, who joined last year to focus on analysing US companies for this fund. This followed the departure of Anjli Shah and two other analysts who worked closely with Desson on generating ideas in the US, which is typically a large portion of the fund. At the time, responsibilities for US research passed to the dedicated US Smaller Companies team who use a different research process to Desson and are based in the US, rather than the UK. These changes and the uncertainty around how they might impact the fund and future performance were the main reason the fund was removed from the Wealth Shortlist.

Process

Desson and her team search the globe for companies outside of the usual candidates of large firms that dominate stock markets. They believe smaller companies have greater long-term growth potential and are relatively under-researched, so there are plenty of opportunities to uncover the larger companies of tomorrow.

Hunting for long-term growth means the team don’t tend to invest much in economically sensitive areas of the market, like energy or real estate. The focus on quality leads them to companies with strong balance sheets and good management teams, whilst avoiding those that are highly indebted or loss making. Momentum is also important, which means the team like to maintain investments in companies that are growing while selling companies where expected growth hasn’t materialised.

To identify these attributes, the team use a quantitative tool called the ‘matrix’, which narrows down over 6,000 smaller companies across the world. The output is continually reviewed, with the most attractive opportunities receiving further analysis and team debate. They focus on the data for individual companies, rather than broader economic views.

This results in a fund of between 40 to 80 companies, although it’s been fewer than 50 during Desson’s tenure. This level of concentration means each holding can have a meaningful impact on the fund’s performance, but it can also increase risk. Currently 46% of the fund is invested in the US, although this is less than the global stock market. In contrast, the fund invests more in other countries such as United Kingdom and Germany as well as some higher-risk emerging markets like Thailand and Brazil. The fund can use derivatives, which add risk.

Desson invests in companies for the long term, so doesn’t make many changes to the fund. She has made some new investments over the last 12 months though. These included Shanghai Conant Optical, a Chinese eyewear manufacturer, and US retailer Boot Barn.

Investments that were sold include Polish supermarket chain Dino Polska and Sinbon Electronics in Taiwan. Badger Meter, a company who provide water management solutions in the US, was also sold as the managers felt the company’s prospects had weakened.

Culture

The fund was previously part of Standard Life, until the business merged with Aberdeen Asset Management in 2017 to create Standard Life Aberdeen. This later became Aberdeen Standard Investments and, in July 2021, the company changed name once again to abrdn in order to simplify and unite under one single brand. In 2025 the company announced a further rebrand and is now known as Aberdeen. They’ve confirmed that they don’t intend to change any fund names over the short term though.

While mergers have the potential for disruption, we think the Smaller Companies team, which also includes UK and European funds, was relatively unaffected. Despite some turnover in personnel last year, there’s a collegiate feel to the Smaller Companies team at Aberdeen. Members share research and ideas with each other, and work with one another to debate and challenge stock decisions.

ESG Integration

Although the fund’s investment process doesn’t specifically exclude any particular area, ESG (Environmental, Social, and Governance) considerations form a part of company analysis. The managers engage with companies where they feel there are serious ESG issues and use their right to vote at shareholder meetings.

Aberdeen is a firm well known for its commitment to ESG. Responsible investing has been part of the business since a Corporate Governance team was set up in 1992 and its first ethical fund was launched in 1994. We like that the firm’s policy positions on a range of divisive issues, from plastics and tobacco to palm oil and biodiversity, are easily available on their website. The firm also produces frequent ESG-related thought leadership articles, a podcast series, and an annual Stewardship report.

We’re pleased to see that the firm’s commitment to ESG has filtered down to the fund level. Aberdeen fund managers generally see themselves as owners of businesses, not investors, and stewardship is an important part of their investment processes. The firm exercises all voting rights and engages with management to encourage best practice. ESG and stewardship factors are included in every stock research note and each firm receives an ESG score, based on its ESG credentials and ability to manage ESG risks. All managers have access to a central ESG team, as well as specialist on-desk analysts.

The company run several exclusions-based and impact funds, which take their commitment to society, the environment, and other thematic investment goals a step further.

While ESG risks are considered as part of company due diligence, this fund doesn’t have a sustainable focus. Of the funds under our research coverage, this fund has one of the highest ESG risk scores. The companies within the fund could therefore face increased regulatory scrutiny, reputational damage, and operational challenges, potentially impacting the fund's future performance.

Cost

The fund has an ongoing annual charge of 1.04%, but we’ve secured HL clients an ongoing saving of 0.27%. This means you’ll pay a net ongoing charge of 0.77%. Our platform charge of up to 0.35% per year also applies, except in the HL Junior ISA, where no platform charge applies.

We recently made some changes to the amount clients pay to invest with us. Find out more about these changes.

Performance

Since Desson became co-manager in February 2020, the fund’s returned 27.89%*. This trails the MSCI ACWI Small Cap index and the average fund in the IA Global sector, which returned 88.32% and 75.63% respectively. Remember, past performance isn’t a guide to the future.

The last few years have been challenging for the fund. While the fund’s growth style has been out of favour for much of this period, the manager’s stock selection (the ability to invest in companies that go on to perform well regardless of their country or sector) has also been weaker.

Over the 12 months to the end of March, the fund fell 1.67%, compared to the benchmark’s 23.88% growth. Given the focus on quality companies, we expect the fund to lag when markets rise quickly, although not to this extent. Smaller companies have started to perform strongly again, but most of last year’s growth was driven by lower quality companies, in which this fund doesn’t tend to invest.

Investments that detracted from returns included US consumer companies Deckers Outdoor and e.l.f. Beauty, which were both hurt by uncertainty from US tariff policy. Vertex, a software business providing tax solutions, also detracted from performance and Desson has since sold the fund’s investment in the company over concerns that AI could disrupt operations.

Returns over the past year were aided by investments in French energy company Gaztransport et Technigaz and industrial consultancy ALS. Fabrinet, a US manufacturer of electrical components, also performed strongly.