| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.1% | 0.0% | 17.3% |
| 2025 |
|---|
| 17.3% |
The abrdn International Small Cap Active ETF underperformed its benchmark in Q4 2025, delivering 0% quarterly returns versus 2.96% for the benchmark, though achieving strong 17.28% annual returns. The fund maintains a quality-focused approach targeting companies with strong balance sheets and high earnings visibility. Key detractors included Japanese consulting firm Baycurrent, elevator services provider Japan Elevator Services, and German defense contractor Renk, which missed market expectations for 2027-2028 targets. Positive contributors included Games Workshop, which surprised with strong results and dividend increases, and Taiwanese technology companies Chenbro and Elite Material, benefiting from AI-driven demand. New positions were initiated in Shanghai Conant, a Chinese lens manufacturer, and HD Hyundai Marine Solution, positioned for operating leverage as the marine industry transitions to dual-fuel technology. Looking ahead to 2026, the manager expects a balanced macroeconomic environment with healthy earnings growth supported by AI investment, defense spending, and infrastructure development, though elevated valuations and geopolitical tensions warrant monitoring.
The fund maintains a quality-focused approach targeting international small cap companies with strong balance sheets, high earnings visibility, and management-led growth strategies, positioned to benefit from AI investment, defense spending, and infrastructure development while navigating elevated valuations and geopolitical risks.
As we enter 2026, the macroeconomic environment appears broadly balanced across regions. This constructive backdrop supports expectations for healthy earnings growth across global equity markets in the year ahead. Our conviction lies in businesses offering high earnings visibility and management-led growth strategies, which we believe are best placed to justify investor confidence in 2026.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 29 2026 | 2025 Q4 | GAW.L, RNK.DE | AI, defense, gaming, infrastructure, international, Japan, small cap, Taiwan | - | Technology companies continued to advance due to optimism about artificial intelligence despite some volatility linked to concerns about valuations. Continued investment in AI remains a… |
| Oct 28 2025 | 2025 Q3 | - | Artificial Intelligence, Data centers, Global Trade, Growth Investing, small caps |
CTS GR JUN3 GR DNP PW |
The fund underperformed amid weakness in Europe but saw gains from AI-related holdings like Fabrinet and Elite Material. Managers highlighted continued strength in data center… |
| Jul 27 2025 | 2025 Q2 | 7164 JP, CHG LN, RKT LN | AI Materials, Defense Spending, International Equities, Small Cap Stocks, tariffs | TSE:6544 | - |
| Mar 31 2025 | 2025 Q1 | 2383 TT, SWECB SS | - | - | - |
| Jun 30 2024 | 2024 Q2 | 6544 JP, 7936 JP, 9793 JP, HILS LN, YOU LN | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
Defense SpendingThe entire world is rapidly rearming off an extremely low base of defense spending. This exposure focuses on companies that make armaments for nation state security and materially outperformed for the year. |
Defense Armaments Rheinmetall Palantir RTX | |
Infrastructure SpendingPlaying on the continued theme of infrastructure spending, defense and energy sustainability, positions in Industrial and Energy sectors including Oshkosh, Coterra, OSI Systems, and Herc Holdings added positively to performance. |
Defense Energy Industrial Government Sustainability | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q2 |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines |
International Small Cap |
||
Tariffs |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 28, 2025 | Fund Letters | Kirsty Desson | DNP PW | Dino Polska S.A. | Financials | Food Retail | Bear | NYSE | consumer confidence, Food, Poland, retail | Login |
| Jun 30, 2025 | Short Thesis | 2025 Q2 abrdn International Small Cap Fund | TSE:6544 | Japan Elevator Service Holdings | Specialty Business Services | Specialty Business Services | Bull | Taiwan Stock Exchange | — | Login |
| Oct 28, 2025 | Fund Letters | Kirsty Desson | CTS GR | CTS Eventim AG & Co. KGaA | Information Technology | Entertainment | Bear | Bolsas y Mercados Españoles (Madrid) | consumer demand, entertainment, Event ticketing, Integration costs | Login |
| Oct 28, 2025 | Fund Letters | Kirsty Desson | JUN3 GR | Jungheinrich AG | Industrials | Machinery | Bear | Bolsas y Mercados Españoles (Madrid) | Industrials, Logistics, machinery, restructuring | Login |
| TICKER | COMMENTARY |
|---|---|
| GAW.L | Games Workshop was identified as one of the largest contributors in 2025 and also contributed meaningfully in 2024, a reminder that patience pays when a business is delivering. |
| RNK.DE | Renk, the German provider of mission critical drive train components for combat vehicles and marine vessels, was another detractor; shares declined as the 2027–2028 targets fell short of market expectations. |
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