| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.1% | 11.71% | 5.66% |
The abrdn International Small Cap Active ETF outperformed its benchmark in Q2 2026, returning 11.71% versus 9.62%, driven primarily by sector allocation. Top contributors included AI-related infrastructure holdings Elite Material, Chenbro Micom, and Chroma ATE, which the manager trimmed after strong performance. Key detractors included Pan African Resources due to declining gold prices, Shanghai Conant Optical affected by rising raw material costs, and Gaztransport & Technigaz impacted by falling LNG prices following a Strait of Hormuz ceasefire. The manager initiated six new positions during the quarter, including Tokyo Seimitsu (semiconductor probers), Bachem (GLP-1 peptide manufacturing), and Helios Towers (African telecom infrastructure), while exiting Sweco, Dino Polska, and Jungheinrich due to diminished conviction. Looking forward, the manager expects market leadership to broaden as interest rate expectations shift and AI concentration eases. The portfolio maintains a quality and valuation discipline focus, positioned to benefit from international small-cap re-rating as investor allocations remain below historical norms. The strategy continues to deliver stronger earnings growth and higher returns on equity than the benchmark despite a narrowed valuation premium.
The fund invests in high-quality international small-cap companies capable of generating sustainable earnings growth and positive momentum while maintaining valuation discipline, with a focus on structural growth opportunities across sectors including AI infrastructure, semiconductors, pharmaceuticals, and telecommunications infrastructure in emerging markets.
The manager expects market leadership to broaden and evolve in the second half of the year, driven by shifting interest rate expectations and easing market concentration. The portfolio is well positioned from both quality and valuation perspectives, with the strategy's valuation premium relative to the benchmark having narrowed significantly while continuing to deliver meaningfully stronger earnings growth and higher returns on equity. The manager maintains focus on investing in high-quality companies capable of generating sustainable earnings growth and positive momentum while maintaining valuation discipline. International small-cap equities continue to offer attractive long-term opportunities with greater diversification, stronger earnings growth prospects, and more compelling valuations than large-cap counterparts.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 27 2026 | 2026 Q2 | 7729.T, BANB.SW, DNP.WA, FAGR.AS, GTT.PA, HEIJM.AS, HTWS.L, JUN3.DE, PAF.L, SWEC.ST | AI, GLP1, growth, international, Quality, semiconductors, small caps, Telecom Infrastructure | - | abrdn's international small-cap fund outperformed in Q2 2026 on AI infrastructure strength, returning 11.71%. The manager trimmed AI winners and rotated into semiconductor equipment, GLP-1 manufacturing, and emerging market telecom infrastructure. Three positions exited due to weakening competitive dynamics. Portfolio positioned for broadening market leadership with quality companies delivering superior earnings growth at narrowed valuation premium to benchmark. |
| Apr 21 2026 | 2026 Q1 | 2360.TW, 3374.TW, AVON.L, CURY3.SA, EVD.DE, FLRY3.SA, GTT.PA, IMD.AX, JUN3.DE, PAN.JO, RILBA.CO, VNT.AX | defense, Defensive, healthcare, infrastructure, international, Mining, small caps | - | Fund rotated from cyclical industrials to defensive growth themes including defense, infrastructure, mining, and healthcare amid Middle East geopolitical tensions. New positions include defense contractor Avon Technologies and infrastructure provider Ventia. Manager focuses on high-quality businesses with strong balance sheets and structural growth tailwinds while monitoring valuations in higher-for-longer rate environment. |
| Jan 29 2026 | 2025 Q4 | GAW.L, RNK.DE | AI, defense, gaming, infrastructure, international, Japan, small cap, Taiwan | - | abrdn's international small cap fund delivered strong 17% annual returns despite Q4 underperformance. The quality-focused strategy targets companies with strong balance sheets and earnings visibility, benefiting from AI demand and defense spending. New positions in Chinese lens manufacturer Shanghai Conant and marine services provider HD Hyundai Marine Solution reflect conviction in sector-specific growth opportunities heading into 2026. |
| Oct 28 2025 | 2025 Q3 | CYBR, INDA | Asia, emerging markets, Europe, international, Quality, small caps |
CTS GR JUN3 GR DNP PW |
abrdn's international small-cap fund underperformed in Q3 due to stock selection, with key detractors including CTS Eventim and Dino Polska offset by takeover targets like Alpha Group. The manager expects markets are entering early recovery favoring low-quality stocks initially, but believes small-cap outperformance will sustain given superior diversification, growth potential, and attractive valuations amid rate cuts. |
| Jul 27 2025 | 2025 Q2 | 3374.TW, 6544.T, 6963.TW, 7164.T, CHG.L, FOUR.L, FPT.VN, GTT.PA, ITP.PA, POLYMED.NS, RNK.DE | defense, Geopolitical, global, Japan, small caps, Taiwan, Trade Policy |
TSE:6544 6544.T RNK.DE CHG.L |
The fund outperformed through stock selection, benefiting from Japanese elevator services, Taiwanese AI-related materials, and French LNG solutions. New defense positions target European spending increases. Tariff volatility and Middle East tensions created market uncertainty, though temporary trade agreements and ceasefires provided relief. The strategy remains focused on market-leading small caps with long-term growth potential. |
| Mar 31 2025 | 2025 Q1 | 3374.TWO, CTS.DE, DNP.WA, FPT, GAMA.L, GTT.PA, SWECO-B.ST | Asia, Europe, international, Quality, small caps, tariffs, Trade Policy |
2308.TW SWECO-B.ST |
abrdn's international small cap fund underperformed in Q1 amid trade policy uncertainty, with Vietnamese and UK holdings weighing on returns while European names outperformed. The manager reduced tariff-sensitive exposure and focuses on quality companies with pricing power and supply chain flexibility, believing small caps may outperform given domestic focus and attractive valuations. |
| Jun 30 2024 | 2024 Q2 | 7936.T, BESI.AS, CVSG.L, FPT.HM, GFREGIO.MX, HILS.L, ITP.PA, NOVA, RAA.DE, YOU.L | AI, international, Japan, small caps, technology, Valuations | - | abrdn's international small-cap fund outperformed in Q2 2024 on strong stock selection, particularly in AI-exposed names like FPT Corporation and quality Japanese companies like ASICS. Small-cap valuations remain attractive relative to expensive large caps. The manager focuses on high-quality companies with resilient earnings while navigating risks from political uncertainty and potential currency reversals. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe fund benefited from holdings in AI-related infrastructure and equipment suppliers including Elite Material, Chenbro Micom, and Chroma ATE. The manager trimmed these positions during the quarter after strong performance, reflecting disciplined risk management. Market concentration has begun to ease as investors reassess AI assumptions around competition, potential overcapacity, and timing of returns. |
Infrastructure Equipment Semiconductors Data Centers |
SemiconductorsThe fund initiated a position in Tokyo Seimitsu, a leading supplier of semiconductor probers with differentiated precision-engineering capabilities and advanced temperature-control technologies. The manager believes increasing semiconductor complexity will support higher demand, stronger pricing, and further margin expansion for the company. |
Probers Equipment Precision Engineering Margin Expansion | |
GLP1The fund initiated a position in Bachem, a company specializing in peptide manufacturing. The manager views Bachem as well positioned to benefit from the rapid expansion of the GLP-1 and obesity treatment market, representing a structural growth opportunity in pharmaceuticals. |
Peptides Obesity Pharmaceuticals Manufacturing | |
Telecom InfrastructureThe fund initiated a position in Helios Towers to gain exposure to the structural growth of telecommunications infrastructure across Africa and the Middle East. This reflects the manager's view of long-term infrastructure build-out opportunities in emerging markets. |
Africa Middle East Towers Emerging Markets | |
LNGGaztransport & Technigaz, a specialist engineering company providing cryogenic containment systems for LNG storage and transportation, was a detractor during the quarter. Following the announcement of a ceasefire in the Strait of Hormuz, LNG prices declined, adversely impacting the share price. |
Natural Gas Shipping Energy Geopolitics | |
GoldPan African Resources, a London-listed gold producer with operations in South Africa and Australia, lagged during the period due to the declining gold price. The company was among the key detractors to performance during the quarter. |
Gold Miners South Africa Commodities | |
| 2026 Q1 |
DefenseFund initiated position in Avon Technologies, which designs and manufactures mission-critical protective equipment for military and law enforcement. Company enjoys patented technology with long-duration contracts from US Department of Defence and NATO driving record order book and strong profitability. |
Defense Military Protection |
InfrastructureFund added Ventia Services Group, which provides essential infrastructure and maintenance services across Australia and New Zealand for government and blue-chip customers. Manager believes company is well positioned with inflation-protected contracts and high renewal rates. |
Infrastructure Maintenance Government | |
Critical MineralsFund initiated position in IMDEX, which supplies mining-technology tools. Manager likes the stock for rental-led recurring revenues buoyed by exploration and critical-minerals tailwinds. |
Mining Technology Exploration | |
GoldFund added Pan African Resources, an Africa-focused mid-tier gold producer with mix of low-cost surface operations and higher-grade underground mines. Manager likes the stock for step-change in production and cash flow enabling rapid deleveraging. |
Gold Mining Africa | |
| 2025 Q4 |
TechnologyThe Fund invests at least 80% of net assets in technology companies across multiple sub-industries including IT consulting, internet services, application software, communications equipment, semiconductors, and interactive media. The portfolio focuses on companies with sector-leading cash flows, attractive valuations, and sustainable profitability prospects. |
Software Hardware Semiconductors Internet Communications |
| 2025 Q3 |
Small CapsSmall caps have been performing well in the current environment characterized by interest-rate cuts. Given greater geographic and sector diversification, higher growth potential and lower valuations, the manager believes small-cap outperformance can sustain. |
Small Caps Outperformance Valuations Growth |
QualityThe manager maintains focus on high-quality companies with well-defined strategies for growth over the medium to long term. They expect a shift from low-quality recovery to fundamentally driven, higher-quality companies outperformance. |
Quality Fundamentals Strategy Growth | |
Data CentersElite Material, a manufacturer of copper-clad laminate used in data centre circuit boards, performed well after management increased guidance due to continued momentum for high-end, high-margin solutions. |
Data Centers Circuit Boards Components | |
| 2025 Q2 |
Defense SpendingThe fund initiated positions in defense companies RENK Group and Chemring Group, both positioned to benefit from increased European defense spending. RENK Group supplies mission-critical drivetrain components for combat vehicles, while Chemring Group provides countermeasures and energetic devices for defense applications. |
Defense European Military Combat Aerospace |
Trade PolicyPresident Trump's sweeping tariff policies significantly impacted markets, including a 10% blanket duty on all imports and over 100% duties on China. A temporary 90-day agreement reduced US tariffs on Chinese goods from 145% to 30% and Chinese retaliatory duties from 125% to 10%, though uncertainty persists over the outcome once it expires. |
Tariffs China Trade Negotiations Policy | |
| 2025 Q1 |
Trade PolicyUS tariff policies are creating uncertainty and fears of a global trade war, with specific impact on Vietnamese companies like FPT due to higher-than-expected proposed tariffs. The fund made trades to reduce exposure to companies significantly affected by US tariffs. |
Tariffs Trade War Vietnam Policy Uncertainty |
Small CapsSmall-cap companies may hold up better than large caps during uncertain times as they tend to be more domestically focused and less exposed to tariff uncertainty. Valuations for small caps are well below large caps and have been less widely held. |
Valuations Domestic Outperformance Defensive | |
QualityGiven uncertainty, the fund believes it is critical to focus on quality companies with financial strength, adaptability to flex supply chains, deep understanding of customer needs, and market-share clout to maintain pricing power. |
Financial Strength Adaptability Pricing Power Supply Chain | |
| 2024 Q2 |
AICorporate first-quarter results generally exceeded expectations, particularly from companies exposed to artificial intelligence. Large technology companies, led by NVIDIA, fared especially well as they benefited from their exposure to the fast-growing area of AI. FPT Corporation performed well after announcing a new partnership with NVIDIA to provide GPU-as-a-Service. |
NVIDIA Technology GPU Cloud |
Small CapsSmall-cap valuations are more measured and at a significant discount to those among large caps. Concentration in the small-cap benchmark is vastly different from the large-cap equivalent, with materially lower potential for overheld positions being unwound. The fund prefers to stay in high-quality, small-cap equities with resilient and visible earnings streams. |
Valuations Discount Quality Earnings | |
JapanASICS Corporation continued to execute on its strategy, leading to stellar first-quarter results and benefiting from the weaker yen. The fund initiated a position in Japan Elevator Service, benefiting from the trend of building managers switching to independent maintenance providers. Japanese industrial production continues to be weak, affecting companies like Daiseki. |
Yen Industrial Maintenance Currency |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
| 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 |
| Jun 30, 2025 | Fund Letters | abrdn International Small Cap Fund | 6544.T | Zenkoku Hosho | Financials | Specialized Finance | Bull | Tokyo Stock Exchange | Defensive growth, financial services, Japan, market share expansion, Mortgage Guarantees, ROE recovery | Login |
| Jun 30, 2025 | Fund Letters | abrdn International Small Cap Fund | RNK.DE | RENK Group | Industrials | Aerospace & Defense | Bull | Frankfurt Stock Exchange | Combat Vehicles, Defense Contractor, Drivetrain Components, European defense, Germany, NATO spending, Volkswagen Spinout | Login |
| Jun 30, 2025 | Fund Letters | abrdn International Small Cap Fund | CHG.L | Chemring Group | Industrials | Aerospace & Defense | Bull | London Stock Exchange | 9% CAGR Target, Countermeasures, Decoy Systems, Energetics, Roke Division, Sensors, UK Defense | Login |
| Mar 31, 2025 | Fund Letters | abrdn International Small Cap Fund | 2308.TW | Elite Material Corporation | Information Technology | Electronic Components | Bull | Taiwan Stock Exchange | CCL, electronics, growth, High-end, operating leverage, premium pricing, semiconductors, Taiwan | Login |
| Mar 31, 2025 | Fund Letters | abrdn International Small Cap Fund | SWECO-B.ST | Sweco AB | Industrials | Construction & Engineering | Bull | Nasdaq Stockholm | Consultancy, Diversified, engineering, Europe, growth, infrastructure, Sustainability, Sweden | Login |
| TICKER | COMMENTARY |
|---|---|
| PAF.L | Pan African Resources, the London-listed gold producer with operations in South Africa and Australia, lagged during the period due to the declining gold price. |
| GTT.PA | Gaztransport & Technigaz (GTT), a specialist engineering company providing cryogenic containment systems for the storage and transportation of liquefied natural gas (LNG), was another detractor. Following the announcement of a ceasefire in the Strait of Hormuz, LNG prices declined, adversely impacting the share price. |
| FAGR.AS | Fagron: The company is a global leader in pharmaceutical compounding, offering a defensive and highly regulated business model with significant barriers to entry. |
| HEIJM.AS | Koninklijke Heijmans: The company provides focused exposure to structural growth drivers in the Netherlands, including housing shortages and increasing infrastructure and electricity grid investment. |
| 7729.T | Tokyo Seimitsu: The leading supplier of semiconductor probers, benefiting from differentiated precision-engineering capabilities and advanced temperature-control technologies. We believe increasing semiconductor complexity will support higher demand, stronger pricing and further margin expansion. |
| BANB.SW | Bachem: The company specialises in peptide manufacturing and is well positioned to benefit from the rapid expansion of the GLP-1 and obesity treatment market. |
| HTWS.L | Helios Towers: The group provides exposure to the structural growth of telecommunications infrastructure across Africa and the Middle East. |
| SWEC.ST | Sweco: The engineering consultancy was sold due to our reduced confidence in the near-term outlook for European architecture and engineering expenditure. |
| DNP.WA | Dino Polska: The Polish discount food retailer was exited as we believe the competitive landscape in Poland has become more challenging, with the potential to place pressure on future margins. |
| JUN3.DE | Jungheinrich: The forklift truck manufacturer was sold as the market increasingly shifts towards the mid-market segment, where Chinese competitors benefit from a structural cost advantage through their manufacturing base. |
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