View a collection of Hugh Young's insights into the world of investing that have been distilled into ten succinct rules.
Aberdeen’s mainstream equity process dates from the early 1990s, and we believe its advantages lie in the consistency of its approach, irrespective of market conditions. From the company visits and analysis carried out regionally, through to portfolio construction decisions, we adopt a team approach. Cross-coverage of securities locally ensures objectivity; we avoid cultivating ‘star’ managers.
Diversification at the stock level is our main control of risk. We aim to add value by capitalizing on original research. We see equity risk in terms of investing in a poor quality company, or overpaying for a good one.
Diversification does not ensure a profit or protect against a loss in a declining market.
Active management: Our aim is to add value by identifying good quality securities, defined chiefly in terms of management and business model, which are attractively priced. We believe stock selection is the key source of equity alpha. We downplay benchmarks in portfolio construction since these provide little clue to future performance.
Proprietary research: Our equity managers always visit companies before investing, making thousands of visits annually to existing and prospective holdings. Every contact is documented in detail. If a security fails our screens, we will not own it, irrespective of its index weight.
Long-term focus: Strategies are simple: buy-and-hold; add on the dips; take profits on price run-ups. This reduces transaction costs and keeps portfolios focused. We rarely focus on short-term returns.
Team approach: We employ over 90 equity investment professionals based globally. Portfolio decisions are made collectively, and we avoid cultivating ‘star’ managers. Cross-coverage of securities also increases objectivity and lessens reliance on individuals.