ABERFORTH SMALLER COMPANIES: Silence is golden for trust that lets numbers do the talking

Judging by the way it behaves, you would think that Aberforth Partners is a Swiss bank that prefers to conduct its business affairs under a veil of secrecy.

But it is not. In fact, it is an Edinburgh-based investment house with offices close to the city’s imposing castle – a successful one at that, with assets of more than £2 billion under management.

The money is run for both private investors and institutional clients – insurance companies and pension funds.

Quiet celebration: Aberforth Partners, based in Edinburgh, was set up 25 years ago

Yet Aberforth is an investment business with a real difference. Unlike rivals, it does not court publicity. Indeed, it hates it, preferring the performance numbers to do all the talking.

The business, set up as a partnership, has just celebrated its 25th anniversary. But there were no fireworks to mark the occasion. Just silence.

‘We don’t provide any press comment regarding the trusts we manage,’ The Mail on Sunday was politely told last week when inquiring about its flagship investment trust, Aberforth Smaller Companies.

‘Apologies, but we won’t be able to set up a call for you with one of our investment team,’ it confirmed. 

Even a request to name the individuals responsible for managing the trust was met with stony silence, meaning that we have to rely upon independent trust scrutineer Trustnet for that information.

It states that Alistair Whyte and Richard Newbery, founders of Aberforth along with three others in 1990, are the lead managers. This gang of five were previously at former Edinburgh investment house Ivory & Sime.

Irrespective of its reserve, Aberforth Smaller Companies, like the business partnership, has been a resounding success. 

It has also just celebrated a quarter of a century as an investment trust and has outperformed its benchmark, the Numis Smaller Companies Index, over that period. Over the past five years it has beaten most of its smaller company rivals and, by a huge margin, the FTSE All-Share Index.

Such outperformance should be expected. Unlike most other investment houses Aberforth eats, sleeps and breathes its sector. 

Its whole modus operandi is built on extracting returns from UK smaller companies. Its other two funds, Aberforth Geared Income and Aberforth UK Small Companies (an investment fund, not a trust), are also focused on listed minnows.

In a recent research note, broker Canaccord Genuity waxed lyrical about Aberforth Smaller Companies, praising the management for its ‘highly disciplined’ investment approach and a ‘progressive and sustainable’ dividend. It classed its shares as a ‘buy’.

Canaccord director Alan Brierley says: ‘We’ve known the Aberforth investment team for almost all of the past 25 years. While many fund managers have a habit of disappearing when they encounter a difficult investment period, Aberforth will always see us without fail.

‘Yes, they don’t court publicity but their primary focus is on generating long-term returns and they have been very good at that.’

Alan Steel, chairman of independent financial adviser Alan Steel Asset Management, based in Linlithgow, across the Forth Bridge from Edinburgh, says Aberforth has a ‘peerless reputation’ for investing in small-cap stocks. 

He adds: ‘Like Harry Nimmo, the smaller companies manager at Standard Life, they consistently deliver, which at the end of the day is what investors crave and desire. I’m happy for them to remain silent as long as their performance numbers impress.’