I’m a fund manager… here’s why abrdn’s Abby Glennie is backing a UK mortgage broker but not Tesla

Each month, This is Money puts a senior fund or investment manager to task with tough questions for our I’m a fund manager series to find out how they manage their own money.

We want to know where they’d invest for the next year – or even next 10 years – and what pitfalls to avoid.  

This week, we spoke to Abby Glennie, fund manager of abrdn UK Smaller Companies Growth Trust plc.

The trust aims for long term capital growth by investing in UK-quoted smaller companies. It currently has around 50 individual holdings.

The total value of its assets currently equates to around £450million and the trust trades at a discount of around 11.5 per cent to its net asset value.

In the hot seat: We quiz Abby Glennie on where she finds value, the best country to invest in, whether Bitcoin and Tesla are worth it and the age-old question of growth versus value

1. If you could invest in only one company for the next 10 years, what would it be?  

For a reliable 10-year savings option, I’d choose JTC plc, the provider of fund administration services. 

It boasts highly visible revenue streams, excellent execution and management, and benefits from both bolt-on acquisitions and organic growth. 

For something a bit racier, Raspberry Pi, which recently had a UK IPO, is very interesting. Looking ahead 10 years, it could become a much larger business. 

Currently, external headwinds like supply chain challenges and inventory investment are suppressing some financials, but they have an attractive margin potential story through channel management.

2. What about for the next 12 months? 

On a 12-month view, I find Mortgage Advice Bureau interesting. 

During this period, I expect the UK rate-cutting cycle to begin and housing activity to pick up. 

I believe Mortgage Advice Bureau should benefit early in this recovery cycle due to the significant amount of remortgaging activity that is likely or necessary. 

They are poised to gain market share, and as the environment improves, they will invest in advisor growth, which will be complementary.

12-month view: Glennie thinks Mortgage Advice Bureau will benefit early in this recovery cycle due to the significant amount of remortgaging activity that is likely or necessary

3. Which sector should people be most excited by?  

For me, company specifics are far more important than sectors, especially given how broad many sectors are. 

If I had to choose, though, I’d say Industrials will start to look more interesting broadly. 

The recovery in that space across many regions has been slower than the market expected, but as it starts to come through and aspects like destocking are behind us, the operational leverage in some of these businesses should lead to attractive growth trends.

4. What sector would you be avoiding?

I always avoid loss-making businesses and areas where regulatory or government decisions pose significant risks to the investment case. 

I prefer not to invest in situations with binary outcomes where I have limited insight into the potential results.

Reliable 10-year plan: Glennie says JTC plc has highly visible revenue streams, excellent execution and management, and benefits from both bolt-on acquisitions and organic growth

5. Which country offers the best value for investors? 

I’m clearly biased, but I believe the UK remains a very attractive opportunity for investors, who are generally coming from historically low levels of allocations. 

Recent UK economic data has been resilient and solid relative to other regions. 

Valuations remain low, with earnings growth in the small/mid-cap area being particularly attractive. 

As we progress through this economic cycle, I think it favours recovery and interest in many of the areas that dominate UK markets. 

Additionally, the high level of bids for businesses highlights the inherent value of these opportunities. 

6. Should investors focus on growth or value stocks?

I think there remains a balance, with higher-for-longer rates likely being a key driver, and we see different factors performing in different regions. 

While there’s been a perception that growth has been outperforming, value in UK small cap has outperformed Growth by 4 per cent year to date, down from 12 per cent over the last year. 

Expert: Abby Glennie, fund manager of abrdn UK Smaller Companies Growth Trust plc

So, style headwinds have still been present for our investment process. 

Given the sharp style rotations through 2022 and into 2023, we are also finding many quality growth opportunities that are very appealing in terms of valuation. 

Perhaps we are in a market situation where you can have both?

7. Tesla – will it ultimately boom or bust?  

What Tesla has done for the electric vehicle (EV) space has been a game changer, but I think we’re seeing increasing pushback and a slowdown in EV adoption. 

It feels like there was too sharp a regulatory move into this space, without real development into fuel alternatives and sustainable fuels. 

I still think there is a place for those. The infrastructure build-out, especially in some regions, is so challenging and capital-intensive. 

Depreciation in EVs has caused concern, as well as battery longevity issues, which drive consumer caution. 

In the UK, many EVs are purchased through tax-efficient options, so we don’t have a clear picture of the EV value retention landscape. 

I don’t own an EV, but if I did, my favourites would be Rivian and Citroen Ami, depending on the use.

Not a buy: Glennie says there is increasing pushback and a slowdown in EV adoption

8. Scottish Mortgage – would you buy, hold, or sell? 

I’d be holding what I have and certainly more of a buyer than a seller. 

As with much of the investment trust market, there’s an attractive discount opportunity if you can take a longer-term view. Scottish Mortgage faced significant challenges during the 2022/2023 market styles, but they have a clear investment process. 

As an investor, I understand what I am investing in, and they work hard on communication with the market. 

Their performance has already been recovering, and I expect that to continue. However, markets remain volatile, so a longer-term view is necessary.

9. Is the property market ‘safe as houses’ or due a crash? 

I’m not a property expert, but I’m not concerned about a property crash in the UK. 

There’s a real need for new property inventory, especially in the affordable space, but forecasts show our projected new home rates aren’t nearly enough. 

The planning system is slow, and housebuilders’ ability to accelerate build rates is limited, so that’s unlikely to change. 

With homes, it’s all about location, location, location – and that helps secondary prices remain strong. 

However, the stamp duty costs, especially in Scotland where I am based, are worrying in terms of how they suppress activity. 

Staying put: Glennie says she is holding what she has in Scottish Mortgage Investment Trust and would consider herself more of a buyer than a seller

10. Has Brexit cost the average UK investor? 

Brexit feels like a reasonable contributor to the derating and reduction in allocations to UK stock markets over recent years, which has been costly for investors with domestic listed equity exposure. 

Companies and investors dislike uncertainty, and that’s what Brexit created for some time. 

11. Will interest rates return to rock bottom again? 

I expect we will settle in the middle over the next few years, but I believe the direction on rates will be downwards from here. 

Ultra-low rates are unlikely in any sensible time frame, but we also shouldn’t view those as normal just because they lasted so long. 

If rates settle around the 2.5-3 per cent range over the coming years, that feels like a very manageable level for economies and stock markets. 

I think this would be a good backdrop for smaller companies investing over that period if we see rates start to decline from current levels. 

Inflation watch: Inflation hit the Bank of England’s 2% target in May. This was the first time since July 2021 that inflation had reached this level 

12. Do you think inflation is here to stay? 

Inflation over recent years has been inherently difficult to predict as it hasn’t followed a normal cycle; it has been driven by unpredictable events such as Covid-19, supply chain disruption, and the Ukraine/Russia conflict. 

There will always be a risk of similar events occurring again. 

However, it seems that the major inflationary drivers are now behind us and have settled. I believe inflation is sustainable at these currently lower rates.

13. Should gold form part of everyone’s portfolio? 

It’s not something I’ve ever invested in personally, and few clients ever mention it. 

I think the recent experience with gold has also questioned its resilience in certain macro periods relative to expectations. I’d rather invest my capital elsewhere. 

14. What about bitcoin?

Things I don’t understand well are outside my comfort zone, and I include bitcoin in that. 

It’s one to avoid for me, but well done to all those who have profited from it. 

There’s always risk when generalist investors and non-specialists get involved in complex new products, and the retail interest here worries me, not to mention potential regulations. 

15. You inherit £100k tomorrow. What would you do with the money? 

I’d probably treat us to a nice trip to New Zealand, as it’s on my bucket list. Then, I’d invest the rest. 

I’d choose a range of four complementary equity Investment Trusts, which I can hold for the long term, hopefully benefiting from gearing and discount narrowing over time, seeking to compound the returns from performance. 

Compare the best DIY investing platforms and stocks & shares Isas

Investing online is simple, cheap and can be done from your computer, tablet or phone at a time and place that suits you.

When it comes to choosing a DIY investing platform, stocks & shares Isa or a general investing account, the range of options might seem overwhelming. 

Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts. 

When weighing up the right one for you, it’s important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.

To help you compare the best investment accounts, we’ve crunched the facts and pulled together a comprehensive guide to choosing the best and cheapest investing account for you. 

We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide linked here.

>> This is Money’s full guide to the best investing platforms and Isas 

Platforms featured below are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence. 

DIY INVESTING PLATFORMS AND STOCKS & SHARES ISAS 

	Admin charge	Charges notes	Fund dealing	Standard share, trust, ETF dealing	Regular investing	Dividend reinvestment
AJ Bell*	0.25%	Max £3.50 per month for shares, trusts, ETFs.	£1.50	£5	£1.50	£1.50 per deal	More details
Bestinvest*	0.40% (0.2% for ready made portfolios)	Account fee cut to 0.2% for ready made investments	Free	£4.95	Free for funds	Free for income funds	More details
Charles Stanley Direct*	0.35%	No platform fee on shares if a trade in that month and annual max of £240	Free	£11.50	n/a	n/a	More details
Fidelity*	0.35% on funds	£7.50 per month up to £25,000 or 0.35% with regular savings plan.	Free	£7.50	Free funds £1.50 shares, trusts ETFs	£1.50	More details
Hargreaves Lansdown*	0.45%	Capped at £45 for shares, trusts, ETFs	Free	£11.95	£1.50	1% (£1 min, £10 max)	More details
Interactive Investor*	£4.99 per month under £50k, £11.99 above, £10 extra for Sipp	Free trade worth £3.99 per month (does not apply to £4.99 plan)	£3.99	£3.99	Free	£0.99	More details
iWeb	£100 one-off fee (waived until Dec 2024)		£5	£5	n/a	2%, max £5	More details
Accounts that have some limits but attractive offers
Etoro*  No investment funds or Sipp	Free	Investment account offers stocks and ETFs. Beware high risk CFDs.	Not available	Free	n/a	n/a	More details
Trading 212*	Free	Investment account offers stocks and ETFs. Beware high risk CFDs.	Not available	Free	n/a	Free	More details
Freetrade* No investment funds	Basic account free,  Standard with Isa £5.99, Plus £11.99	Freetrade Plus with more investments and Sipp is £9.99/month inc. Isa fee	No funds	Free	n/a	n/a	More details
Vanguard  Only Vanguard’s own products	0.15%	Only Vanguard funds	Free	Free only Vanguard ETFs	Free	n/a	More details
(Source: ThisisMoney.co.uk July 2024. Admin % charge may be levied monthly or quarterly