These funds build on the foundation of traditional indexation, while seeking outperformance by incorporating specific ‘factors’.

We’re noticing that enhanced indexation is a trending topic among our clients. In this article, we address some of your questions.

Where can enhanced index funds be used?

Enhanced index funds have all the hallmarks of active funds, but they’re priced closer to passive funds, with low tracking errors.

We think enhanced index funds complement both traditional active and passive funds. The low-cost nature of our enhanced index equity range (from 10bps annual management charge) provides clients with the opportunity to reduce costs whilst offering the potential to outperform a benchmark.

As a result, our clients often use these funds as core allocations or ‘building blocks’ within their asset allocation.

What are the funds in the Aberdeen Investments range?

*AMC = annual management charge **OCF = ongoing charges figure. Charges shown are for B Acc share class as at 28 February 2025. Click through to find full fund details and important information.  

 

We believe our enhanced index equity funds represent a smart evolution in investing, because they blend the best of passive and active in an easy-to-use open-ended investment company (OEIC) structure.

How have the funds performed?

Our funds have performed well. Over 1 & 3 years all seven, are 1st or 2nd quartile. Notably, the World Equity Enhanced fund is 1st quartile over 1,3,5 & 10 year time periods. (1)

All our enhanced index funds are rated by RSMR, while our World, Emerging Markets, Asia Pacific and UK funds all have the Dynamic Planner Premium label.

For more information about the performance of our enhanced index fund range, visit our quantitative investing pages or speak to your local Aberdeen Investments business development director.

What can investors expect from a risk perspective?

Our enhanced index funds are more diverse than traditional active funds because they have more holdings.

The funds are managed with an awareness of all stocks in the benchmark. So they’re closer to the benchmark than traditional active funds that often concentrate on a few names.

There’s also continuous management of risk as markets change. We regularly rebalance to keep portfolio risk budget in control.

How often do you trade?

Under our mandates, we can trade as much as we like, but we generally rebalance monthly to strike the balance between updating the portfolios with our latest views without incurring overly punitive costs.

What’s your biggest variation in stock weight compared to the benchmark?

Based on our favoured factors (Quality, Momentum & Value) we take a view on benchmark constituents. Positive or negative, our biggest variation is approximately +/- 0.5%, which provides a risk-managed outcome versus the benchmark. 

What’s your biggest variation in sector/country weight compared to the benchmark?

For sectors it is approximately +/- 4% and for countries it is approximately +/-1.5%. Most positions are within these bounds.

Which platforms are these funds available on?

All major UK platforms.

Who are your competitors?

While there are some other individual funds with a similar risk profile, we are the only provider using a consistent multifactor approach across a range of complementary OEICs.

What else sets Aberdeen Investments apart from enhanced index competitors?

Heritage: we’ve been running this type of strategy for 20 years, so we benefit from significant experience. We’ve evolved our processes and developed our learning over this timeline.

Differentiated fund infrastructure: we’ve also invested in fund management infrastructure such as proprietary risk models, attribution and factor capture. We think all this gives us a head-start on the competition.

What’s the bottom line?

For investors seeking to optimise their portfolios without investing with a star manager, enhanced index funds can be a powerful tool. In a market where every edge and basis point counts, we believe our range provides a disciplined, evidence-based path to potential outperformance.

For more information about our enhanced index fund range, visit our quantitative investing pages or speak to your local Aberdeen Investments business development director.

To learn more about our investment process and factor-based investing, see our previous article.