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Lonsec upgrades Aberdeen fund

Research house Lonsec has upgraded Aberdeen Asset Management's Ex-20 Australian Equities Fund to 'highly recommended'.

Launched in August 2014, Aberdeen said the fund is a concentrated portfolio of 20-60 companies that are primarily listed on the ASX, but excludes that largest 20.

According to Aberdeen head of Australian equities Rob Penaloza, the fund gives the asset manager an "opportunity to deliver value to clients looking for an alternative or a complement to their large cap Australian equities exposure".

"There are some compelling reasons for investing outside the top 20 Australian stocks. Our research shows that alpha potential for active Australian equity managers increases when you exclude the largest 20 companies from the ASX 300 index," he said.

"That's partly because these companies are heavily researched, making it more difficult to uncover new information and exploit inefficiencies."

"They are also heavily skewed to the Financials sector, creating a challenge for diversification. An ex-20 fund can reduce risk by offering greater diversification across a more equally weighted universe," Mr Penaloza said.

The fund is currently available on AMP's North platform, BT Wrap, Asgard, IOOF pursuit and Macquarie Wrap.