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Global Small Companies Fund

Specialists in a vast and growing investable universe

March 2021 - Monthly REPORT

UPCOMING EVENT

Hitting our price targets

SUMMARY

The Fund returned +2.73% in March, underperforming the benchmark return of +3.82%.

PORTFOLIO

Top Holdings (alphabetically)

Brenntag AG Germany Industrials Dino Polska Poland Consumer Staples Kindred Group PLC Malta Consumer Discretionary NICE Information Service Korea, Republic of Industrials TFI INTERNATIONAL INC Canada Industrials

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Mar 20211
1 Month1 Year2 Years P.A.3 Years P.A.5 Years P.A.SINCE INCEPTION
Fund 2.7%45.5%15.3%8.0%12.8%10.0%
Benchmark 3.8%38.9%13.2%10.7%12.7%9.5%
1 Month1 Year2 Years P.A.3 Years P.A.5 Years P.A.SINCE INCEPTION
Fund
2.7%
45.5%
15.3%
8.0%
12.8%
10.0%
Benchmark
3.8%
38.9%
13.2%
10.7%
12.7%
9.5%

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

The Fund returned +2.73% in March, underperforming the benchmark return of +3.82%.

Global equity markets closed out the month and the quarter on a positive note.  Improved economic conditions and accelerated vaccine programs drove the global market rally.  In the US, the month began strongly, thanks to a retreat in Treasury bond yields, solid economic reports, and the approval of another vaccine. However, enthusiasm faded as yields climbed higher following Federal Reserve Chair Jerome Powell’s statement that inflationary pressures will be felt in the future. The US dollar rallied in response to rising bond yields. The passage of the $1.9 trillion stimulus bill, however, provided hope for a speedier economic recovery and gave a boost to the equity markets to close out the month. In Europe, improving sentiment regarding an economic recovery offset further lockdowns in Europe due to increased COVID-19 infection rates and sluggish vaccine roll-out. Most major European equity markets rallied with Germany, Italy and France leading the way. In the UK, COVID-19 vaccine rollouts accelerated as Prime Minister Boris Johnson announced a plan to reopen the economy from the UK’s third lockdown, with restrictions being lifted entirely by the summer.  Asian equity markets were weighed down by China which was down over 6% as measured by the MSCI China Index. Despite a strong start to the year and a positive economic outlook, China’s tech stocks were hit by the rotation to value, and investors concern about a tightening of monetary policy to avoid inflationary pressures.

Individual stock selection was the main driver of the Fund’s performance in March. Approximately 97 bps separated the top contributor and largest detractor. As of 31st March, the top 10 holdings accounted for approximately 31% of the Fund’s assets, with the largest position approximately 4.3% of the portfolio at the end of the month. Regional and sector exposure remained consistent month over month. The Fund continues to be overweight small to mid-cap names vs the benchmark. The Fund has outpaced the benchmark 7 out of the past 12 months.

The Fund rotated out of a number of growth-oriented companies that met our valuation targets during the month and initiated positions in companies that are well-positioned for post-COVID 19 recoveries. The Fund also undertook some profit-taking by trimming several positions that had moved meaningfully and met our price targets. As a result, cash holdings increased over the month, and the number of holdings in the portfolio decreased from 64 to 59. The largest addition to the portfolio during the month was a cash and carry retailer based in Brazil called Asaii. The company spun out of a larger food retailer, Companhia Brasileira De Distribuição. As a stand-alone company, we believe Asaii is very well positioned to grow its store base and market share over time with attractive returns.  The fund also added Serco, a UK-listed government contractor with significant revenue streams in the US and the UK.  After a significant turnaround, management has the business well-positioned for growth going forward.  Intertrust, an international trust and corporate management company based in the Netherlands, and Equiniti, a British-based outsourcing business focused on financial and administration services, were both added to the Fund. Both businesses have struggled recently but rising interest rates, normalization in capital market activity, and attractive valuations make them compelling investment opportunities.

The Fund exited several positions that performed well including Green Thumb, Bytes Technology Group, Flatex, and Prada as prices for all of these positions approached fair value. Additionally, Basic Fit, AK Medical, and iHuman were sold based on weaker than expected fundamentals.

PROFILE

STATISTICAL DATA

PORTFOLIO SUMMARY
VOLATILITY3
12.8%
NUMBER OF STOCKS
59
BETA4
0.75
MAXIMUM DRAW DOWN
-20.7%

FEATURES

  • APIR CODE PCL0022AU
  • REDEMPTION PRICEA$ 1.7089
  • FEES * Management Fee: 1.1%
    Performance Fee: 20.5%
  • Minimum initial investment A$10,000
  • FUM AT MONTH END A$ 144.52m
  • STRATEGY INCEPTION DATE 1 April 2015
  • BenchmarkMSCI All Country World SMID Cap Index unhedged in AUD

Fund Managers

Jon Moog

CIO and Portfolio Manager

David Li

Head of Research and Portfolio Manager

Description

The Fund invests principally in small and midcap listed (or soon to be listed) global equities. Its investment objective is to obtain returns greater than the MSCI All Country World Index SMID Cap unhedged in Australian dollars (‘Index’) over rolling 3 year periods after fees. The Fund’s investment manager, Lizard Investors LLC, uses a value oriented investment approach that seeks to identify and invest in quality businesses that create significant value but are mispriced, overlooked, or out-of-favour. The investment manager believes that unique opportunities exist due to limited available research, corporate actions, or unfavourable investor perception.

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1. Net performance figures are shown after all fees and expenses, and assume reinvestment of distributions. No allowance has been made for buy/sell spreads. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
2. Inception 1st April 2015.
3. Annualised standard deviation since inception.
4. Relative to MSCI All Country World SMID Cap index unhedged in AUD.
* For further information regarding fees please see the PDS available on our website.