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Global Small Companies Fund

Specialists in a vast and growing investable universe

May 2021 - Monthly REPORT

The worldwide economic road to recovery continues

SUMMARY

The Fund returned +1.67% in May, outperforming the benchmark return of +1.19%.

View full commentary here.

We recently hosted a webinar covering the compelling opportunity in global small caps. Financial planners may also complete a short questionnaire available HERE for CPD points.

PORTFOLIO

Top Holdings (alphabetically)

Brenntag AG Germany Industrials Dino Polska Poland Consumer Staples NICE Information Service Korea, Republic Of Industrials Sendas Distribuidora SA Brazil Consumer Staples TFI INTERNATIONAL INC Canada Industrials

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 May 20211
1 MTH 1 YEAR 2 YEARS P.A. 3 YEARS P.A. 5 YEARS P.A. SINCE INCEPTION P.A.
Global Small Companies Fund 1.7% 29.4% 16.6% 7.5% 12% 10%
MSCI All Country World SMID Cap Index unhedged in AUD 1.2% 30.5% 15.9% 10.9% 11.7% 9.9%

Swipe horizontally to see all columns

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

The Fund returned +1.67% in May, outperforming the benchmark return of +1.19%.

Global equity markets sustained their year-long rally into May as the worldwide economic road to recovery continues.  Global markets have now posted positive returns in four out of the first five months of the year. Successful COVID-19 vaccine rollouts have allowed many economies to gradually reopen. Developed economies, which experienced declining COVID-19 infection rates due to better access to vaccines and more efficient distribution programs, were quicker to reopen their economies than emerging markets.  Broad-based US equity market indices, despite underperforming most developed markets, were generally up on the month with the exception of the tech-heavy Nasdaq composite index which was down -1.4%. The index performance was reflective of investor expectations of stronger economic growth and inflation, favouring value stocks overgrowth.  As a result, we saw ‘recovery’ based stocks in cyclical sectors such as financials, energy, industrials, and materials rally, while tech-centric growth stocks underperformed.  The US dollar declined, which boosted returns in overseas markets. Europe was the strongest performing region in the month as investors were optimistic about the quickened pace of vaccine rollouts and took advantage of relatively attractive valuations.  Positive economic data and continued assurances from the ECB of unwavering support also contributed to the upside in May.  Asian markets were up slightly on the month with India leading the way.  Despite the huge resurgence of COVID-19 in India, the Nifty 50 rose 6.5% with investors optimistically looking forward as infection rates slowly declined. Japanese equities were slightly up on the month, buoyed by a recent decline in COVID-19 cases.

Individual stock selection and currency were drivers of the Fund’s performance in May. Approximately 91 bps separated the top contributor and largest detractor.  As of 31st May, the top 10 holdings accounted for approximately 29% of the Fund’s assets, with the largest position approximately 4.8% 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 initiated four new positions and exited several positions that met our valuation targets.

The first addition was Softchoice, a Canadian software sales business that helps enterprises build out and maintain their IT infrastructure.  Softchoice’s business closely reflects successful investments we made historically in companies such as Softcat and Bytes in the UK.  We believe that solid organic growth, a sticky customer base, and an attractive valuation are elements that make Softchoice an attractive investment.

The second addition was Anima, an Italian asset management business, which we believe should benefit from the consolidation of the industry in Italy.

The third addition is an investment in an Austrian industrial business with excellent management alignment and a track record of value creation.

The final addition is an attractively valued Israeli software business that is going through a transition to subscription revenue.

The Fund rotated out of several positions during the month including Kindred, Yalla, BHG Group, and Synnex as they all met our valuation targets.  The Fund also sold out of Equiniti after the company agreed to be purchased by a private equity firm.  Finally, the Fund exited a small position in Loconodo after the company had disappointing operating results.

PROFILE

STATISTICAL DATA

PORTFOLIO SUMMARY
VOLATILITY3
12.6%
NUMBER OF STOCKS
56
BETA4
0.75
MAXIMUM DRAW DOWN
-20.7%

FEATURES

  • APIR CODE PCL0022AU
  • REDEMPTION PRICEA$ 1.7451
  • FEES * Management Fee: 1.1%
    Performance Fee: 20.5%
  • Minimum initial investment A$10,000
  • FUM AT MONTH END A$ 164.16m
  • 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. Please refer to the PDS for information regarding risks. 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.