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Global Small Companies Fund

Specialists in a vast and growing investable universe

May 2022 - Monthly REPORT

While the macro environment remains challenging, we continue to see opportunities in our space

SUMMARY

The Fund was up slightly, 0.6%, outperforming the index by 1.7% in May.

We recently held a Portfolio and Investment Update webinar. Financial planners may complete a short questionnaire available HERE for CPD points.

PORTFOLIO

Top Holdings (alphabetically)

Cogeco Communications
Canada
Communication Services
Cogeco Communications Inc. is a cable television operator. The Company markets basic cable television services and various discretionary services, which include pay television, audio programming, and high-speed Internet access by cable modem. Cogeco Communications serves customers throughout Canada.
Irish Continental Group PLC
Ireland
Industrials
Irish Continental Group, Public Limited Company markets holiday packages and provides passenger transport, roll-on and roll-off freight transport, and container lift-on and lift-off freight services between Ireland, the United Kingdom, and Continental Europe.
Sendas Distribuidora SA
Brazil
Consumer Staples
Sendas Distribuidora S/A distributes consumer goods. The Company provides a wide variety of foods, household products, clothes, and toiletries. Sendas Distribuidora serves customers in Brazil.
Serco Group PLC
United Kingdom
Industrials
Serco Group plc provides outsourcing services to governments, international agencies, and corporations located throughout the world. The Company manages facilities, projects, and information technology systems. Serco runs scientific establishments, provides critical information to manage traffic, maintains buildings, and operates railways.
Softchoice Corp
Canada
Information Technology
Softchoice Corporation provides information technology services. The Company offers cloud, hybrid IT, end user productivity, security, and managed services. Softchoice serves clients in Canada and the United States.

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 May 20221
1 MTH 1 YEAR 2 YEARS P.A. 3 YEARS P.A. 5 YEARS P.A. SINCE INCEPTION P.A.
Global Small Companies Fund 0.6% -9.3% 8.4% 7.2% 5.2% 7.1%
MSCI All Country World SMID Cap Index unhedged in AUD -1.1% -4.4% 11.7% 8.7% 8.0% 7.8%

Swipe horizontally to see all columns

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

The ACWI SMID cap index was down -1.1% in May, as ongoing concerns over inflation, rising interest rates, and the war in Ukraine weighed on investors. In the US, policymakers continue to stand by their hawkish stance and foresee further rate increases to tame inflation. Inevitably, we are starting to see early signs of the U.S. economy slowing down: the PMI index fell again in May and GDP was confirmed to have contracted in the first quarter. In Europe, inflation continues its rapid rise putting more pressure on the ECB to raise rates. The UK’s inflation rate was confirmed to have reached a 40-year high in April, yet May’s expected inflation is higher still. The largest jump was from a higher level of the energy price cap. In Japan, the equity market welcomed Prime Minister Kishida’s “New Capitalism” policy (emphasizing economic growth).  The likelihood of recession is rising as central banks may struggle to tame inflation and pull off a “soft landing.”

Energy, Utilities, and Financials performed well in May while Consumer Staples and Consumer Discretionary lagged behind the overall market. While the S&P had dropped 20% for the year on May 20th, it bounced back and ended May in the green. The US Dollar DXY index briefly gave back some strength only to climb back as of this writing. One trend that we are happy to see continuing is the MSCI Value index outperforming its Growth counterpart. While the macro environment remains challenging, we continue to see opportunities in our space: the MSCI All Country World Index ex-US is trading at an attractive 12.2x forward earnings, unchanged from April.

Stock selection drove the Fund’s overperformance against the index in May. As of May 31st, the top ten holdings accounted for 41% of the Fund’s assets with the largest position approximately 5.9% of the portfolio.

Despite the volatility in the market, the Fund was not very active during the month.  There were no new positions added, nor did we exit any positions.   We are balancing new investments against those already in the Fund as a wide array of stocks have sold off, which creates opportunities.

PROFILE

STATISTICAL DATA

PORTFOLIO SUMMARY
VOLATILITY3
12.8%
NUMBER OF STOCKS
42
BETA4
0.74
MAXIMUM DRAW DOWN
-20.7%

FEATURES

  • APIR CODE PCL0022AU
  • REDEMPTION PRICEA$ 1.5029
  • FEES * Management Fee: 1.1%
    Performance Fee: 20.5%
  • Minimum initial investment A$10,000
  • FUM AT MONTH END A$ 165.57m
  • 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.