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Global Small Companies Fund

Specialists in a vast and growing investable universe

December 2021 - Monthly REPORT

A strong outlook for the year ahead

SUMMARY

The Fund returned +2.9% in December, outperforming the benchmark return of +1.2%.

PORTFOLIO

Top Holdings (alphabetically)

Dino Polska
Poland
Consumer Staples
Nagarro SE
Germany
Information Technology
Orion Engineered Carbons
United States
Materials
PRA Group
United States
Financials
Softchoice Corp
Canada
Information Technology

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Dec 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 2.9% 15.0% 12.3% 14.8% 11.2% 9.8%
MSCI All Country World SMID Cap Index unhedged in AUD 1.2% 23.4% 14.0% 17.7% 12.4% 10.5%

Swipe horizontally to see all columns

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

Global equity markets recovered in December from the previous month’s slump, ending the year on a strong note. Although the Omicron variant of COVID-19 that surfaced in November proved to be more infectious than the Delta strain, investor fears quickly dissipated as Omicron appears to be neither as severe, nor as vaccine-resistant, as initially anticipated.  As a result, most countries have not imposed major restrictions. Equity investors continued to focus on the strong corporate earnings outlook for the year ahead now that the economic recovery is less likely to be disrupted by COVID-19.

The equity markets that suffered most in November, such as the UK and Europe, outperformed the U.S. during the month.  The Federal Reserve announced a doubling in the pace of its tapering from January 2022, while the Bank of England and a few other central banks in continental Europe increased short-dated rates. These actions helped to alleviate concerns over inflation and an overheating of the global economy.  The Bank of Japan remained an outlier, adhering to its stimulus policies, which sent the yen to multi-year lows. Developed equity markets finished 2021 with a 4% gain in December, measured by the MSCI ACWI index, capping off a strong year.  Emerging markets were also up in December, posting a gain of 1.9% as measured by the MSCI Emerging Markets index.  Despite the positive performance in December, Emerging Markets ended the year in negative territory, falling -2.5%.

Individual stock selection and currency were the main drivers of outperformance versus the benchmark in December.  The Fund’s overweight position in smaller-cap names (companies with market caps of under $2bn) also drove performance against the benchmark, as those positions contributed to 1.6% of the Fund’s total performance vs -.1% contribution to the benchmark. Approximately 157 bps separated the top contributor and largest detractor.  As of 31st December, the top 10 holdings accounted for approximately 29% of the Fund’s assets, with the largest position approximately 3.5% of the portfolio.  Regional and sector exposure remained relatively unchanged month over month.

Average cash holdings were stable month over month.  The Fund marginally increased and trimmed several positions.  Deliveroo was trimmed as food delivery services in Europe continue to face regulatory pressure related to their labour forces.  We also trimmed PRA Group in the US on the back of strong stock performance.  PRA is still a meaningful position in the Fund but was reduced to better reflect our assessment of the current risk-reward.

PROFILE

STATISTICAL DATA

PORTFOLIO SUMMARY
VOLATILITY3
12.6%
NUMBER OF STOCKS
51
BETA4
0.75
MAXIMUM DRAW DOWN
-20.7%

FEATURES

  • APIR CODE PCL0022AU
  • REDEMPTION PRICEA$ 1.7215
  • FEES * Management Fee: 1.1%
    Performance Fee: 20.5%
  • Minimum initial investment A$10,000
  • FUM AT MONTH END A$ 195.15m
  • 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.