Investing in Small Caps & the AWSM Fund

Transcription

1 Investing in Small Caps & the AWSM Fund 2018

2 Number of individual companies Increasing long-term growth rate What are small caps? Small market capitalisation ( small cap ) companies are the smaller (and faster growing) companies listed on stock markets Size: Small, but not as small as you think Global Rule-of-Thumb: Smaller than $1bn to $2bn market caps. Up to c.r10bn to R20bn in size. Top 40 Number: Plentiful and diverse c.400 companies listed on the JSE. Only 40 companies reside in the FTSE/JSE Top 40 Index (being the 40 largest companies). Therefore, the rest of the JSE is small (and mid) cap companies. Examples: Unique, well-run & quality businesses ADvTech Ltd: Schooling & tertiary business. Calgro M3 Holdings Ltd: Provider of integrated housing solutions. Datatec Ltd: Global ICT group. Santova Logistics Ltd: Non-asset-based supply chain manager. Mid Caps Small Caps 2

3 Entire JSE Units (Base = 100) Why invest in small caps? In the long-term, small caps add both significant returns and diversification to a portfolio Figure 1: Small Caps versus Large Caps Outperformance: Small caps outperform In the long-term, small caps generate a higher return than larger, slower growing large caps. See Figure Outperformance gap in small caps Diversification: Diversify your Top 40 holdings The Top 40 makes up 73% market cap of the JSE AllShare Index, but it only makes up 10% of all listed businesses in South Africa. Thus, if you ignore small and mid caps in South Africa, you are ignoring 90% of all listed companies in South Africa. Therefore, small and mid caps offer ability to diversify your equity investments. See Figure Small Caps Years Market Caps of Companies Large Caps Figure 2: Size of Companies Listed vs. Number Listed 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Untapped opportunity Number of Listed Companies Small & Mid Caps 27% 90% Top 40 73% 10% Sources: Bloomberg, AlphaWealth workings 3

4 AlphaWealth Prime Small & Mid Cap Fund ( AWSM Fund ) AWSM Fund is a Unit Trust offering a unique, liquid exposure to small and mid caps in South Africa Quality: AWSM Fund s portfolio is a concentrated collection of high conviction small and mid caps. We aim to buy good businesses at good prices that have as little in common as possible. Uniqueness: AWSM Fund is one of only eight other small cap funds in South Africa* Given liquidity constraints, ETFs and other index-trackers do not exist in the small cap space in South Africa (no passive options exist as you need active management in this space). Accessibility: AWSM Fund is accessibility to AlphaWealth clients, direct clients, and off external and internal platforms. Liquidity: AWSM Fund is daily-priced and 24-hour redeemable (i.e. normal Unit Trust rules). This means that AWSM Fund is a liquid entry-point into illiquid underlying small cap investments. Contact us for more information on the AWSM Fund. * Per Morningstar report (December 2017) 4

5 Investing in Small Caps & AWSM Fund Date of Publishing: 16 January 2018

6 Disclaimer Collective Investment Schemes in Securities are generally medium to long term investments. Different classes of units apply to these portfolios and are subject to different fees and charges. A schedule of fees and charges and maximum commissions is available on request from the Company. Commission and incentives may be paid and if so, would be included in the overall costs. The price of a participatory interest is a marked-to market value. Forward pricing is used. The purpose of the money market yield is to indicate to investors a compounded annual return for all money market portfolios on a comparable basis. The yield calculation is not used for income distribution purposes. A forward looking yield is used. This means that the last seven days yield (less the service charges, including VAT) is taken and is annualised for the next 12 month period, assuming the income returns are reinvested. Yields for money market funds are published daily. The value of participatory interests may go down as well as up. Past performance is not necessarily an indication of future performance. Performance numbers and graphs are sourced from Global Independent Administrators (Pty) Ltd are calculated on a NAV to NAV basis and do not take initial fees into account. The Company does not provide any guarantee either with respect to the capital or the return of the portfolio s. Income is re-invested on the re-investment date. Actual investment performance will differ based on the initial fees applicable, the actual investment date and the date of reinvestment of income. Dealing prices are calculated on a net asset value and auditor s fees, bank charges and trustee fees are levied against the portfolios. The total return to the investor is made up of interest received and any gain or loss made on any particular instrument. This will have the effect of increasing or decreasing the daily yield but in case of abnormal losses it can have the effect of reducing the capital value of the portfolio. Excessive withdrawals from the portfolio may place the portfolio under liquidity pressures where a process of ringfencing of withdrawal instructions and managed pay-outs over time may be followed. CIS are traded at ruling prices and can engage in borrowing and scrip lending. The manager may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Prime Collective Investment Schemes Management Company (RF) (Pty) Ltd is a registered Collective Investment Scheme Manager in terms of Section 5 of the Collective Investment Schemes Control Act and is a wholly owned subsidiary of Prime Financial Services (Pty) Ltd, a member of ASISA