ING re-opened its small companies fund to retail investors yesterday following a 20 per cent drop in funds under management (FUM) since the fund closed to avoid potential capacity constraints two years ago.
The Emerging Companies Fund will remain open for “between one and two years” to return its FUM to $1 billion after having dropped to $800 million, according to ING executive director Ross Bowden.
Bowden says the spare capacity has resulted from “natural attrition” over the past two years, accompanied by a 50 per cent increase in the total capitalization of the small caps market.
When the fund closed two years ago Bowden says it represented about 3.5 percent of the total capitalization of the small caps market, however he says since then the increase in the sector capitalisation along with the drop in funds means it now represents about 2.5 percent of the small caps market.
“That indicates we’ve definitely got spare capacity in our retail trust,” he says.
According to Bowden, the reopened fund will be managed in “exactly the same way” as it was before closing, except for the addition of two new portfolio managers.
Issam Eid and Steven Ng, formerly of Macquarie Funds Management, joined ING Investment Management last month, to focus primarily on the small cap sector.
“Small caps go up one year and down the next but our outlook for the sector is still positive over the longer term,” Bowden says.
Meanwhile, the reopening of Equity Trustees’ Small Companies Fund earlier this month appears to have achieved its target of increasing FUM.
Managing director Peter Williams anticipated the fund would close again shortly, having achieved its target of $10 – $15 million of new applications or $50 million in total retail funds under management.
It was closed last October in line with a commitment by fund manager SG Hiscock to maximise returns by closing the fund at less than 1 per cent of market capitalisation of the benchmark Index.
