With Australian stockmarket performance dominated by the largest firms such as CSL and BHP, some investors are choosing to get a diverse portfolio via an ex-20 fund.
Ex-20 funds offer investment in the ASX 300 but typically exclude the largest 20 companies such as the big four banks, biotech CSL, utility Telstra and retailer Woolworths.
Instead, they tend to give greater emphasis to small and mid-cap stocks.
Jason Kururangi, investment manager at Aberdeen Standard Investments, said the Aberdeen ex-20 fund was created following client demand.
“We already had a large-cap fund and a small-cap fund so this sat in the middle as a blend of the two. Clients wanted alpha but also to offset the volatility associated with small-caps,” he said.”
“It gives investors exposure to some high-quality businesses within the ASX that people may not have heard of or realised were listed which is an opportunity for alpha.”
There was also the opportunity for stocks to be upgraded to the largest companies in due course as was the case for Goodman Group and Aristocrat.
“Goodman Group was upgraded to top 20 in June last year and we had a year to exit it so it made sense to hold onto it and we exited in small chunks. This June, Aristocrat was upgraded so we have the same issue, a year to exit, it is good that we have that flexibility in the fund.”
There were currently five ex-20 funds...