TheLonsec research group has included four new funds to its annual review of small cap managers in response to growing concerns over the volume of money being managed by established small cap managers.
The four new funds are offered byMacquarie,Challenger,Australian UnityandEquity Trustees.
In the review, SG Hiscock & Company, which manages the Equity Trustees Small Companies Fund, was the only manager to be awarded a ‘highly recommended’ rating.
Macquarie Fund Management and Acorn Capital, another boutique manager responsible for Australian Unity’s Microcap Trust, both received a ‘recommended’ rating, while Challenger was assigned an ‘Investment Grade’ rating in the first Lonsec review for all three managers.
The review also sawSagittaandColonial First State(CFS) upgraded to ‘investment grade’ from the ‘hold’ ratings applied following recent staff departures at the groups.
Lonsec highlighted the emerging boutique funds, such as SG Hiscock and Acorn Capital, as likely to play a key role in the sector in the future.
The performance of the ‘newer’ funds supported this assessment, with Equity Trustees, Challenger and Acorn delivering above 20 per cent returns for the year to October 2002, while the larger managers such asING, CFS,Portfolio Partners,JB Were, Macquarie andAMP Hendersonposted negative 12 month returns.
Over the last year, a number of established small cap fund managers, including Perpetual, ING and JB Were, have shut off funds from new investors because of concerns about the volume of money they were holding, prompting investors and research houses alike to look for small cap fund alternatives.
