BT moves into small caps market
BTFundsManagement is the latest group to start up a fund in the increasingly popular small caps area, with the BT Australian Small Companies Fund launched this week.
The BT Australian Small Companies Fund has both a retail and wholesale offering investing in Australian listed companies outside the ASX 100, with a general market cap between $75 million and $900 million.
Former ING small caps duo Brian Eley and Ben Griffiths, who worked together for two years before becoming BT’s Australian Small Companies portfolio analysts in January, say the time is right for a small companies fund.
“The current economic cycle suggests now is a great time for small caps, and looking at the micro end of small caps, it is alive and well,” Griffiths says.
More than 250 companies will be analysed on an annual basis for the small companies fund.
The process involves building a company financial model with past and future performance assessed along with cash flow, risk, style analysis, transparency and quality of management.
Under a scoring system, potential candidates are then scored relative to each other, with the score used as the foundation to constructing the portfolio, Eley says.
According to Eley, the BT Australian Small Companies Fund is expected to beat the S&P ASX Small Ordinaries Accumulation Index after five years.
No fund inflow targets have been made for the small caps fund, with both managers preferring instead to take a ‘time will tell’ approach.
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