Small-cap sector 'highly competitive', says S&P
The median small-cap fund has beaten the ASX Small Ordinaries Index by 5 percentage points over the last three years, demonstrating the success of active management in the sector, according to Standard & Poor's Fund Services (S&P).
"Over the three years ending 31 December 2011, the benchmark did 11.8 per cent, and the median small-cap manager did 16.8 per cent," said S&P analyst John Huynh.
Of the 45 headline funds included in the S&P 2011 Small-Cap Sector Review, seven have been upgraded and two have been downgraded. The headline funds include micro-cap, mid-cap and traditional low-cap strategies, according to S&P.
The sole five-star fund is the Aviva Investors Professional Small Companies fund, which was upgraded from four stars due to S&P's "very high conviction in the capabilities of the team and the effectiveness of its investment approach".
The remaining upgraded funds were the Ausbil Microcap fund, the NovaPort Wholesale Microcap fund, the BT Midcap fund, the NovaPort Smaller Companies fund, the Perennial Value Smaller Companies Trust and the Ironbark Karara Australian Small Companies fund.
The two downgraded funds were the Invesco Australian Companies fund and the Eley Griffiths Group Small Companies fund, both of which were downgraded from five to four stars.
While the Invesco Australian Companies fund is still "a quality offering", the downgrade reflects "a number of factors including broader peer-relative assessment and an overall reduction in conviction", said S&P.
The small-cap peer group is "highly competitive" and the majority of the offerings reviewed are "delivering on their investment objectives", according to S&P.
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