Advance gears up with OZ equities funds
ADVANCE Funds Management has added to its suite of Australian equities products with the launch of its Australian Geared Equity and Australian Smaller Companies funds this week.
The Australian Geared Equity fund will aim to outperform the S&P/ASX 200 Accumulation Index over the long-term by borrowing money to gear, or leverage, the exposure of investors.
As fund members do not personally borrow money, they will have no direct obligation to meet any shortfall in fund assets or deal with margin calls.
The fund’s income, including dividends from the underlying geared investment portfolio, will be used to cover the borrowing costs. The funds borrowings will be secured against the investment portfolio.
According to Advance, the market would have to fall by over 60 per cent for investors in the fund to be at risk of losing their invested capital.
The Advance Australian Smaller Companies fund will pick up on market demand for small cap funds and will invest in companies outside the S&P/ASX 100, but within the S&P/ASX 300.
Advance head of marketing and product Eamonn Roles says there are strong opportunities for fund managers to take advantage of latent demand in the small cap sector, particularly given the recent closure of small cap funds by Perpetual, ING and JB Were.
Advance has elected to outsource the underlying portfolio management of both funds to external fund managers.
The Australian Geared Equity Fund will be managed by Maple-Brown Abbott, and the Australian Smaller Companies Fund by a specialist in smaller companies, Jenkins Investment Management.
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