Aus SMIDs getting better growth post-COVID
Australian small/mid-cap funds have beaten the broader Australian equity sector when it comes to growth in the last six months since the start of the economic downturn due to the COVID-19 pandemic.
According to FE Analytics, within the Australian Core Strategies universe, the Australian small/mid-cap sector returned 40.36% versus 18.64% for the broader Australian equities sector, in the six months to 30 September, 2020.
Performance of Australian equity sector versus Australia small/mid-cap sector over six months to 30 September 2020
Over the year to 30 September, 2020, the Australia small/mid-cap sector returned 4.2%, compared to the global small/mid-cap sector which saw a return of 5.16% over the same time period.
The DMP Australian Small Caps Trust Wholesale fund returned the most with 25.73%, followed by OC Micro-Cap (24.68%), Australian Ethical Emerging Companies (21.96%), Lennox Australian Microcap (21.36%) and Hyperion Small Growth Companies (20.83%).
The OC fund’s top holdings were luxury homewares retailer Adairs; health, wellness and beauty product supplier McPherson’s; cloud channel Rhipe; buy now/pay later Sezzle; and gym franchise Viva Leisure.
Robert Calnon, OC senior investment analyst, said the last six months for them had been the busiest of their last decade.
“That’s because of getting a handle on how COVID-19 was going to impact the businesses that we were invested in and then rotating the portfolio appropriately,” Calnon said.
“And the IPO [initial public offering] pipeline that we’re assessing at the moment is bulging, it’s basically at unprecedented levels for us.
“Rates are still near zero, so investors are still looking to equities for returns and as an active manager in a vibrant small cap investing universe, we still think there’s plenty of opportunities to generate outperformance for our investors over the short, medium and long-term.”
Australian Ethical’s top holdings were enterprise technology platform Mach7 Technologies, sales and marketing software firm Bigtincan Holdings, cloud service and data centre Macquarie Telecom Group, neuroscience researcher Cogstate, and healthcare company Healius.
Lennox’s top holdings were Aussie Broadband, enterprise asset management service provider COSOL Ltd, and HUB24.
Hyperion’s top holdings included tech firms Wisetech Global and Xero, Fisher & Paykel Healthcare, Domino’s Pizza, and digital donor management system Pushpay Holdings.
Best-performing Australian small/mid-cap funds over the year to 30 September 2020
AUTHOR
Chris Dastoor
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