Global small/mid caps fare well in 2018
Money Management looked at global small/mid caps across the six months to 30 June, and found the sector placed in the top quartile with returns of 5.42 per cent, second only to North American equities.
This was the first time the sector placed in the top quartile in five years, with its annualised performance across three years 8.44 per cent, and across the year to 30 June 14.31 per cent.
Of the 19 funds in the sector though, only five managed to place in the top quartile, with just under half of the funds sitting in the third and bottom quartiles.
The top performing funds were the Yarra Global Small Companies and the Fidelity Select Global Small Cap funds, returning 10.94 and 10.18 per cent, respectively.
The Yarra Small Companies fund held 65.01 per cent of its portfolio in North America, with the Europe ex UK region holding the second-largest weighting at 15.59 per cent.
Fidelity had much the same weighting within its Select Global Small Cap funds, with a large weighting to North America (59.69 per cent) followed by Europe ex UK (15.15 per cent).
While Yarra had a strong positioning in industrials (19.67 per cent) and information technology (16.67 per cent), Fidelity had an overweight in industrials (18.81 per cent) followed by consumer products (15.96 per cent) and telecom, media and technology (15.52 per cent).
The chart below shows the performance of the top two funds as compared to the sector and benchmark, MSCI AC World SMID Cap index, for the six months to 30 June.
The Mercer Global Small Companies Shares fund, the Bell Global Emerging Companies and the Vanguard International Small Companies Index fund also placed in the top quartile.
Only one fund, the Vanguard fund, was an index-tracker, suggesting that the sector might suit active management.
The chart below shows the performance of the top quartile funds from 1 January to 30 June 2018.
Closer to home, Australian small/mid caps placed just outside the top quartile at 4.18 per cent returns for the six months to 30 June.
AUTHOR
Anastasia Santoreneos
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