Global small/mid caps were not spooked by trade war and Brexit

Small caps mid caps FE Analytics Fairlight Global Small & Mid Cap A Ellerston Global Mid Small Unhedged Bell Global Emerging Companies Prime Value Emerging Opportunities THB International Micro Cap W

13 December 2019
| By Chris Dastoor |
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The US, UK and Europe were still heavily weighted in most of the top performing global small/mid cap funds, as they remain optimistic on issues such as the US/China trade war and Brexit will be resolved in 2020.

According to FE Analytics, the ACS Equity – Global Small/Mid Cap sector returned 18.96%, over the year to 29 November, 2019.

The best performing funds were Fairlight Global Small & Mid Cap A (34.95%), Ellerston Global Mid Small Unhedged (28.4%), Bell Global Emerging Companies (25.74%), Prime Value Emerging Opportunities (23.52%) and THB International Micro Cap W (23.02%).

Fairlight’s regional weightings were in North America (55.67%), Europe (31.44%), Asia Pacific (9.58%), Americas (1.73%) and Middle East/Africa (1.55%), as at 30 November, 2019.

Its top sector weightings were in telecom, media and technology (22.91%), industrials (17.05%), distributions (7.94%), leisure (6.89%) and healthcare (6.65%).

Ellerston’s top regional weightings were the US (67.6%), Spain (6%), UK (5.5%), Japan (2.9%) and the Netherlands (2.6%), as at 30 September, 2019.

Its top sector weightings were in information technology (29.7%), industrials (12.4%), communication services (10.2%), health care (8.9%) and consumer discretionary (8.9%).

Ellerston’s market commentary said global equity markets pushed higher last month, as progress on key issues that had been overhanging the market continue to be addressed.

“‘Phase One’ of the US/China trade negotiations seems to be moving closer to a reality, although we have yet to determine whether tariff risk in December remains on the cards,” it said.

“Risks around a no-deal Brexit are becoming less of a concern as the EU has extended the deadline to 31 January, 2020, and while global economic activity indicators remain subdued, recent indications are pointing to stabilisation.”

Bell’s top sector weights were healthcare (23.07%), telecom, media and technology (22.29%), consumer products (14.66%), industrials (13.29%) and basic materials (11.12%), as at 30 November, 2019.

Its top regional weightings were North America (55.86%), Europe excluding UK (25.19%), UK (10.25%) and Japan (1.72%).

Prime Value’s top sector weightings were financials (24.5%), consumer discretionary (17.5%), information technology (13.9%), industrials (11.4%) and communication services (9.3%), as at 31 October, 2019.

Prime Value’s market review noted the UK’s December election might deliver a resolution of Brexit, as well as optimism about US/China trade negotiations.

“Conflicting reports were coming from the US and Chinese sides about the prospect of delivering a first stage trade deal with the cancellation of an APEC Leaders Summit complicating the issue somewhat,” it said.

“The two nations appear to be moving closer to a stage one agreement rather than further apart which was viewed positively by markets.”

They also noted the impact of long-term bond yields had as they rose moderately over the last two months in Australia and the US.

“This typically implies better economic conditions ahead which contrasts with many economic headlines which are less positive,” the report said.

“The Australian market has responded to rising bond yields by lifting cyclical and value stocks at the expense of high growth momentum stocks.”

THB’s top sector weightings were in Japan (32.9%), UK (17.3%), ‘rest of Europe’ (14.4%), Australasia (11.4%), Sweden (11.2%) and Germany (8.4%), as at 31 October, 2019.

Its biggest weightings were in industrials (31.1%), information technology (26.2%), healthcare (12.7%), consumer discretionary (10.2%) and materials (7.3%).

Top five performing global small/mid cap funds v sector over the year to 29 November 2019

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