Small and micro caps growth exceeds blue chips

In just over three months since the launch of Spheria Asset Management's micro-cap fund, it has reached $170 million funds under management, illustrating the rise of small and micro caps, the firm said.

Australian blue chips have continued to struggle to achieve growth, but Spheria has pursued businesses that were generating strong cash flows, had solid balance sheets and good valuations.

Spheria's portfolio manager, Matthew Booker, said there was boundless opportunity in small and micro caps as investors often passed companies that had reasonable valuations.

Over the last few months, Spheria was actively buying into what they believed were high quality mining services, which included Monodelphous and Macmahon.

Companies that had few friends now, primarily due to cyclical factors, would increase in investor popularity in time, he said.

Spheria portfolio manager, Marcus Burns, said they were also seeing positive contributions from their core holdings in companies that included A2 Milk, Cabcharge and Mortgage Choice.

"Our strategies have neither a growth nor value focus but seek to exploit the quality of the smaller companies' universe. Many of today's large cap companies are likely to be impacted by the innovation and disruptive nature of the best small companies," Booker said.

Spheria Australian Micro fund returned 13.20 per cent over the last three months, while the index generated 6.70 per cent, according to Money Management's Investment Centre.

To see how Spheria's other funds have performed again their peers, click here.

http://investmentcentre.moneymanagement.com.au/investments/managed-inve…