Australian Small and Mid-Cap Fund

Australian Small and Mid-Cap Fund (ASMF or the Fund) aim to provide investors with a total investment return (after fees) that outperforms the benchmark over periods of seven years or longer.

The Fund generally gains its investment exposure by directly or indirectly investing in a portfolio of Small-Cap and Mid-Cap companies listed, or expected to be listed, on the Australian Securities Exchange. Australian Small and Mid-Cap companies are generally those companies that are outside the top 20 companies on the Australian Securities Exchange as determined by market capitalisation.

The Fund aims to be invested with multiple active Underlying Investment Manager(s) whose investment strategies emphasize performance above the benchmark while aiming to control risk.

Ophir Asset Management Pty Ltd (Ophir) is a specialist small and mid-cap equities investment manager established in 2012.

The investment team comprises 11 investment professionals from a diverse range of background working across all Ophir funds.

Ophir currently manages two dedicated Australia and New Zealand investment strategies on behalf of institutional superannuation funds, family offices private wealth groups and individual investors.

Ophir’s investment strategy seeks to provide investors with a concentrated exposure to a high-quality portfolio of growth companies listed outside S&P/ASX50. Ophir employ an extensive investment process that combines a rigorous company visitation schedule and company financial analysis.

Ophir’s fundamental, bottom-up research approach is aimed at identifying businesses with the ability to meaningfully grow and compound earnings over time. Typically, the investment process will look to uncover businesses that are operating within, or about to enter, a period of structural growth and are generating cash or have a clearly identifiable pathway toward free cash flow generation. In order to identify these opportunities, the Ophir investment team spend a considerable amount of time understanding the quality of the business and the environment in which it operates.

The resulting portfolio aims to provide consistent sustainable returns for its investors.

Ophir is a signatory to the Principles for Responsible Investment (PRI).

Selector Funds Management Limited (SFML) is a Sydney based fund manager established in 2003. SFML’s team of 11 combines deep experience in financial markets with diversity of background and thought. SFML believe in long-term wealth creation and building lasting relationships with their investors. SFML is a profitable investment firm who maintains a strong balance sheet and carries no debt.

SFML has a 20-year track record of outperformance, and continues to seek businesses with leadership qualities, run by competent management teams, underpinned by strong balance sheets and with a focus on capital management. SFML focus on stock selection, the funds are high conviction, concentrated and index unaware. SFML portfolios aim to have low turnover and to produce tax effective returns.

SFML’s philosophy is to invest sensibly for the long term. A bottom-up stock selection process is used to identify good businesses selling at a fair price. As a good business evolves into a great business, its underlying real earnings per share grows. SFML aims to capture as much of this earnings growth as possible over time, since this can translate into share price appreciation.

All research is undertaken in-house, extensive analysis includes management interviews, modelling of each company and industry channel checks.

SFML believe Financial Sustainability, Culture and ESG are intertwined. SFML consider these elements integral to the assessment of a business. Voting is the other half of ESG, all resolutions are documented, researched, and voted inhouse. SFML’s ongoing focus on culture and financial sustainability lends itself to strong ESG outcomes. This is evidenced by portfolio emissions significantly lower than index emissions, coupled with outperformance since inception.

SFML’s portfolios are made up of their best ideas rather than slight variations to an index. SFML believe that simply hugging an index limits the returns to investors over the long run.

Founded in 1998, Acorn Capital Limited (Acorn Capital) is a Melbourne based investment manager of Australian emerging companies (small and microcaps). Acorn Capital believes that information asymmetries can be identified dand excess returns generated through research. Its deep insights into the emerging companies sector has enabled Acorn Capital to build an investment capability that seeks to identify the most attractive investment opportunities in its universe, on a risk adjusted basis, regardless of industry, stage of development or public/private status.

Acorn Capital’s investment team also owns the business (in partnership with Australian Unity) and this team is committed to generating long term, attractive, risk adjusted returns. Acorn Capital manages $0.6b on behalf of institutional, wholesale and retail investors.

Acorn Capital believes in the impact its investment activities and engagement have on society. In addition to the potential for attractive returns, Australian emerging companies can also provide investors with exposure to sectors of the economy that are compositionally and characteristically different to the exposure that they may receive from the larger capitalised companies in their portfolios. Emerging companies are often innovative and early adopters of new technologies (e.g., fintech IT, medtech) and provide an exposure to growth equity.

Acorn Capital’s investment returns are primarily derived from bottom-up stock selection, while its investment strategy is style agnostic and designed to identify the most attractive opportunities by industry across both listed and unlisted companies. Returns are principally captured through capital appreciation. The investment team is organised into industry sector specialisations, which provide deep industry-specific and qualitative insights. Such expertise is of particular importance due to the relatively earlier stage of development of Australian emerging companies which limit the application of quantitative investment techniques.

Acorn Capital is a signatory to the Principles for Responsible Investment (PRI).

Founded in 2001, DNR Capital Pty Ltd (DNR Capital) is an Australian investment management company that delivers client-focused, quality, investment solutions to institutions, advisers and individual investors.

DNR Capital offers a differentiated suite of investment strategies. Each of these strategies builds upon the core investment philosophy of investing in quality companies which are well placed to deliver investment returns through economic cycles. DNR Capital believes concentrated portfolios of quality companies maximise the opportunity for outperformance.

The DNR Capital Australian Emerging Companies strategy offers investors exposure to a long-term, Concentrated portfolio of high quality, small cap Australian listed equities.

DNR Capital believe, the small cap sector is a more inefficient part of the market, providing significant opportunities to add value utilising its detailed bottom-up investment philosophy.

DNR Capital seeks to identify good quality emerging businesses that are mispriced by overlaying DNR Capital’s quality filter, referred to as the ‘quality web’, with a strong valuation discipline. DNR Capital uses a five point ‘quality web’ in which five quality factors are reviewed. The key criteria are as follows:

Industry positioning to identify superior positioning, competitive advantage and ability to sustain returns.
Earnings strength as determined by quantitative data scores based on factors such as a security’s return on equity (ROE).
Balance sheet strength as determined by quantitative data scores based on factors such as a security’s net debt to equity ratio.
A management score which is a subjective measure based on experience and extensive company meetings with weight given to those management teams with a history of good allocation of capital.
An ESG risk assessment, where these factors could impact valuation. The assessment of a company’s quality is overlaid with a detailed valuation assessment seeking to exploit mispriced, market inefficiencies.

DNR Capital’s security selection process has a strong bottom- up discipline and focuses on buying quality emerging businesses at reasonable prices. The process involves comprehensive company and industry research, company visits and meetings, and detailed valuation analysis and modelling. This information is used to assess the quality of a business and the expected return.

The portfolio construction process considers stock weightings based on the risk versus the expected return. It is also influenced by a top-down economic appraisal, sector exposures and liquidity considerations.

The investment strategy is long-only and is intended to result in a style-neutral, concentrated portfolio that is high conviction and invests over a five-year period.

DNR Capital is an Authorised Representative of DNR AFSL Pty Ltd ABN 39 118 946 400 AFSL Number 301658.

DNR Capital is a signatory to the Principles for Responsible Investment (PRI).

Ellerston Capital is a specialist investment manager that has been managing money since 2002, offering a variety of innovative Australian and international investment strategies. As a firm that is majority-owned by its principals and employees, Ellerston aligns its goals with those of its clients.

With over two decades of experience, the firm focuses on one primary objective: growing and protecting clients' wealth through strategic investing. Ellerston is dedicated to creating value by identifying exceptional investment opportunities and building portfolios that deliver long-term performance. The firm’s funds encompass a wide array of strategies, including long only Australian, global and Asian equities, Australian and global long-short equity, private assets, and fixed income & multi-asset.

The Ellerston Australian Emerging Leaders Fund’s investment strategy is to construct a high-quality portfolio of Australian and New Zealand companies that are small by market capitalisation. The dedicated team responsible for the Fund employs an active, research-driven, benchmark-independent approach to investing with the aim of delivering superior returns to the benchmark (i.e. S&P/ASX Small Ordinaries Accumulation Index) over time. Investments will generally be made in companies that have a sound business franchise with an attractive earnings profile, that operate in growth industries and trade at a discount to valuation.

Companies in this part of the market are under-researched, and under-owned. In light of this, we believe we can discover companies earlier in their growth life cycle, identify businesses that are in the middle of a solid and sustainable turnaround or restructure, and find assets that have a strategic value and are being mispriced. We believe that these factors contribute to the greater levels of market inefficiencies that can be exploited by understanding the liquidity in the market, accessing multiple sources of liquidity, strong stock picking ability and focusing on risk management.

Ellerston Capital is a signatory to the Principles for Responsible Investment (PRI).

What are the benefits of investing in the Fund?

Diversification: The Fund is an actively managed multi-manager portfolio of predominantly Australian small and mid-cap shares listed on the Australian Securities Exchange. The Fund can be combined with other Australian share funds to provide diversification to investors’ existing Australian Equities holdings concentrated in the top 20 stocks. Diversification may smooth out market volatility and may help protect investments from loss.
Active Management: Potential for long-term capital growth and enhanced performance through active management carried out by Underlying Investment Managers. Centric Capital aim to select high quality Australian small and mid-cap specialist fund managers with a range of complementary investment strategies and styles. In doing so we aim to produce consistent investment performance throughout market cycles.
Access to specialist fund managers: The Fund may provide access to investment strategies which would otherwise not be available to individual investors.
Low minimum investment: A Retail Client will be able to gain an indirect exposure to the underlying investments of the Fund for a minimum initial investment of $5,000 in the Fund. The minimum additional investment into Units in the Fund is $1,000.

Target Market Summary

This product is intended for use within a portfolio as a satellite to core allocation for a consumer who is seeking capital growth and has a very high risk and return profile for that portion of their investment portfolio. It is likely to be consistent with the financial situation and needs of a consumer with a at least 7 years investment timeframe and who is unlikely to need to withdraw their money or access to capital with less than 10 days’ notice.

Important Information

This information is of a general nature only and has been prepared without taking into account your objectives, financial situation and needs. Before acting on this information you should consider its appropriateness having read to your circumstances. You should obtain and consider the latest product disclosure statement before making a decision to invest in the fund.To obtain financial advice tailored to your personal circumstances you should speak to a licensed financial adviser.