Best Small Companies Funds

GOLD WINNERS BENNELONG AND NOVAPORT

Skilled teams find the growth opportunities outside the big names on the ASX

A fter performing well for several years, small companies funds had subdued returns over the past year. Our joint winners are Bennelong ex-20 Australian Equities and NovaPort Smaller Companies.

Bennelong taps into the investment potential that lies beyond the largest stocks, where it says there’s generally greater diversification and a broader opportunity set. It can be used as a complement to a more top-heavy portfolio, or alone as a diversified exposure to the Australian market. It typically holds 20 to 40 stocks and has a large and mid-cap tilt, says Morningstar analyst Matthew Wilkinson.

“The high-conviction Bennelong ex-20 Australian Equities is a top pick for those investors seeking ex-20 exposure,” he says. “With strong leadership and consistent application of a process that we admire, Bennelong ex-20 Australian Equities is a great choice for investors.”

It has been rated “highly recommended” by Zenith since 2011. In its latest review Zenith says the fund is appealing owing to its highly capable portfolio manager, Mark East, and has a track record of outperformance.

NovaPort invests primarily in companies outside the 100 largest companies on the ASX at the time they are first acquired. It is an active investor and its approach is based on paying a reasonable price for companies with an improving profit growth profile, or which are materially undervalued on other factors, while paying particular attention to the underlying quality of earnings and management.

It typically holds 30 to 35 stocks, says Morningstar analyst Andrew Miles. “A gifted investment team and disciplined process mean there are few better domestic small-cap offerings.”

It has scored a “highly recommended” rating from Lonsec for the fourth consecutive year. The fund is managed by the impressive team of Alex Milton and Sinclair Currie, who have over 40 years’ combined experience.

One of last year’s joint winners, SGH ICE, was equal second with five other funds, including Aberdeen Australian Small Companies, BT MidCap and Fidelity Future Leaders, which were also equal second last year.