Boutique investment manager Maple-Brown Abbott has launched an Australian small companies fund focusing on undervalued stocks and strong medium-term earnings supported by sustainable business models.
The Maple-Brown Abbott Australian Small Companies Fund will typically hold 30 to 50 stocks based upon diversification and stock-specific risk management. With regard to returns, it is aiming to outperform the S&P/ASX Small Ordinaries (Total Return) Index, after fees, over a five-year period.
The fund launch intentionally coincides with the organisation’s recent appointment of specialist small-cap managers Phillip Hudak and Matt Griffin, who formerly ran the AMP Capital Australian Emerging Companies strategy.
“Phillip and Matt have an impressive track record and a compelling earnings-based philosophy integrating a sustainability focus that we believe differentiates the strategy. They also have a proven and repeatable investment process, focused on in-depth fundamental research,” Maple-Brown Abbott chief executive Sophia Rahmani said.
“Judging by the early market feedback, history of the team and capacity limits of small-caps strategies, we expect this will be a popular offering for institutional and wholesale clients.”
Hudak expressed his passion for the asset class and provided some insights into the strategy behind the new offering.
“The new fund is based on our existing strategy and core philosophy that earnings drive share prices rather than on any particular investment style. We consider the valuation and where the company is in the earnings cycle. We believe this, combined with our focus on sustainability and avoiding short-term downgrades, can deliver consistent returns,” he said.
Griffin noted recent market volatility has created an optimal time for investing in the type of companies the new fund is targeting.
“As part of the team’s research, we focus on non-consensus and proprietary insights and expect to hold over 1000 company-related meetings per year, including management meetings, site visits, industry expert panels and environment, social and government meetings. The team is highly aligned to client goals through a competitive remuneration framework and each team member having invested into the strategy,” he said.
The small companies fund brings Maple-Brown Abbott’s suite of managed funds to five.
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