TOL - 21st Aug, 2024
4 steps to investing in the best small caps in the world
Did you know global small caps have historically outperformed large caps? Here’s how Ausbil's Tobias Bucks finds his best ideas.
This interview was conducted on 3 July 2024.
If you think global large caps are starting to look overvalued, perhaps it’s time to turn to small caps. According to Tobias Bucks, portfolio manager for the Ausbil Global Small Caps Fund, the performance figures alone warrant further research.
“Global small caps have provided the best risk-adjusted return in equities historically. Better than Australian equities, better than global large cap equities,” he says.
As the typically more volatile end of equities, it pays to be strict on quality fundamentals.
Bucks uses a four-step process to sift out those companies he considers ‘best ideas’ for his portfolio, including:
- The macro outlook
- Regions and sectors with the most unrecognised growth potential and best value
- Fundamental bottom-up stock research
- Portfolio construction: how the stocks fit together and overall portfolio risk
In this episode of Fund in Focus, Bucks details the four-step process, discusses a stock that meets the criteria, and explains how Ausbil incorporate ESG factors into the portfolio. He also discusses the big themes the Ausbil Global SmallCap Fund accesses in the portfolio.
Timecodes:
- 0:00 - Introduction and how Ausbil define small caps
- 0:35 - Why Ausbil focus on developed markets rather than emerging markets
- 0:56 - Ausbil's 4 step process and an example
- 4:12 - The structural growth drivers that Ausbil focuses on
- 5:02 - Looking for market inefficiencies
- 5:52 - Opportunities in Industries
- 8:12 - Why Ausbil is underweight the Energy sector
- 8:54 - Factoring ESG goals
- 10:19 - How investors can incorporate the fund in their portfolio
Invest with Experience
Learn more about Ausbil Investment Management and how you can invest here.
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Sara is a Content Editor at Livewire Markets. She is a passionate writer and reader with more than a decade of experience specific to finance and investments. Sara's background has included working at ETF Securities, BT Financial Group and Macquarie Group. She also holds a degree in psychology which drives a continued fascination with how human behaviour drives and is driven by investments and market activity.
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Sara is a Content Editor at Livewire Markets. She is a passionate writer and reader with more than a decade of experience specific to finance and investments. Sara's background has included working at ETF Securities, BT Financial Group and...
Sara is a Content Editor at Livewire Markets. She is a passionate writer and reader with more than a decade of experience specific to finance and investments. Sara's background has included working at ETF Securities, BT Financial Group and...
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