Microcap Fund Review FY 2020. The year of volatility.

FY2020 will for the time being at least go down as most volatile year ever for the S&P/ASX Emerging Companies Index since it started in January 2004. The S&P/ASX Emerging Companies Accumulation Index recorded a negative return of -30.74% for March 2020 the worst ever month since the index began 16 years ago. This performance was subsequently followed by the best month ever for the index in April 2020 when the index recorded a gain of 25.80%. The index cracked on over the rest of June 2020 quarter and finished up 44.88% for the quarter. The 2HFY2020 saw some incredible volatility both on the downside and the upside in ASX microcaps. It saw some incredible moves at the broad index level but also the stock-specific level.

As I have noted many times before judging any fund manager’s performance contained in the review, either positive or negative over a short time frame is not a good strategy in my view. Some fund managers will have positioned their portfolios better going into this period. Some fund managers will have positioned their portfolios better coming out of this period and rode the rebound wave particularly well. Some fund managers may have even achieved both. All fund managers will have accomplished this through a combination of a little luck and by design in terms of stock selection, portfolio risk management and timing. The one-year numbers in June 2021 will give a far better insight into the alpha-generating capabilities of individual microcap managers.

We have added one new name into our universe the Altor Alpha Fund. I have removed both of the Terra Capital offerings due to a lack of performance data from the manager.

International microcap indexes are provided to give a sense of how the Australian microcap market is performing relative to other global microcap markets.

I will be producing this review every quarter.

Notes:

1. All figures are as reported by the various managers.

2. Missing figures are either not reported by the manager or not applicable. 

Get investment insights from industry leaders

Liked this wire? Hit the follow button below to get notified every time I post a wire. Not a Livewire Member? Sign up for free today to get inside access to investment ideas and strategies from Australia’s leading investors.