ACQ is a pre-IPO/unlisted, micro and small cap strategy designed to deliver capital growth (of course), dividend income and manage risk by diversification across securities, industries, and by different stages of development. With approximately 90 securities in the portfolio (circa 25 being unlisted) we would say it is highly diversified for this type of strategy. Notwithstanding the diversification, the manager has been selective by industry, with the current portfolio exhibiting a focus on healthcare (including med tech), IT, online retail/e-commerce and disruptions in financial services and battery minerals and clean energy are a number of the more notable thematics the manager is investing in. That is, in areas where the manager continues to see strong, ongoing, structural growth in companies that provide both innovation and a sustainable, competitive advantage. No surprise ACQ has performed well over the last 12-months given sector positioning – NTA +77% YoY. And, with the prior disc to NTA roaring back to a slight premium, share price returns have been +116%. Of course, we would point out the obvious – past performance is not an indication of future performance, but credit where credit is due regarding sector positioning. Always good to see the close-ended structure being used appropriately by asset class, in this case illiquid unlisted and limited liquidity longer term positioning in smaller listed companies.
The Fund returned -3.47% (post-fees) for the month, outperforming the benchmark which returned -4.04%.
The key contributors to relative performance included an overweight position in Karoon Energy (KAR) and underweight positions in Leo Lithium (LLL) and Chalice Mining (CHN). KAR outperformed as the energy producer benefitted from rising oil prices during the period.
The key detractors from relative performance included underweight positions in Boss Energy (BOE) and New Hope Corporation (NHC) and an overweight position in Helloworld Travel (HLO). Travel company HLO saw reversals in September as the travel sector faced headwinds including higher bond yields and fuel prices.
What is Macquarie Australian Small Companies Macquarie Australian Small Companies is an Managed Funds investment product that is benchmarked against ASX Index MidCap 50 Index and sits inside the Domestic Equity - Mid Cap Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Macquarie Australian Small Companies has Assets Under Management of 140.18 M with a management fee of 0.6%, a performance fee of 0.84% and a buy/sell spread fee of 0.58%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Macquarie Australian Small Companies has returned 6.17% in the last month. The previous three years have returned 6.27% annualised and 20.68% each year since inception, which is when the Macquarie Australian Small Companies first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Macquarie Australian Small Companies first started, the Sharpe ratio is 0.4 with an annualised volatility of 20.68%. The maximum drawdown of the investment product in the last 12 months is -11.03% and -69.79% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Macquarie Australian Small Companies has a 12-month excess return when compared to the Domestic Equity - Mid Cap Index of -0.72% and -0.76% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Macquarie Australian Small Companies has produced Alpha over the Domestic Equity - Mid Cap Index of -0.08% in the last 12 months and -0.13% since inception.
What are similar investment products? For a full list of investment products in the Domestic Equity - Mid Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will Macquarie Australian Small Companies provide? Macquarie Australian Small Companies has a correlation coefficient of 0.96 and a beta of 1.07 when compared to the Domestic Equity - Mid Cap Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Macquarie Australian Small Companies and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Macquarie Australian Small Companies with the ASX Index MidCap 50 Index? For a full quantitative report on Macquarie Australian Small Companies compared to the ASX Index MidCap 50 Index, you can click here.
Can I sort and compare the Macquarie Australian Small Companies to do my own analysis? To sort and compare the Macquarie Australian Small Companies financial metrics, please refer to the table above.
Has the Macquarie Australian Small Companies been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the Macquarie Australian Small Companies. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 The Fund returned 0.48% (post-fees) for the month, outperforming the benchmark which returned -1.31%.
The key contributors to relative performance included an overweight position in News Corporation (NWS) and underweight positions in Chalice Mining (CHN) and Iress (IRE). Chalice Mining underperformed after the eagerly anticipated scoping study for its Gonneville project proved to be predicated on questionable production grade and commodity price assumptions.
The key detractors from relative performance included overweight positions in Webjet (WEB), Insignia Financial (IFL) and Centuria Capital (CNI). Webjet underperformed for the period after releasing an update that showed a slight slowdown in the company’s projected growth in FY 2024 and revealing it has no plans to reinstate its dividend.
Performance Commentary - July 31, 2023 The Fund returned 3.54% (post-fees) for the month, performing in line with the benchmark which also returned 3.54%.
The key contributors to relative performance included an underweight position in Core Lithium (CXO) and overweight positions in Webjet (WEB) and Corporate Travel (CTD). Core Lithium underperformed amid ongoing volatility in the lithium sector driven by fluctuating EV demand, impairment announcements, quarterly production updates and M&A.
The key detractors from relative performance included overweight positions in Resolute Mining (RSG), Flight Centre (FLT) and Regis Resources (RRL). Strength in travel stocks continued in July. Flight Centre provided a positive update flagging expectation of higher earnings. Demand for leisure travel remains high, seemingly unaffected by a broad-based slowing of consumer demand. Older, wealthier travellers benefitting from higher income from savings are boosting demand. Corporate travel remains below pre-COVID levels.
Performance Commentary - June 30, 2023 The Fund returned -0.41% (post-fees) for the month, underperforming the benchmark by -0.44%.
The key contributors to relative performance included overweight positions in McMillan Shakespeare (MMS), AUB Group (AUB) and NRW Holdings (NWH). AUB Group saw a reversal after last month’s trading update.
The key detractors from relative performance included overweight positions in Johns Lyng Group (JLG), Gold Road (GOR) and Resolute Mining (RSG). Johns Lyng Group fell markedly despite an upgrade earnings via a mid-month trading update.
Performance Commentary - May 31, 2023 The Fund returned -5.42% (post-fees) for the month, underperforming the benchmark by -2.16%.
The key contributors to relative performance included an overweight position in News Corp. (NWS), underweight position in De Grey Mining (DEG), and an underweight position in Premier Investments (PMV).
The key detractors from relative performance included an overweight position in Perseus Mining (PRU), overweight position in Lovisa (LOV), and an overweight position in Super Retail (SUL). Retailers Super Retail and Lovisa saw share price weakness following disappointing trading updates, while Perseus Mining underperformed as the gold price fell during the period.
Performance Commentary - April 30, 2023 The Fund returned 3.09% (post-fees) for the month, outperforming the benchmark by 0.31%.
The key contributors to relative performance included overweight positions in Helloworld Travel (HLO), Centuria Capital (CNI) and Resolute Mining (RSG).
Helloworld Travel underperformed for the period after reporting a strong update with the company benefiting from a continued rebound in travel post COVID-19.
Gold miner Resolute Mining outperformed following the release of a strong quarterly update and ongoing strength in the gold price.
The key detractors from relative performance included an underweight position in Telix Pharmaceutical (TLX) and overweight positions in Champion Iron (CIA) and Syrah Resources (SYR).
Cancer imaging company Telix Pharmaceutical saw its share price surge following the release of significantly better-than-expected March quarter sales.
Iron ore producer Champion Iron underperformed on continued weakness in the iron ore price.
Performance Commentary - February 28, 2023 The Fund returned -3.38% (post-fees) for the month, outperforming the benchmark by 0.32%.
The key contributors to relative performance included an underweight position in Core Lithium (CXO), and overweight positions in Johns Lyng Group (JLG) and AUB Group (AUB).
Building services company Johns Lyng outperformed after reporting a bumper earnings update, benefiting from a long pipeline of restoration work from 2022 floods.
Insurer AUB outperformed following a positive earnings update. The company reported revenue growth and margin expansion in its Australian broking division driven by ongoing network optimisation, disciplined acquisitions, and enhanced broker propositions.
The key detractors from relative performance included an underweight position in Flight Centre (FLT), and overweight positions in NRW Holdings (NWH) and Clinuvel Pharmaceuticals (CUV).
Travel company Flight Centre outperformed after raising equity to fund an acquisition in late January. The travel industry generally reported strong results in February.
Biotech company Clinuvel Pharmaceuticals saw share price weakness after reporting lower than expected sales of its key product SCENESSE.
Performance Commentary - December 31, 2022 In December, the Fund finished down -3.04% (post-fees), outperforming the benchmark by 0.69%.
The key contributors to relative performance included overweight positions Champion Iron (CIA) and Spark New Zealand (SPK), and an underweight position in Core Lithium (CXO).
Iron-ore producer Champion Iron outperformed for the period as iron ore prices continued to rise.
New Zealand telecommunications company Spark New Zealand, which was recently added to the ASX200, outperformed due to its defensive characteristics in weak market conditions.
The key detractors from relative performance included overweight positions in Liontown Resources (LTR) and Johns Lyng Group (JLG), and an underweight position in Chalice Mining (CHN).
Lithium producer Liontown Resources underperformed, giving back some of their strong 2022 gains, amid increased uncertainty of lithium demand from China.
Building services company Johns Lyng Group underperformed for the period after the market reacted to the Chief Operating Officer selling 31% of his shares in the company.
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