Paradice Global Small Cap Fund (ETL0365AU) Report & Performance

What is the Paradice Global Small Cap Fund fund?

The Paradice Global Small Cap Fund is an actively managed, long only global equities product that invests in small caps. The Investment Manager believes that global small cap companies are the largest investment universe with the least amount of broker research coverage. there is an opportunity to find value no matter where we are in the economic cycle.

  • Paradice believes that investment markets are inefficient as a result of excesses in collective market emotion, short-termism and too much market focus on profit and loss statements.
  • The Fund is managed with a value and quality style bias, and has an emphasis on companies that exhibit four key characteristics – undervaluation, business quality, strong financial metrics and shareholder friendly management teams.
  • The aim is to outperform the Benchmark over a three to five year period (after management costs and before tax).

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For Paradice Global Small Cap Fund

Paradice Global Small Cap Fund Fund Commentary September 30, 2023

The Fund was essentially flat for the quarter posting returns of -0.25% (net). Areas of weakness for the Fund were primarily stock selection in Europe and an underweight to Emerging Markets, which outperformed during the period. Areas of strength for the Fund were North America and the UK on the back of strong performance in Industrials.

Portfolio Changes

During the quarter the Fund initiated two new positions and exited five. There was also one merger.

The Fund initiated a new position in a company that operates the leading investment platform in Europe, which connects financial institutions and investors. Whilst the business does not technically have a recurring subscription revenue, the revenue streams are very predictable and sticky by nature, leading to strong predictability of earnings. The company appears undervalued relative to a broad range of comparable businesses.

An additional new position for the Fund was a Japanese listed company that provides online recruitment solutions to Japanese companies seeking to recruit staff across many industries. The company’s flagship website is consistently ranked #1 in satisfaction surveys. This business plays nicely into Japan’s structurally tight labor market (due to demographics) as well as the constant war for talent amongst major employers.

A US retail clothing store was exited during the quarter. We commend the management team at the company on the successful turnaround of the flagship brand. Brand turnarounds are extremely challenging to execute on. We exited our position based on valuation combined with an increasingly challenging economic environment for the consumer.

A German listed trucking components business was also exited. The company is a well run business, however, recent earnings have been bolstered by supply constrained market for trucking components and high pricing for new trucks. We sold the position to zero on concerns around future earnings growth potential.

Three additional positions were exited during the period on valuation grounds to make way for new investments and manage the Fund cash position.

In addition, the merger of the Fund position in a leading player in spinal surgery, and a US medical device business closed during the quarter. As a result, our shares in the former were effectively swapped for shares in the latter. The board of US medical device business has subsequently announced an increase of their ongoing share buyback program.

We believe the combination of these two businesses, led by a well established and proven management team is a compelling investment.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Paradice Global Small Cap FundETL0365AUManaged FundsForeign EquityEquity World Mid/SmallForeign Equity - World Mid/Small IndexDeveloped -World Index815.00 M1.25%0.00%0.6%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Paradice Global Small Cap Fund3.76%2.96%15.64%0.9%9.82%14.44%14.06%13.45%-10.1%-23.68%-23.68%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Paradice Global Small Cap FundForeign Equity - World Mid/Small Index-0.74%-1.93%NA%NA%NA%1.065.56%5.06%0.930.93

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
Paradice Global Small Cap FundYes-www.paradice.com.au-

Product Due Diligence

What is Paradice Global Small Cap Fund

Paradice Global Small Cap Fund is an Managed Funds investment product that is benchmarked against Developed -World Index and sits inside the Foreign Equity - World Mid/Small 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 Paradice Global Small Cap Fund has Assets Under Management of 815.00 M with a management fee of 1.25%, a performance fee of 0.00% and a buy/sell spread fee of 0.6%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the Paradice Global Small Cap Fund has returned 3.76% in the last month. The previous three years have returned 0.9% annualised and 13.45% each year since inception, which is when the Paradice Global Small Cap Fund 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 Paradice Global Small Cap Fund first started, the Sharpe ratio is NA with an annualised volatility of 13.45%. The maximum drawdown of the investment product in the last 12 months is -10.1% and -23.68% 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 Paradice Global Small Cap Fund has a 12-month excess return when compared to the Foreign Equity - World Mid/Small Index of -0.74% and -1.93% 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. Paradice Global Small Cap Fund has produced Alpha over the Foreign Equity - World Mid/Small Index of NA% in the last 12 months and NA% since inception.

What are similar investment products?

For a full list of investment products in the Foreign Equity - World Mid/Small Index category, you can click here for the Peer Investment Report.

What level of diversification will Paradice Global Small Cap Fund provide?

Paradice Global Small Cap Fund has a correlation coefficient of 0.93 and a beta of 1.06 when compared to the Foreign Equity - World Mid/Small 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 Paradice Global Small Cap Fund and its peer investments, you can click here for the Peer Investment Report.

How do I compare the Paradice Global Small Cap Fund with the Developed -World Index?

For a full quantitative report on Paradice Global Small Cap Fund compared to the Developed -World Index, you can click here.

Can I sort and compare the Paradice Global Small Cap Fund to do my own analysis?

To sort and compare the Paradice Global Small Cap Fund financial metrics, please refer to the table above.

Has the Paradice Global Small Cap Fund 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.

How can I invest in Paradice Global Small Cap Fund?

If you or your self managed super fund would like to invest in the Paradice Global Small Cap Fund please contact via phone or via email .

How do I get in contact with the Paradice Global Small Cap Fund?

If you would like to get in contact with the Paradice Global Small Cap Fund manager, please call .

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the Paradice Global Small Cap Fund. All data and commentary for this fund is provided free of charge for our readers general information.

Historical Performance Commentary

Performance Commentary - June 30, 2023

The portfolio generated positive returns during the period of 1.76%, however underperformed the benchmark by 1.49%. The source of underperformance was primarily stock selection across Information Technology, Healthcare and Industrials. Geographically, Emerging Markets were source of absolute and relative outperformance, whilst Japan also contributed positively. The UK and Europe were areas of geographic weakness.

Portfolio Changes

The portfolio was quite active during the quarter, initiating positions in two new stocks, whilst selling five.

A diabetes care company (mentioned above) was added to the portfolio during the period. We believe investors are placing too many concerns on the short term and not appreciating the company’s product pipeline. The diabetes industry is large and growing and the company offers the premium ‘non-patch’ pump in the market, in our opinion.

A US flooring manufacturer was also added in Q2. The company sells almost all types of flooring (except wood) in both the US and Europe. We believe the concerns around a housing slowdown due to higher interest are overdone. Roughly half of the company’s revenues come from renovations, not new construction.

A US snacking business holding was sold after a nasty earnings miss and a lack of confidence in the new management team. The company previously performed well for the portfolio, and some profits were taken at higher levels. However, two poor capital allocation decisions have left the balance sheet in a precarious position at a time when inflation and demand are both very challenging to predict. The thesis had changed appreciably from when we first invested in the company, therefore it was time to divest.

A medical device manufacturer holding was sold during the month on valuation grounds.

A UK distribution business, which provides sourcing solutions across a diverse range of industries was sold off during the quarter. The company’s strong point is in automation and robotics, which has highly specialized distribution needs and regular maintenance revenues. The recent CEO change and concerns about an economic slowdown caused us to sell the shares off to an attractive entry level in our view.

A US industrial distributor holding was sold off during the quarter as a funding source for new purchases. The company is currently under takeout, trading at a very narrow discount to the agreed upon takeout price.

An Irish listed property developer holding was divested as the shares approached fair value.

Performance Commentary - March 31, 2023

The Fund had a positive quarter returning 6.56% and outperforming the benchmark by 0.89%. Geographically speaking, stock selection in the United States was a primary source of positive return. Conversely, stock selection in the UK detracted from the portfolio’s performance. On a sector basis, returns were driven by an underweight position in financials, positive stock selection in Real Estate, and strong stock performance in our overweight Industrials exposure. Our underweight to Information Technology was a negative contributor.

There were no new names purchased in the portfolio. We sold out of a US-listed industrial company on valuation grounds. We added and trimmed individual names on the basis of position size and/or valuation grounds. The bench of new names remains constructive and recent volatility is bringing investments closer to our buy prices across stocks in a range of sectors.

Performance Commentary - January 31, 2023

Performance Commentary - December 31, 2022

The Fund had a robust absolute and relative quarter, delivering a 9.25% return, and outperforming the benchmark by 3.51%. On a sector basis, returns were spearheaded by key overweights to Health Care and Industrials given our strong stock selection. Geographically speaking, stock selection in North America was a primary source of positive return, while our overweight to and stock selection in the UK also added notably. Conversely, stock selection in Japan proved a detractor to the quarter’s performance.

Top Performers for the Quarter Included:

ChampionX (US) formulates specialty chemicals for the energy industry which allow for more efficient extraction of Oil and Gas. The company’s products reduce Oil and Gas operators’ water wastage and energy usage. ChampionX reported earnings during the quarter which demonstrated impressive pricing power and disciplined cost management, shares subsequently rallied. We believe ChampionX is well placed heading into 2023 as a vital supplier into the Oil and Gas market.

Bottom Performers for the Quarter Included:

YDUQS (Brazil) is the country’s largest postsecondary school education provider, offering a combination of on campus and distance education options. A few factors impacted the stock during the quarter. The company’s shares have come under pressure as investors are increasingly uncertain of the ramifications of the impending change of political parties in Brazil. Also, YDUQS’s floating rate debt will reduce earnings in 2023. In our view, it is likely that left facing President Lula will be favorable for the education industry. During his first term as president (2003 – 2010), through an emphasis on education, Lula focused on reducing poverty and improving literacy levels. Education continued to be a focus during his re-election campaign as it was integral to his plan to rebuild the economy in the face of crisis and to reduce poverty. We are currently reviewing our investment thesis on the company.

During the quarter, the Fund initiated a position in a global engineering and consulting business. We believe the business will achieve robust growth due to strong ESG and regulatory tailwinds. The Fund sold out of a specialized industrial manufacturer of lasers and motion control components which had been a solid holding and strong contributor to the portfolio over many years. The fund exited two Japanese positions – a dentistry supply business that reached our estimation of fair value and an ingredients and flavourings business that we believed had made some poor capital allocation decisions, calling into the question the quality of the company leadership. Lastly, the Fund exited its position in a Scandinavian specialty aluminum supplier on valuation grounds.

Performance Commentary - September 30, 2022

The Fund returned -6.00% during the September quarter, versus our benchmark which returned -0.37% over the same period. Our stock selection in the Industrials, Consumer Staples and Health Care sectors in particular were areas of weakness. From a geographic perspective, our stock selection in the US and our overweight and stock selection in the UK were significant detractors in Q3.

Performance Commentary - June 30, 2022

The Fund returned -9.64% during the June quarter, versus its benchmark which returned -7.58% over the same period. Our overweight in the US, particularly to Industrials, impacted performance negatively during the quarter. Stock picking in the UK was a net positive for the fund, though not sufficient to offset sector allocations.

Significant contributors to performance included:

Fibra Prologis (Mexico)
Fibra Prologis’ defensive attributes shone through in the quarter. The REIT owns logistics and other light industrial assets that have high utilization and majority dollarized rents, with many multinational tenants. Tailwinds include rising e-commerce penetration and US nearshoring activity. The company has also been active with asset acquisitions, driving additional value.

CDK Global Inc (US)
CDK provides a broad suite of software solutions to the automotive retail industry, primarily car dealerships in the US. We began purchasing CDK last in 2021 as the business was undervalued with a very sticky customer based delivering high predictability of revenue and cashflow. Early in the quarter CDK received a takeout offer from Brookfield Asset Management at roughly a 30% premium to our cost basis.

Renewi (UK)
Renewi is a waste management company listed in the UK with most of its operations in the Netherlands and Benelux regions. Renewi has a focus on recycling and sustainable waste management practices. During the quarter, Renewi released financial results showing revenue growth of 10% and flagged a potential dividend increase for 2023. We believe Renewi remains materially undervalued compared to listed sustainable waste management comps and appears ripe for a takeout in an industry which continues to see consolidation.

Performance Commentary - March 31, 2022

Our overweight positions in the UK and Europe were headwinds in the quarter. While stock selection, specifically in Emerging Markets, helped to offset our off-the-mark geographic positioning, the Fund trailed the benchmark for the quarter.

Significant contributors to performance included:

ChampionX Corporation (US)
ChampionX rose with global energy prices which accelerated sharply in the quarter. With Russia facing significant sanctions, oil & gas production will need to increase elsewhere and ChampionX is well positioned to support both onshore and offshore drilling and production.

Sendas Distribuidora (Brazil)
Brazilian cash & carry Sendas Distribuidora rose due to a recovering Brazilian economy, a recent acquisition that will accelerate store rollout plans, and a strengthening currency. We view the cash & carry business model as highly defensive due to its low-priced products and underpenetrated position in the Brazilian retail space. Within this attractive space Sendas holds a strong position in a near-duopoly market which we believe will allow the company to maintain margins via price increases even in an inflationary environment.

KAR Auction Services (US)
KAR Auction Services surprised the market by divesting its physical auction and logistics assets to Carvana for a very attractive price. After the divestiture closes, KAR will be an asset lite digital auction provider with a clean balance sheet. Long-term we expect the digital auction market to consolidate and believe this consolidation will further benefit KAR.

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