UBS Microcap Fund aims to provide investors with capital growth over the long term from a portfolio of micro company shares that we believe are being undervalued by the market, based on our assessment of the companies’ future cash flows.
After fees and expenses, the Portfolio declined by 4.14% during the month, underperforming its benchmark by 11 bps.
The largest positive contributors were Generation Development Group, Monash IVF and Leo Lithium (not held). Generation Development Group jumped on speculation that the business may be a takeover target given recent consolidation in the funds management industry. Monash IVF traded higher after the release of Medicare statistics for August which showed total cycle growth of 20.3% on the prior corresponding period. Leo Lithium (not held) was suspended from listing pending correspondence from the Mali government in relation to their Goulamina Lithium project.
The largest negative contributors were Botanix Pharmaceuticals, Paladin Energy (not held) and XRF Scientific. Botanix Pharmaceuticals traded lower as FDA approval for their novel drug Sofpironium Bromide was delayed pending additional information regarding patient use instructions. Paladin Energy (not held) traded higher on the back of a stronger underlying Uranium price. Lastly XRF Scientific was sold off despite no stock specific news.
What is UBS Microcap Fund UBS Microcap Fund is an Managed Funds investment product that is benchmarked against ASX Index Small Ordinaries Index and sits inside the Domestic Equity - Small 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 UBS Microcap Fund has Assets Under Management of 35.17 M with a management fee of 1.2%, a performance fee of 20.00% and a buy/sell spread fee of 0.7%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the UBS Microcap Fund has returned 5.14% in the last month. The previous three years have returned 4.46% annualised and 17.02% each year since inception, which is when the UBS Microcap 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 UBS Microcap Fund first started, the Sharpe ratio is 0.65 with an annualised volatility of 17.02%. The maximum drawdown of the investment product in the last 12 months is -9.46% and -34.3% 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 UBS Microcap Fund has a 12-month excess return when compared to the Domestic Equity - Small Cap Index of -4.85% and 3% 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. UBS Microcap Fund has produced Alpha over the Domestic Equity - Small Cap Index of -0.22% in the last 12 months and 0.25% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Small Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will UBS Microcap Fund provide?
UBS Microcap Fund has a correlation coefficient of 0.92 and a beta of 0.72 when compared to the Domestic Equity - Small 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 UBS Microcap Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the UBS Microcap Fund with the ASX Index Small Ordinaries Index?
For a full quantitative report on UBS Microcap Fund compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the UBS Microcap Fund to do my own analysis?
To sort and compare the UBS Microcap Fund financial metrics, please refer to the table above.
Has the UBS Microcap 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 UBS Microcap Fund?
How do I get in contact with the UBS Microcap Fund?
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the UBS Microcap Fund. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 After fees and expenses, the Portfolio increased by 1.70% during the month, outperforming its benchmark by 301 bps.
The largest positive contributors were Botanix Pharmaceuticals, Energy One and Laserbond. Botanix Pharmaceuticals traded higher as the targeted FDA approval date for their novel drug Sofpironium Bromide was reaffirmed for end of September 2023. Energy One received a non-binding indicative offer for their business at $5.85/share being a 44% premium to its last traded price. Laserbond provided a strong FY23 result with revenue up 25.7% on pcp and net profit after tax up 31.1%.
The largest negative contributors were NextEd, XRF Scientific and PeopleIn. Tertiary education provider NextEd traded lower following a trading update highlighting the negative implications of the temporary COVID-19, 408 Visa on their business which has since ceased. XRF scientific traded lower after reaching all time highs. PeopleIn was sold off after missing their pre-announced EBITDA guidance range of $62m-$66m for FY23, generating $60.9m.
Performance Commentary - July 31, 2023 After fees and expenses, the Portfolio increased by 2.23% during the month, underperforming its benchmark by 131 bps.
The largest positive contributors were Energy One, XRF Scientific and Murray Cod Australia. Energy One confirmed FY23 guidance will be met, with total revenue expected to be $44.5m and EBITDA of $12.3m. XRF Scientific reached new all-time highs, driven by strength in the mining and industrial sectors. Murray Cod Australia rallied after reiterating growth plan to achieve 10k tonnes of fish in 2030 and the successful recapture of escapee fish despite a provision of $2.6m previously made.
The largest negative contributors were NextEd, Lycopodium and Smartpay. Tertiary education provider NextEd updated the market with FY23 guidance which was slightly below expectations. The miss was largely a result of growing pains, where short-term classroom leases were booked as operating expenditure rather than being amortised. Lycopodium traded lower despite no stock specific news. Payment solution provider SmartPay reached all-time highs during the month but finished lower on fears of slower transacting volumes in the more challenging economic environment.
Performance Commentary - June 30, 2023 After fees and expenses, the Portfolio increased by 2.19% during the month, outperforming its benchmark by 216 bps.
The largest positive contributors were Botanix Pharmaceuticals, Fleetwood and Lycopodium. Botanix Pharmaceuticals provided an update regarding their activities leading up to FDA approval date, initiating label negotiations and accelerating commercial activities ready for launch of its novel drug Sofpironium Bromide. Building solutions provider Fleetwood entered an accommodation agreement with Rio Tinto to supply 250 rooms, expected to generate a further $100-$120m in revenue over the period to April 2027. Engineering services provider Lycopodium was selected by Barrick Gold Corporation to complete the feasibility study and basic engineering scope for its Reko Diq Copper-Gold Project in Pakistan, valued around $55m.
The largest negative contributors were PeopleIN, Alliance Aviation Services and Paladin Energy (not held). Talent solutions business PeopleIN traded lower after concluding a strategic review announced in November 2022 which provided no new insights. Alliance Aviation Services continued to be sold off following the ACCC’s rejection of the takeover approach from Qantas Group. Uranium company Paladin Energy (not held) rallied on the back of the Namibian government confirming there are no imminent legislative changes that would impact its ownership of the Langer Heinrich Mine.
Performance Commentary - May 31, 2023 After fees and expenses, the Portfolio decreased by 1.40% during the month, outperforming its benchmark by 186 bps.
The largest positive contributors were MaxiPARTS, SmartPay and Supply Network. MaxiPARTS announced and completed the acquisition of 80% of workshop consumables distributor Forch Australia which is expected to provide immediate incremental improvement to profit margins. Payment solution provider SmartPay outperformed after announcing its FY23 result which highlighted a 62% increase in revenue and 81% increase in EBITDA. Supply Network upgraded its FY23 guidance during May, highlighting that industry conditions remain very supportive.
The largest negative contributors were Lunnon Metals, Top Shelf International and XRF Scientific. Lunnon Metals traded lower, levered to the underlying Nickel price which traded around $20,430 USD/T down from monthly highs of over $24,950 USD/T. Top Shelf International fell after announcing it seeks to raise $40m at a 19% discount to the 10-day volume weighted average price. The funds will be used to reduce debt while supporting the launch of their agave spirit.
XRF Scientific retraced after reaching all-time highs, driven by strength in mining and industrial sectors.
Performance Commentary - April 30, 2023 After fees and expenses, the Portfolio increased by 4.20% during the month, outperforming its benchmark by 142 bps. The largest positive contributors were XRF Scientific, Lycopodium and SmartPay. XRF Scientific continued to outperform, driven by strength in its mining and industrial sectors. Sales revenue was up 45% in the March quarter to $40.5m, with NPAT up 39% to $8.2m. Lycopodium provided a strong update, increasing full year NPAT guidance to $45m (previously $40m).
Payment solutions provider SmartPay highlighted terminal fleet growth of 62% and transaction revenue increasing 76% (y/y) in Australia. Additionally, they announced a strategic review of its New Zealand business to unlock greater value. The largest negative contributors were Alliance Aviation Services, Botanix Pharmaceuticals and Top Shelf International.
Alliance Aviation Services traded lower on the back of a negative ACCC decision which opposed Qantas’ proposed acquisition at $4.75/share. Botanix Pharmaceuticals conducted a $10m capital raise at a 10% discount to the last traded price to prepare for FDA approval and commercial launch of their novel drug Sofpironium Bromide. Top Shelf International continued to trade lower after a small capital raise to help fund the completion of their agave distillery, which was conducted at a 13% discount to the last traded price.
Performance Commentary - March 31, 2023 After fees and expenses, the Portfolio declined by 2.25% during the month, underperforming its benchmark by 153 bps.
The largest positive contributors were Monash IVF, NextEd Group and Mincor Resources. Reproductive and fertility services group Monash IVF traded higher on no stock specific news. Education business NextEd Group reached all-time highs as the market digested their stella 1H23 result, with record revenues of $43.6m (up 239% on pcp) and EBITDA of $6.6m (up 403% on pcp). Mincor Resources was subject to an on-market takeover bid from Andrew Forrest’s Wyloo Metals at $1.40/share representing a 35% premium to the last closing price of $1.04.
The largest negative contributors were Liontown Resources (not held), Janison Education and GR Engineering Services. Liontown Resources (not held) received a non-binding indicative proposal from Albemarle Corporation at $2.50/share. Janison Education was removed from the AllOrdinaries index which saw selling by passive index funds, further weighing on the share price. GR Engineering Services traded lower after paying a $0.09 dividend for the half year.
Performance Commentary - February 28, 2023 After fees and expenses, the Portfolio increased by 0.76% during the month, outperforming its benchmark by 446 bps.
The largest positive contributors were Lycopodium, Ridley Corporation and XRF Scientific. Lycopodium provided a strong 1H23 update, increasing full year guidance across both revenue and NPAT reflecting a robust portfolio of projects and studies currently in delivery. Importantly, the business continues to be awarded new projects given high demand for base metal projects in support of the energy transition. Ridley Corporation posted a strong result, with EBITDA up 13% (y/y) to and NPAT up 20% (y/y). Management highlighted that despite challenging conditions they expect earnings growth in all business segments and improved asset utilisation. XRF Scientific continued to perform, driven by strength in the mining and industrial sectors. Sales revenue was up 46% on the pcp and NPAT was up 34%.
The largest negative contributors were Pacific Smiles, Mincor Resources, and Top Shelf International. Pacific Smiles traded lower after updating guidance to be at the bottom end of the previously advised range. Mincor Resources was sold off on the back of a weaker underlying Nickel price, in addition to a poor 1H23 result which flagged a slow ramp up of the Kambalda operation. Top Shelf International completed a capital raise to help fund the completion of their agave distillery, conducted at a 13% discount to the last traded price.
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