Lonsec unsure about UBS small caps team
The UBS small caps fund might have lost its competitive edge with the departure of its previous managers John Campbell and Jeremy Bendeich, according to a report published by Lonsec.
In its small cap sector review, the researcher has announced a downgrade from a 'fund watch' to an 'on hold' rating for the UBS Australian Small Companies Fund.
"Lonsec considers the fund's major competitive edge to be its disciplined and robust investment process," Lonsec's investment analyst Steven Sweeney stated.
"However, the investment team has experienced persistent year-to-year personnel change in recent years and is untested as a combined entity, with Victor Gomes only joining Stephen Wood in mid 2011," Sweeney said.
The fund's previous managers Jeremy Bandeich and John Campbell made a sudden departure from the company in April 2011, announcing the launch of their own small cap boutique - Avoca Investment Management.
The only remaining member of the previous three-person team, Stephen Wood, almost immediately took over, with Victor Gomes having been appointed to co-manage the fund in late April.
However, the UBS acquisition of ING Investment Management further added to the instability, according to Lonsec.
"While perhaps impacting less on the small caps team than it has on the large cap team, this still has the potential to add further instability," the report stated.
Lonsec acknowledges that the move by UBS to "boutique" the equity teams, while still early days, may assist in addressing this issue and enhance the managers' alignment of interest with investors.
Furthermore, the recent hire of a resources analyst to this small caps team could prove beneficial in providing insight into a key small cap sector, Sweeney said.
However, Lonsec concluded by saying it currently believed "there are a number of more attractive opportunities in the small cap sector" and that it will be looking for a period of stability and cohesion in the new structure.
Recommended for you
Technology firm Iress and investment manager Challenger have formed a strategic partnership to launch an adviser solution to better serve their retiring clients.
There have only been a “handful” of opportunities in the last 20 years when infrastructure has looked as cheap relative to equities as it does now, according to Lazard, making it a viable option to provide portfolio security amid market volatility.
The Australian Financial Complaints Authority has reported an 18 per cent increase in investment and advice complaints received in the financial year 2025, rebounding from the previous year’s 26 per cent dip.
EY has broken down which uses of artificial intelligence are presenting the most benefits for wealth managers as well as whether it will impact employee headcounts.
