Small cap investing provides early access to next big thing
Investors who make allocations to global small cap funds can gain access to the next international success story before large cap fund managers start looking at them.
Speaking at a briefing Sydney today, Eaton Vance Global Small Cap team leader, Aidan Farrell, said small cap investing gave investors access to businesses with potential, before they would through large cap or all cap funds.
"This really is all about identifying structural growth," he said.
"It's about identifying the next SAP of this world... the next Apple. The beauty of small cap investing is you're getting into the sweet shop before anybody else.
"That's not because nobody else can look at it, it's because for large cap investors the liquidity isn't there, so there's no point in them looking at these."
With equities markets starting 2016 in a period of volatility, Farrell warned against taking rash decisions.
"There's going to be volatility as there was at the start of this year," he said. "But you need to stick to your guns.
"It's difficult sometimes, we've seen [allegedly] a lot of sovereign wealth funds selling in recent times, which means the baby's been thrown out with the bathwater, a lot of good stocks have come down at the same time.
"You have to grit your teeth… the worst you could do is get nervous and change your approach, because then you will — in my view — crystalise your losses."
AUTHOR
Nicholas O'Donoghue
Recommended for you
Evidentia’s chief investment strategist Nathan Lim has announced his retirement after a 30-year career.
GQG Partners has marked its fifth consecutive month of outflows as its AI concerns lead to fund underperformance but overall funds under management increased to US$166.1 billion.
Apostle Funds Management is actively pursuing further partnerships in Asia and Europe but finding a suitable manager is a “needle in a haystack”.
Managed account provider Trellia Wealth Partners, formed from the merger between Betashares and InvestSense, has appointed its first managing partner.
