The Zenith Investment Partners “Australian Small Companies Sector Review” has found large-cap fund managers employing passive strategies have significantly outperformed managers using the same investment strategies in the small-cap space over the past 17 years.
The finding rang true for absolute as well as risk-adjusted returns, leading the research house to recognise the importance of active management strategies for the small-cap sector.
Lending weight to this conclusion was Zenith’s finding that over the 2014 calendar year, the median small-cap manager using active strategies generated a return of 1.6 per cent. This compared favourably to the return delivered by the S&P ASX Small Ordinaries Accumulation Index of -0.76 per cent.
The 2014 calendar year result represented outperformance of 2.4 per cent against the index and was even more pronounced when looking at the three-year period ending 31 December 2014, where the median active manager outperformed the index by 18.5 per cent a year.
The sector review assessed a total of 59 offerings, with the NovaPort Wholesale Smaller Companies Fund, Fairview Equity Partners Emerging Companies Fund, Ironbark Karara Australian Small Companies Fund and Bennelong Ex-20 Australian Equities Fund earning the premium highly recommended rating.
