Paradice Global Small Cap Fund - Class A
About this Fund
|FUND MANAGER||Paradice Investment Management|
|ASSET CLASS||GLOBAL EQUITIES|
The Fund employs a long term ’bottom–up’ approach to investment. Paradice believes that equity markets are inefficient and therefore offer excellent investment opportunities over time.
To outperform the Benchmark over a three to five-year period (after management costs and before tax).
|BENCHMARK||S&P Global ex Australia and New Zealand Between USD1 Billion and USD5 Billion (AUD) Net Total Return Index|
|FUND SIZE||S&P Global ex Australia and New Zealand Between USD1 Billion and USD5 Billion (AUD) Net Total Return Index|
|NO. OF HOLDINGS||60-80|
|FEES||1.25% p.a. of the NAV (before performance fees) of the Fund|
Benefits of investing in the Paradice Global Small Cap Fund - Class A
Global small cap companies are the largest investment universe with the least amount of broker research coverage. The Investment Manager believes that there is an opportunity to find value no matter where we are in the economic cycle. By building a diversified portfolio of global investments that exhibit four key characteristics (undervaluation, business quality, strong financial metrics and shareholder-friendly boards) the Fund aims to generate strong, long term risk-adjusted returns.
Global small cap companies have generally outperformed global large cap companies over long periods of time as well as having substantial operating leverage and revenue growth opportunities over the medium to long term. But remember, past performance of a particular stock or sector is not a reliable guide to future performance.
Other significant benefits of investing in the Fund may include:
The Fund is primarily designed for investors seeking superior medium to long term capital growth from exposure to a diversified global portfolio of quality small and mid cap companies. Investors need to be comfortable with the short term fluctuations inherent in small and mid cap equity investments.
The Fund is primarily designed for investors seeking superior medium to long term capital growth from exposure to a diversified portfolio of quality companies. Investors need to be comfortable with the short term fluctuations inherent in equity investments.
About the Fund
The Paradice Global Small Cap strategy was established in August 2010 by lead portfolio manager/analyst Kevin Beck. The team comprises of six investment professionals including Kevin.
The Fund typically invests in 60-80 global franchise businesses with strong net cash, low leverage, operating in a niche market.
The Fund employs a bottom up investment process with an absolute return view. We are investors in a very large investable universe (market capitalisation below US$5bn) looking to find investment opportunities anywhere in the world to create a best idea, benchmark agnostics portfolio.
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. Paradice focuses on identifying securities that exhibit four key characteristics - undervaluation, business quality, strong financial metrics and shareholder-friendly management teams.
How we invest your money
Paradice strives to buy assets with a discount to its assessment of intrinsic value. The intrinsic value of a security is what the security would be worth if a buyer was to purchase 100% of the business. Paradice employs discounted cash flows and real world transaction multiples to arrive at its assessments of intrinsic value. Paradice earns the vast majority of its investment returns through the unwinding of the discount.
While undervaluation is the lynchpin of Paradice's process, investment candidates must generally also exhibit unique business quality with solid financial strength and management teams that we believe know how to grow business value. Business quality is revealed in those businesses that have leading market shares, solid margins, strong free cash flow generation and improving returns on investment capital. Paradice searches out companies that exhibit limited amounts of financial and operating leverage. Paradice believes this financial strength is both an offensive and defensive measure.
Strong balance sheets are offensive such that management teams can utilise this strength in an economic downturn to improve the earnings power of the business. Paradice generally searches out those conservative management teams that understand business quality, the power of a strong balance sheet and what it takes to grow business value over time.
At the end of this rigorous analytical process, companies are ranked by the degree of the discount of the current market price to the team's estimate of the company's intrinsic value. Paradice generally invests where it believes it can get the best risk/ reward characteristics. Paradice assembles the portfolio by taking bigger positions in companies where the discount is greatest and smaller positions in companies with narrower discounts. Sizing of investment is also subject to adjustments for appropriate diversification by geography and sector and liquidity.
To achieve the investment objective, the Fund will generally invest in global small and mid capitalisation companies (excluding Australian and New Zealand companies) that have a weighted average market capitalisation of less than US $5 billion and cash.