No small feat: managers leading the way in smaller names

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Three newly-covered small and mid-cap sectors have entered Citywire’s investment analysis for the first time, but who is making a big noise in these smaller markets?

Extending our database has already revealed new names in both equity and fixed income sectors, and now we have added equity global small and mid-cap, equity Asia Pacific small and mid-cap, and equity Taiwan small and mid-cap to the analysis.

Taking into account these new additions, small and mid-cap sectors are well represented at present, with 10 markets now covered.

Looking at the new markets, to date, no manager has achieved a three-year track record in the Taiwanese small and mid-cap market, but there is already healthy competition in the global and Asia Pacific small and mid-cap sectors.

So who is standing out from the pack in these two respective fields?

Equity Asia Pacific Sm&Mid Cap

Top performing manager: Mark Mobius, Templeton Asian Smaller Companies

Three year total returns (average manager performance): 200.2% (143.68%)

Veteran emerging markets investor and Euro Stars A-rated manager Mark Mobius is making strides in the Asia Pacific small & mid-cap sector, returning almost 60% more than the average manager in the sector over the past three years.

The $226.3 million fund was launched in October 2008 and has a strong geographical focus on South Korea (28.4%), India (21.3%) and China (18.6%).

These are the three largest country bets and are all considerable overweights to the MSCI AC Asia ex-Japan Small Cap Index benchmark. Meanwhile, Mobius has a pronounced underweight to Taiwan, with his allocation currently 16% below benchmark.

On the stock side, Mobius favours retail (14.9%) and materials (10.6%), while steering clear of capital goods, where he has 6% of the fund compared to a benchmark allocation of 10.6%.

The largest single bet in the portfolio is on high-end Hong Kong-based clothes retailer Giordano International, which makes up over 4.5% of the fund.

Other large positions include Mumbai-based pharmaceutical firm Tata Chemicals, Korean education provider Daeyko and GS Home Shopping, which is one of South Korea’s largest online retailers.

The Templeton Asian Smaller Companies fund marks the11th fund under Mobius’ management which is now tracked by Citywire.

Equity Global Sm&Mid Cap

Top performing manager: Tim Wood, McInroy & Wood Smaller Companies

Three year total returns (average manager performance): 118.57% (72.44%)

Operating with a broader remit than Mobius is Tim Wood, who runs the Ucits-compliant, UK-domiciled McInroy & Wood Smaller Companies fund. He has managed the £37 million ($58 million) portfolio since its launch in March 2001.

Although operating without a rigid definition of ‘smaller’, Wood focuses on companies outside the leading equity indices in the US, UK and Europe. This has seen him broadly split geographical exposure into around 30% into each of these three markets.

Wood manages a diverse portfolio of small cap stocks. According to the most recent factsheet, Tennessee-based agricultural and homewares retailer Tractor Supply Company is his largest single position and accounts for 4.8% of the fund.

Other major holdings include French veterinarian specialist Virbac (4.0%) and auto parts retailer O’Reilly Automotive (4.5%). The fund held 5.6% cash in the most recent factsheet.