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Prime Value Asset Management has been nominated as a finalist for the Australian Equities – Small Cap Award by the Zenith Fund Awards for the second year running. Prime Value was crowned winner in the same small cap category at the 2022 Zenith Fund Awards.
The Awards are run by Zenith Partners and designed to “…acknowledge and encourage excellence in funds management across all asset classes and disciplines”, according to Zenith.
Prime Value’s flagship small cap fund is the Prime Value Emerging Opportunities Fund, run by Portfolio Managers Richard Ivers and Mike Younger. The Fund has returned 10.6% per annum after fees over the last five years, 8.2% p.a. above the Small Ordinaries Accumulation index for the same time period.
Both Ivers and Younger are passionate about active management in driving consistent small cap performance. “Small cap stocks are one of the best sectors for active managers to add value for investors”, Mr Ivers said.
“A huge number of stocks are classed as small cap, and many of these are not thoroughly researched by stockbrokers, so there is great potential to dig deep and find excellent investments.”
Mike Younger says passive approaches don’t translate well to small caps. “The small cap indices can be volatile and the small ordinaries index has not been kind to investors in recent years.
“Consider the Prime Value Emerging Opportunities Fund, which has returned 11.4% after fees for the calendar year to 31 August 2023, compared with the Small Ordinaries Accumulation return of 3.5% over the same period.
“The best way to take advantage of small cap volatility is via active management, being selective and buying good companies at attractive valuations.”
Key to Prime Value’s active approach is a willingness to get out and meet company management in person – the Prime Value small cap team conducted approximately 1,100 meetings with small cap companies across the last 12 months.
“We’re not traders, the opportunity to invest is an opportunity to partner with a quality company. There are great benefits in getting to know a company better. It’s essential not only to sort the wheat from the chaff but to track companies over a period of time”, Ivers said.
Younger agrees: “You can’t glean everything you need from an annual report. Some of the best insights come from asking questions and getting a closer understanding of a company’s ethos and longer term plans.”
Current market uncertainty, with potential for interest rates to stay higher for longer, is bound to create more buying opportunities, according to the Prime Value small cap team.
“We are always interested in companies with high certainty in earnings, and this becomes even more valuable in a time where interest rates may stay higher for longer, and inflation may prove sticky.
“Over the medium to longer term, those companies with a strong earnings profile, combined with good management and low leverage tend to come out on top”, Ivers said.
Younger said the team is currently seeing good opportunities among small industrial stocks. “There are some excellent companies in this sector of the market, which has been a little unloved and presents good buying opportunities.
“It’s a space we’ll continue to monitor. In the meantime, we’re just staying committed to our process and meeting companies on a regular basis.”
The Prime Value Emerging Opportunities Fund is currently rated Recommended by Zenith Partners, and Recommended by Lonsec. Richard Ivers and Mike Younger also manage Prime Value’s SIV Emerging Companies Fund for SIV investors, which is also performing strongly.
To invest in the Prime Value Emerging Opportunities Fund please contact our Client Services Team at firstname.lastname@example.org and 61 3 9098 8088
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