Investors now have two options for investing in the outperforming Prime Value Emerging Opportunities Fund, with Prime Value announcing a new class of units for investing in the Fund.
The new Class B units will use the Small Industrials Accumulation Index as its benchmark, which is considered the most comparable index as the fund does not invest in mining companies.
The existing Prime Value Emerging Opportunities Fund will continue to operate with its 8% p.a. absolute benchmark, with the fund referred to as Class A.
Prime Value believes this change will benefit clients who wish for greater choice in the benchmarks available. Prime Value consulted widely and employed feedback from investment consultants, research houses, and the broader intermediary market in making the new class of units available.
A new maximum cash holding of 20% (from 100%) is being introduced for both classes of the Prime Value Emerging Opportunities Fund, providing investors with more certainty that the fund will be invested through the cycle.
It’s more reflective of how the Fund invests. Historically, the fund has never held more than 20% cash since inception, and currently holds 6% cash.
A consistent track record
The Prime Value Emerging Opportunities Fund has carved out a strong track record as an outperforming small cap Fund since inception, and has shown an ability to outperform across different market conditions.
The Fund has shown consistent outperformance across bull markets, bear markets, record low interest rates, record hikes in interest rates, a tech boom, tech bust, and COVID-19.
The Prime Value Emerging Opportunities Fund has outperformed both the Small Ordinaries Accumulation Index and the Small Industrials Accumulation Index for each of the last six years.
The Fund has also occupied a spot in the top quartile of managers for performance in the Mercer survey of small cap managers for three out of the last four financial years – a fine achievement given the big variations in performance across different managers from year-to-year.
The Prime Value Emerging Opportunities Fund’s performance and process was recognised with Prime Value winning the Australian Equities – Small Caps Award at the Zenith Fund Awards 2022, and being among the select few finalists in 2023.
The Fund was also named a “Star Manager” in 2022 by Financial Newswire in association with SQM Research.
The Prime Value Emerging Opportunities Fund has delivered 11.3% after fees per annum to investors since inception in 2015. The Prime Value Emerging Opportunities Fund is currently rated Recommended by Lonsec, and Recommended by Zenith.
Small cap stocks poised for 2024
Australian small cap stocks may be poised for a promising 2024 given the momentum from end of 2023, according to Richard Ivers, portfolio manager for the Prime Value Emerging Opportunities Fund. “Obviously the economic backdrop with inflation slowing and central banks signalling that rate rises are near an end helps to fuel optimism.
“In small cap stocks there is well-placed interest in the number of quality companies which are attractively valued.
“Many of these were over-sold as the small cap sector lagged large cap stocks over the previous two years, creating excellent buying opportunities, and an exceptional opportunity for long-term investment returns in quality small cap companies.”
Some examples of quality smaller companies which have found a more attractive level include Equity Trustees, AUB Group, and IPH Limited, according to Mr Ivers. “These companies are relatively defensive with a strong earnings growth outlook.
“Earnings resilience is an attractive characteristic over the longer term in small cap stocks, as we don’t know what surprises may be in store over 2024 and beyond.”
Ivers said quality is key for managing any bumps along the way. “The smaller end of the market can be volatile but this can be tamed somewhat by focussing on the more quality companies, which demonstrate resilient earnings.
“It’s important to invest with an eye on volatility because even in bull markets the next challenge is never too far away. We are optimistic but also realistic about current geopolitical instability and the potential for inflation to be more stubborn than we would like.
“We’ve always felt strongly that managing volatility successfully starts with what you are buying – if you buy well and focus on quality there is a good chance you will deliver returns with lower risk over the longer term”, Mr Ivers concluded.
To invest in the Prime Value Emerging Opportunities Fund please contact our Client Services Team at info@primevalue.com.au and 61 3 9098 8088