Australian Ethical Emerging Companies WS aims to provide long-term growth by investing in small capitalization companies that meet the Australian Ethical Charter. The opportunity to invest in a diversified portfolio of shares in small capitalization companies on the basis of their social, environmental and financial credentials.
The Emerging Companies Fund (Wholesale) (the ‘Fund’) returned 9.2% net of fees in the financial year ended 30 June 2023, compared to the benchmark which rose 9.5%. The Emerging Companies Fund (Retail) grew by 8.6% net of fees in the quarter, underperforming the benchmark.
The Fund’s underweight exposure to Consumer Discretionary and the Industrials sector detracted from investment performance, while being nil-weighted in the poor-performing Real Estate Investment Trust sector added to performance.
The Fund’s small and microcap holdings performed strongly in the final quarter of 2023 as investor interest returns to this part of the market. The Fund benefited from takeover interest with vitamin company Blackmores, wellbeing software company Limeade, and telematics software company Eroad, receiving bids from strategic and private equity buyers.
What is Australian Ethical Emerging Companies WS Australian Ethical Emerging Companies WS is an Managed Funds investment product that is benchmarked against ASX Index Small Ordinaries Index and sits inside the Domestic Equity - Small Cap Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Australian Ethical Emerging Companies WS has Assets Under Management of 0.00 M with a management fee of 1.2%, a performance fee of 20.00% and a buy/sell spread fee of 0.15%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Australian Ethical Emerging Companies WS has returned 5.39% in the last month. The previous three years have returned -1.7% annualised and 16.61% each year since inception, which is when the Australian Ethical Emerging Companies WS first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Australian Ethical Emerging Companies WS first started, the Sharpe ratio is NA with an annualised volatility of 16.61%. The maximum drawdown of the investment product in the last 12 months is -6.59% and -30.01% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Australian Ethical Emerging Companies WS has a 12-month excess return when compared to the Domestic Equity - Small Cap Index of 1.61% and 2.98% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Australian Ethical Emerging Companies WS has produced Alpha over the Domestic Equity - Small Cap Index of NA% in the last 12 months and NA% since inception.
What are similar investment products?
For a full list of investment products in the Domestic Equity - Small Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will Australian Ethical Emerging Companies WS provide?
Australian Ethical Emerging Companies WS has a correlation coefficient of 0.93 and a beta of 1 when compared to the Domestic Equity - Small Cap Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Australian Ethical Emerging Companies WS and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Australian Ethical Emerging Companies WS with the ASX Index Small Ordinaries Index?
For a full quantitative report on Australian Ethical Emerging Companies WS compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the Australian Ethical Emerging Companies WS to do my own analysis?
To sort and compare the Australian Ethical Emerging Companies WS financial metrics, please refer to the table above.
Has the Australian Ethical Emerging Companies WS been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Australian Ethical Emerging Companies WS?
If you or your self managed super fund would like to invest in the Australian Ethical Emerging Companies WS please contact Level 8, 130 Pitt Street. Sydney NSW 2000 via phone 1800 021 227 or via email enquiries@australianethical.com.au.
How do I get in contact with the Australian Ethical Emerging Companies WS?
If you would like to get in contact with the Australian Ethical Emerging Companies WS manager, please call 1800 021 227.
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Australian Ethical Emerging Companies WS. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - December 31, 2022 Global markets had a strong final quarter for 2022 after a volatile nine months, with the MSCI World index ex Australia rising 7.5% and the S&P ASX 300 rising 9.1%. Despite inflation remaining elevated, there were indications that prices could stabilize, as natural gas prices fell from a high of €340/MWh in August to preUkraine levels near €70 by the end of the year. The US bond yield decreased dropping from 4.23% in October to 3.88% by the end of the year. The Australian bond market was more volatile, falling from 4.2% in October to 3.29% in December before finishing the year at 4.05%.
The Emerging Shares Fund appreciated by 2.0% (Wholesale 2.1%) over the December quarter relative to its S&P/ASX Small Industrials Benchmark which appreciated 6.6% resulting in an underperformance of -4.6% (Wholesale -4.4%).
The underperformance can be primarily attributed to stock selection in Communications, Healthcare and Information Technology sectors, while a zero weighting in real-estate was a negative contributor. Companies like wealth management software company Bravura Solutions came clean on their 1st half 2023 trading in November while pathology and radiology company Healius downgraded earnings in November on higher cost structures with falling covid revenues, while cloud communications company Symbio downgraded their profitability late in December. We view these as temporary setbacks which in time can be recovered. The strongest individual stock contributor was utility and airports software billing company Gentrack which appreciated 85% over the quarter after strengthening its 2023 and 2024 revenue guidance.
Performance Commentary - September 30, 2022 The S&P/ASX 300 returned 0.5% over the quarter despite ongoing uncertainty as pent-up demand, ongoing impacts from COVID-19, and the conflict in Ukraine continues to put pressure on inflation. In the US YoY CPI rose to 9.1% in August. In Australia June CPI rose to 6.1% YoY, the highest annual change in over 30 years. The global economy faces a bleak outlook, with Europe facing a looming energy crisis, many Central Banks rapidly raising rates to tackle inflation, while in China the People’s Bank of China has been loosening policy as its economy slows to its lowest rate of growth in decades, driven by an ongoing property crisis and continued lockdowns as part of its zero-COVID policy.
The Emerging Companies Fund appreciated 1.7% (1.8% Wholesale) outperforming its benchmark which fell 1% over the September Quarter. The outperformance is attributed to the Funds significant overweight allocation into the healthcare with cognition company Cogstate appreciating 42% on news its shareholder and business partner Japanese company Eisai had reported positive clinical data in a Phase 3 Alzheimer’s clinical study. We were pleased with the performance of mortgage insurer Genworth which appreciated 18% while paying a healthy dividend on reporting a strong 2022 result. Our investment in technology company Praemium appreciated 55% on news of the sale of its UK division and a solid 2022 financial result. Other good contributors included non-bank lender Pepper Money which appreciated 18% from an oversold position and PDF productivity and esignature business Nitro Software +20% on news private equity was building a position.
Performance Commentary - June 30, 2022 The Emerging Companies Fund fell -21.5% underperforming its benchmark which fell -18.4% over the June Quarter. The underperformance is attributed to the Funds significant overweight allocation into the information technology sector, the weakest performing sector, with healthcare also a laggard. The technology sell-off has been led out of the US, with microcap and small-cap Australian companies in their earlier stage of commercial development particularly hard hit. We continue to believe superior growth attributes are the primary reason for investing into small and microcap companies, irrespective of interest rates and consequently have been adding to some of our underperforming names.
We were very pleased to receive a takeover offer for lab testing company HRL priced at a healthy 95% premium to the prevailing share price. We believe there will be additional merger and acquisition activity if share prices remain weak
Performance Commentary - December 31, 2020 For the quarter, the Fund pleasingly achieved an absolute return of 19.5% (19.7% Wholesale Fund) against the fund’s benchmark, the S&P/ASX Small Industrials Index, which advanced 12.2%. The Emerging Companies Fund’s 12-month performance was +35.1% (35.9% Wholesale Fund) against 5.9% for the benchmark. We were very pleased with the relative outperformance of the fund over recent periods.
Over the quarter Healthcare, Information Technology, Materials and Utilities sectoral exposures drove the outperformance. The US general election win by Joe Biden is seen as a positive for climate change while the growth of ESG funds around the world saw the market chasing many renewable and adjacent assets. The Fund’s renewable energy generators and retailers from New Zealand including Meridian Energy (+51.7%), Contact Energy (+35.6%) and Mercury Energy (+29.6%) were all among the leading contributors.
The strongest individual company contributor was mortgage insurer Genworth Mortgage Insurance Australia which appreciated 52.7%, benefiting from an improved outlook for residential property. On a similar note, Resimac – a mortgage provider which securitises its funding on global markets – appreciated 49% over the quarter.
We were also pleased with contributors from pharmacy software company Corum (+92%), assessment software company Janison Education (+45.6%), job referencing technology company CV Check (+60.8%) and metals recycler Sims Metal (+77.4%). The Fund continues to be actively managed.
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