Investing in small companies

What are small companies?

The definition of what constitutes a “small company” differs within the industry, but in general terms, they are companies with a market value between $300 million and $2 billion.

Why invest in small companies?

Small caps offer an interesting opportunity in the market due to the lack of analyst coverage, subsequent potential for mispricing and long-term growth prospects.

What is the Intelligent Investor Australian Small Companies Fund?

Using Intelligent Investor’s value-based investing philosophy, the Australian Small Companies Fund is a managed fund that seeks to deliver moderate to high total portfolio returns over the long term across 10-25 listed small companies, often overlooked by the broader market. These are companies smaller than the largest in the Small Ordinaries Index (curr A2 Milk, worth $3.2B).

The ‘Small Ords’ are the smallest 300 companies in the All Ords index (e.g. company 201-500).

The fund is managed by our equities team at Intelligent Investor, and will use the same long-term, value investing philosophy that has provided the team's track performance to date.

The main benefits of the Intelligent Investor Australian Small Companies Fund include:

• Good potential for generating capital growth
• Lower fee structure than most fund managers
• Benefit from a unique opportunity - less liquidity means larger funds struggle to invest in small companies.
• Good potential for above average returns from active management by the experience team at Intelligent Investor
• Limited contributions to ensure that performance is not impacted by the size of the fund, and to maximise the possibility of delivering a better return.

More information on investing in small companies:

• Our Australian Small Companies Fund page
• Highlights from our webinar, 'investing in small companies'
• 'The rewards of small cap investing' article
• 'Top 5 small caps for 2017' article