S&P upgrades CFS micro-cap fund after a review of the sector.
Standard & Poor's Fund Services (S&P) has upgraded Colonial First State's (CFS) Australian micro-cap fund and handed out two new ratings after a review of the sector.
S&P upgraded the CFS MIF - Developing Companies Fund from two to three stars, while it gave new three-star ratings to the Atom Small Cap and Macquarie Australian Microcap funds.
The review included nine investment strategies and their badge versions.
S&P gave four-star ratings to the Unity Acorn Capital Microcap Trust, Celeste Australian Smaller Companies Fund, Pengana Emerging Companies Fund and Perpetual Smaller Companies Fund.
"Given the limited availability of information and the lack of research on smaller companies compared with their larger counterparts, smaller company common stock is not always accurately priced by the market," S&P analyst Justine Gorman said.
"Fund managers that understand the industry in which a company operates, its business model, and management's ability to source and use capital are more likely to select better stocks for their portfolio. All of the highest-rated fund managers in this peer group exhibit these qualities."
None of the strategies was awarded the top rating of five stars.
S&P has left the Challenger Microcap Fund on hold.
The research house put the Challenger fund on hold in July this year after the departure of portfolio manager Michael Besley, who joined Ellerston Capital to run an Asia-Pacific small companies fund.
The two non-consecutive alphabetic letters encountered most often last week caused more controversy than the underlying policy they represented, Wouter Klijn writes.... read more »
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