The new Microequities Deep Value Microcap Fund is off to a good start, with its inception taking place at the lowest point of the Australian market since the start of the global financial crisis.
The fund was established on 6 March this year, enabling it to profit from the market rally that followed.
Although the exact date was a coincidence, the inception of the fund during this stage of the market was not, Microequities chief executive Carlos Gil told InvestorDaily.
"In the middle of the financial crisis there was panic selling that affected a lot of fund managers in the small-cap and micro-cap space," Gil said. "This pushed down the price of stocks."
Although the company always intended to launch a fund over time, it had only been offering research services over the last four years.
Gil saw the large scale sell-off of micro-cap companies as a good starting point for a fund.
"I was confronted with an asset class that I knew very well and at prices that I had never seen. The prices did not relate to the intrinsic value of the businesses," Gil said.
"We thought that this was from a pricing and valuation perspective an absolute unique time for investing."
The fund had returned 14.7 per cent from its inception to 29 May 2009.
Still, the S&P/ASX Small Ordinaries - the index that forms the closest approximation of the fund's investment universe - returned more than 40 per cent over the same period.
But Gil said the fund takes a long-term investment horizon and it is still too early to read much in the performance over the last three months.
"I have no doubt we will outperform in the medium to long term," he said.
