Specialist micro-cap manager Acorn Capital is looking at investment opportunities in Asia for the next managed fund it will introduce to the Australian market.
It has targeted coverage of micro-caps in Asia as Acorn feels this is where a gap in investment avenues currently exists locally.
The manager currently runs two micro-cap funds that invest in both public and private companies in the domestic market.
“What we looked at and investigated was to what extent can we replicate what we do in Australia into another region. On that basis we found the Asian small-cap to micro-cap area to be the best fit,” Acorn Capital chief operating officer Douglas Loh told InvestorDaily.
“It bears a lot of similarities to the Australian micro-caps. Here we’ve got 1700 companies in the micro-cap sector to look for opportunities and in Asia it’s bigger, there are 5000 companies.”
While the new fund will be investigating investment opportunities across Asia, it will be doing so using a country-neutral approach.
“By taking a sector-neutral and country-diversified or neutral approach, the product can offer investors a managed market risk. And we believe that sector offers significant opportunities because out of 5000 companies you are bound to find some,” Loh said.
The philosophy behind the country-neutral method involves the wide variety of returns across Asia between countries and industries. According to Loh, it meant selecting the wrong country could have a significant impact on returns for investors.
At this stage, Acorn is looking to launch the fund at the end of 2012. The manager is currently marketing the concept to institutional investors and asset consultants to get an understanding of the support it will receive.
When launched, the new product will be available for both wholesale and retail investors.
