In a challenging environment, investing in small- and micro-caps can provide investors with exposure to growth and greater access to sector specific opportunities, says UBS.
Speaking to InvestorDaily, Joel Fleming, UBS micro-cap portfolio manager, said investing in small-caps has never been so pertinent, as the asset class has the ability to generate substantial capital returns.
Through “micro-caps and small-caps you get much broader exposure across the economy and you can get more ‘pure’ exposure to what you would consider a positive theme,” Mr Fleming said.
The asset class is a “big pool of potential investments – they stretch across all aspects of the economy, different business models, different industries, and different sectors”.
“A lot of these businesses are at an earlier stage of development and we look at small-caps as [a] nursery for future winners,” he said.
Mr Fleming said a positive feature of small-caps is that the companies within the space are investing in growing their business.
“There’s plenty of opportunity ahead for them in terms of either growing into a new market or growing their market share. They’re making investments; they’re spending money on new facilities, and they’re employing people to drive their business forward,” he said.
Mr Fleming also pointed out that while small-caps are less macro dependent because they’re growing off smaller bases, they are still able to take advantage of emerging trends.
“The world is moving forward very quickly, and it’s often these smaller companies that are able to more quickly capitalise on new technologies and new opportunities,” said Mr Fleming.
“There is a lot of innovation, there is a lot of investment, and there is a lot of thought happening [in] this area.”
UBS Australian small companies portfolio manager Victor Gomes said technology and IT will present investors with opportunities going forward.
“[This] falls into the broader digital theme where these businesses are delivering transformational benefits, and through the process allowing investors to capture that high-growth benefit within their business,” Mr Gomes said.
Unlisted infrastructure can provide strong returns, but investors are increasingly being locked out of the asset class, according to Infrast...
Fiducian has posted a net profit of $5.3 million for the half, up by 7 per cent year-on-year, with the wealth group optimistic that it will ...
BHP profits have jumped and the company will pay out a record dividend but could revise its outlook downward as global uncertainty weighs on...