With growth hard to come by, investors are scanning all aspects of the market for long-term development, which can only bode well for small and mid cap sectors.
This has led Citywire Global to analyse who have been the consistent stand out performers in global small and mid cap equities over the past five years.
There are currently 34 managers tracked by Citywire in the Lipper Global Equity Small & Mid Cap sector and 20 of them can boast a five year track record.
Out of this peer group, only two have beaten the average manager return in each of the individual five years.
Over this period, which covers April 2008 to April 2013, the average manager generated an absolute return of 17%, while the most commonly used index, the MSCI World Small Cap TR USD, rose 31.51%.
So, who are the managers who have outperformed the market and their peers over this five year period?
Edwin Lugo, Franklin Templeton
Five year total return: 59.12%
Greatest outperformance vs. average manager: +11.09% in 2012/13
The first of our two outperformers is former Citywire AAA-rated manager Edwin Lugo. He is now the sole lead on the $167 million Franklin Global Small-Mid Cap Growth fund following David Glazer’s decision to join Pioneer in January.
Lugo, who is coming up to seven years on the fund, has a strong bias to the UK market, where he has positioned 28% of the fund at present. This is while largely concentrating investments in the industrials (36%) and financials (32.5%) sectors.
The top 10 holdings of the fund, as per the end of March 2013, show strong diversity among countries, with Japan, France, Italy, Ireland, the US, the Netherlands and the UK all represented.
Within the portfolio as a whole, Lugo has a significant overweight to the European market in general. Here he holds 29 percentage points more than the fund’s index, the MSCI World Small Cap benchmark.
It emerged this month Franklin Templeton had soft-closed Lugo’s European small and mid-cap strategy in order to allow efforts to be focused on the Global Small Mid Cap Growth fund.
Kasper Billy Jacobsen, Sparinvest
Five year total return: 41.29%
Greatest outperformance vs. average manager: +8.37% in 2011/12
Sparinvest’s Kasper Billy Jacobsen is the only other global small and mid cap manager to have outperformed his peers in each of the past five years, with a consistent performance on the $37 million Global Small Cap Value fund.
Jacobsen, who was joined by co-manager Trine Uggerhøj in March 2011, currently runs five funds on behalf of the Danish asset management firm, with his tenure on the small cap approach dating back to 2004.
In a contrary approach to his peers, Jacobsen has found favour in the Japanese equity market, which makes up 20% of his equity exposure. This is alongside strong allocations to both the German (17.5%) and US (10.5%) markets.
On a sector basis, Jacobsen has invested nearly two-thirds of the fund in consumer names, while industrials (21.5%) and materials (15%) also make up substantial allocations.