SG Hiscock & Company Limited (SGH) in partnership with US-based asset manager, EAM Global Investors LLC (EAM) has launched the EAM Global Small Companies Fund into the Australian market. The fund will be distributed by SGH and provides Australian investors access to global small companies.
The launch of the fund follows the recent partnership announcement between SGH and EAM Global Investors.
EAM’s chief executive, Travis Prentice, said the systematic investment approach used by the firm has gained traction in the US and he expects the Australian market will follow suit.
“We use our own proprietary approach called Informed Momentum®, whereby our investment team invests in companies with positive momentum, but we also add rationale and risk management overlays to deliver alpha for clients.”
The listed universe of global small companies represents around 11,000 stocks, equating to 88 per cent of all publicly listed companies. By number of constituents, the global small cap universe is seven times larger than its mid and large cap peers combined. Spanning both developed and emerging markets, this opportunity set provides strong opportunities for portfolio diversification.
Mr Prentice said the sheer size and dynamics of the small companies’ universe can make it difficult for an investor to research each and every stock. Systematic elements within the investment process – such as momentum signals - mean opportunities can be identified and capitalised on in a timely manner.
“Historical data over the last 30 years shows the cumulative performance of the momentum factor outperforms that of value, quality and growth factors over time.
“Additionally, over the same period, momentum wins on a risk-adjusted basis, suggesting that an investor with the added tailwind of momentum exposure may prove beneficial over time.
“We’re looking forward to offering Australian investors access to such a unique investment style through SGH,” Mr Prentice said.
The EAM Global Small Companies Fund in Australia holds between 100-150 companies and does not use pre-set sector or country weightings, allowing the portfolio manager to follow the momentum factor within the risk management parameters of the fund.
EAM Global Investors – which has AU$3.4 billion in funds under management – has been in the Australian institutional market for several years and partnering with SGH provides a greater level of exposure to the adviser market.
Head of distribution at SGH, Anthony Cochran, said the addition of a global small companies’ manager with such a distinct investment philosophy is already generating strong interest from local advisers.
“EAM is entering the market at a time when advisers are looking for innovative investment products that have a proven track record of delivering returns.
“Our initial discussions with advisory groups have been overwhelmingly positive, and we anticipate strong demand for the strategy in Australia.
“Providing exposure to the momentum factor means investors don’t have to pick between value or growth. EAM have a proven track record of delivering strong risk adjusted outcomes for clients,” Mr Cochran said.
The EAM Global Small Companies Fund has also been awarded a recommended rating by leading research house, Zenith Investment Partners.
The research report said: “Zenith believes EAM employs a differentiated investment approach and considers the investment team to be highly experienced. Overall, we believe EAM is well-positioned to deliver upon the Fund's investment objectives.”
EAM Investors has joined several other global funds managers in the SGH Partnership Program, including Morgan Stanley Investment Management (Australia) Pty Ltd, LaSalle Investment Management Securities LLC. and abrdn.
