While small capitalisation companies generally involve more risk because of their lower liquidity, their greater sensitivity to managements’ influence, and their greater sensitivity to economic conditions, they have proven over a long time horizon to be a rewarding asset class to allocate capital – preferably for patient investors who grasp the power of compounding.
Since inception in September 2019, the Montgomery Small Companies Fund has made an admirable start out-performing its benchmark the S&P/ASX Small Ordinaries Accumulation Index by over 17 per cent.
Investing in low-returning asset classes, such as bank term deposits, can reduce anxiety, it can also have higher long-term opportunity cost in terms of lower capital accumulation.
In this whitepaper, we look at the Montgomery Small Companies investment methodology which categorises the companies within their investment universe into four areas, and the differences in annual rates of return having a large impact on long-term results.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
