The process for finding small companies with potential

An important part of investment management is portfolio construction. Gary Rollo and Dominic Rose – two seasoned and dedicated small cap specialists – lift the lid on their investment process and how they go about weighting individual holdings in the portfolio to share insights ahead of the commencement of the new Montgomery Small Companies Fund.

These talented managers have a track record of seizing the opportunities that others miss and in this podcast share specific stock examples.

 “We see small companies as an undiscovered opportunity, and if you roll up your sleeves, work hard and go out there and find these companies before others, there is an opportunity, if you get it right, to profit from every stage of the life cycle. That’s the value that we want to bring to our investors.– Gary Rollo

The Montgomery Small Companies Fund will typically invest in a portfolio of 30 to 50 companies listed on the ASX or NZX. The construction of a diversified portfolio will use the “four bucket approach” targeting superior risk-adjusted returns.

The “lifecycle approach” features four life stages of a company and typical individual stock weightings of:

  • Early stage (<1 per cent)
  • Emerging growth (1 per cent – 3 per cent)
  • Developed (2 per cent to 5 per cent) and
  • Core (3 per cent to 7.5 per cent).

Much of the portfolio consists of high-quality growth stocks plus stable compounders complemented by cyclical growth opportunities and businesses in transition. There is a strong focus on risks, including liquidity, earnings expectations, stock correlations and capital structures.

The Fund is designed to be as agile as the remarkable small companies that it invests in.

“We’re active small cap investors. We’re open and we’re pragmatic. We are rolling up our sleeves, we’re pounding the pavement, we’re meeting with lots of management teams and we’re looking to build a portfolio of 30 to 50 companies which we think will outperform the market. We are looking for structural growth companies, and we balance the portfolio with some stable compounders. We weight the stocks in the portfolio based on the stage of development of the company. We’ll apply a lower weighting for the earlier stage developing companies, and a higher weighting for the lower risk, more core developed companies. This way we try to capture the upside potential, and also manage the risk.” – Dominic Rose

I’m excited to be introducing you to the Montgomery Small Companies Fund.

It really is a ground-floor opportunity to invest in tomorrow’s leaders today. To register your interest, please click here.

The issuer of units in Montgomery Small Companies Fund (ARSN 635 229 533) (Fund) is the Fund’s responsible entity Fundhost Limited (ABN 69 092 517 087) (AFSL 233045). The Fund’s investment manager is Montgomery Lucent Investment Management Pty Limited (ABN 58 635 052 176, Authorised Representative No. 001277163). The Product Disclosure Statement (PDS) will be available prior to launch of the Fund; the expected launch date is 20 September 2019. Copies of the PDS are expected to be available from 2 September 2019 from Montgomery Investment Management, contactable on (02) 8046 5000 or at www.montinvest.com.

This information has been prepared without taking into account the objectives, financial situation or needs of any investor. Before making any decision to make or hold any investment in the Fund you should consider the PDS in full. An investment in the Fund must be made using a valid application form attached to the PDS. Returns are not guaranteed.

Our Funds

The Montgomery Fund

  • AUSTRALIA/NZ
  • Concentrated high conviction equities
  • From $25,000
Learn More

Montgomery Global Fund

  • GLOBAL
  • Concentrated high conviction equities
  • From $25,000
Learn More

Montgomery Alpha Plus Fund

  • GLOBAL
  • A market neutral strategy
  • From $50,000
Learn More

Montaka Global Access Fund

  • GLOBAL
  • Access long/short global equity portfolio
  • From $50,000
Learn More

Montgomery Global Equities Fund (ASX:MOGL)

  • GLOBAL
  • Concentrated high conviction equities
  • No minimum investment - see your broker limits
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Our Funds

Concentrated High Conviction Equities

Listed

Montgomery Global Equities Fund (ASX:MOGL)

Global
Available on the ASX as an Exchange Traded Managed Fund, invests in 15 to 30 quality global businesses for long-term capital growth with a target distribution yield of 4.5% per annum. Mirrors the strategy of the Montgomery Global Fund.
Unlisted From $25,000

Montgomery Global Fund

Global
Invests in 15 to 30 quality global businesses for long-term capital growth. Priced daily. Mirrors the strategy of the Montgomery Global Equities Fund (ASX:MOGL).
Unlisted from $25,000

The Montgomery Fund

Australia/NZ
Aims to provide long-term growth and income by investing in 20 to 40 high-quality Australian and New Zealand businesses trading at attractive valuations. Priced daily.
New Fund

Montgomery Small Companies Fund

Australia/NZ
Aims to provide long-term growth by investing in 30 to 50 high quality, undervalued, Australian and NZ small and emerging companies with strong growth potential. Priced daily.
Unlisted from $1 Million

The Montgomery [Private] Fund

Australia/NZ
Seeks to deliver absolute returns from a portfolio of high-quality Australian and New Zealand businesses. Capital preservation is paramount. By invitation only.

Alternate Equity Strategies

Unlisted from $50,000

Montgomery Alpha Plus Fund

Global
Aims to generate positive returns in both rising and falling markets. Invests in 80 to 180 global businesses expected to deliver above-average returns, while selling short a similar-sized portfolio expected to deliver below-average returns. Priced daily.
Unlisted from $50,000

Montaka Global Access Fund

Global
Aims to generate materially higher risk-adjusted returns, net of fees, than is generally available in the equities market over the medium term. Priced monthly. Provides retail investors access to the Montaka Global Fund.
Unlisted From $1 Million

Montaka Global Fund

Global
Aims to generate materially higher risk-adjusted returns, net of fees, than is generally available in the equities market over the medium term. By invitation only.