Why add small caps to your portfolio

If I were to characterise the domestic small cap market in just one word, it would be ‘dynamic.’ It is truly dynamic in the sense that it is constantly changing and evolving which creates exciting opportunities for astute investors.

Driving forces of this constant change include global growth themes that have some years to play out, such as the falling costs of deploying technology and the rise of the Asian consumer, as well as dynamic entrepreneurs with advantaged business models disrupting the larger often established incumbent players.

Smaller companies are generally defined as those sitting outside the ASX100 index. In general, they tend to be at an earlier stage of their business life cycle relative to their more mature counterparts (‘big caps’ in the ASX100). The upside here is small caps can have quite significant growth potential.

Importantly, realising this growth potential may be less reliant on general macroeconomic conditions because these companies are earlier-stage, benefiting from structural tailwinds and/or employing disruptive business models.

A key to success

Management execution is a particularly important success factor when it comes to small companies. Indeed, many small companies are a direct reflection of their management teams, who are often entrepreneurial founders with substantial ‘skin in the game.’ Their strategic decisions strongly shape and define the outcomes of these businesses so understanding how management think can be a key contributor to making money as an investor in the small cap market.

Our process involves us spending a lot of time getting to know the management teams of the companies which we invest in because we see investing as a partnership built on trust and delivering on expectations.

Many of the higher growth companies within the ASX100 index were once small caps – household names like realestate.com.au, carsales.com, Flight Centre, Domino’s Pizza and Cleanaway, and more recently, Altium and Afterpay.

This highlights the exciting potential of investing in the small cap market. By seeking out structural growth companies lead by dynamic management teams, we are essentially investing in tomorrow’s leaders, today.

To pre-register to receive more information about the launch of the Montgomery Small Companies Fund, please click here.

Our Funds

The Montgomery Fund

  • AUSTRALIA/NZ
  • Concentrated high conviction equities
  • From $25,000
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Montgomery Global Fund

  • GLOBAL
  • Concentrated high conviction equities
  • From $25,000
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Montgomery Alpha Plus Fund

  • GLOBAL
  • A market neutral strategy
  • From $50,000
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Montaka Global Access Fund

  • GLOBAL
  • Access long/short global equity portfolio
  • From $50,000
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Montgomery Global Equities Fund (ASX:MOGL)

  • GLOBAL
  • Concentrated high conviction equities
  • No minimum investment - see your broker limits
Learn More

Montgomery Small Companies Fund

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