Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.

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formerly Realindex Investments

Leader in active quantitative equities across Australian equities, global equities, emerging markets and global small companies.

Backed by a unique blend of research, portfolio construction and risk management, focused on uncovering original insights and translating them into investment strategies that are active and systematic, aiming to generate alpha.

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At Stewart Investors, we believe in putting people first. Our investment world-view is of a series of partnerships – with each other, with our clients, with the companies we invest in, the people who buy their goods and services, and with the wider society in which we all live and work.

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Australian Small and Mid Cap Companies

Prices & performance
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Strategy Overview

Key Facts

Entry Price:

Exit Price:

Price Date:
* The unit price for the Fund will be delayed temporarily given a special distribution is in progress.
* This is an annualised interest rate from the past seven days. For actual performance for our Cash Funds, please view the performance page.


An experienced manager in an under-researched market segment

Outside of the heavily researched S&P/ASX 50 Index lies the fast-paced world of Australian small and medium-sized companies.

Our portfolio managers have worked together since 2008 and have delivered consistent absolute returns with above market performance over the medium and long term.

Why invest in small and mid cap companies?

  • By favouring companies with sustainable competitive advantages, strong financials and predictable earnings we seek to deliver superior returns and protect from downside risks.

  • Value is discovered through a bottom-up investment approach with an emphasis on industry, financials and management.

  • Consistent absolute returns have been delivered through all investment cycles over the medium and long term. 

What are the risks?

Although all investments carry risk, the level of risk is dependent on the type of investment strategy and the underlying investments. Generally, the higher the potential return of an investment, the greater the risk.

The risks of investing in the Australian Small and Mid Cap Companies strategies include:

Company risk

Investment in equities is exposed to risks due to changes in that company or its business environment.

Equities risk

Equity securities are subject to changes in value, and their values may be more volatile than those of other asset classes.

Liquidity risk

Refers to the difficulty in selling an asset for cash quickly without an adverse impact on the price received. Under abnormal or difficult market conditions some normally liquid assets may become illiquid, restricting the Investment Manager’s ability to sell them and to make withdrawal payments or process switches (if applicable) for investors without a potentially significant delay.

Short selling risk

The First Sentier Australian Small Companies Long Short Opportunities Fund involves short selling. Short selling means a fund sells a security it does not own to try and profit from an anticipated fall in the value of the security. Short positions carry heightened risks as the potential losses are uncapped in the case of a rising security price.

As with any investment, there are no guarantees on the value of the investment or the income generated from it. Investors may get back less than the original amount invested. For a full description of the terms of investment and the risks, please see the Product Disclosure Statement for each fund. If you are in any doubt as to the suitability of our funds for your investment needs, please seek financial advice.

We look beyond Australia’s largest names

Performance of a $10,000 investment in the index versus our strategies

Past performance is not a reliable indicator of future performance.

How we invest in Australian equities

Meet Dawn Kanelleas

When she’s not gleaning new perspectives from art exhibitions large and small, Dawn Kanelleas curates a portfolio of Australia’s best up-and-coming companies.

Questions about investing in Australian Small and Mid Cap Companies

How can you tell the difference between large caps, mid caps and small caps?

Market capitalisation, a multiplication of a company’s share price by the number of outstanding shares, is commonly used to rank companies on indices around the world.  Well known capitalisation indices in Australia include:

  1. S&P/ASX 100 Index; Australia’s largest 100 companies. Approximate market cap between $130bn to $3bn.
  2. S&P/ASX 300 Index; a broad-based index covering both large and small caps. Approximate market cap between $130bn to $100m.
  3. S&P/ASX Small Ordinaries Index; this includes companies in the S&P/ASX 300, but outside of the S&P/ASX 100. Approximate market cap between $3bn to $100m.

There are also less well-known indices, such as the S&P/ASX 50 Index which comprises the largest 50 companies, and the S&P/ASX MidCap 50, which includes companies within the S&P/ASX 100, but not those within the S&P/ASX 50.

Am I exposed to mid caps in a broad share market exposure?

Due to the concentrated nature of the Australian share market, roughly 76% of an ASX 300 portfolio – and fund manager’s attention – would be invested in Australia’s top 50 companies. The remaining market capitalisation of the ASX 300 is split roughly evenly between mid caps (13%) and small caps (11%). Such a relatively small exposure means that investors may be missing out on a rich seam of successful, growing companies which characterise the mid cap space.

Mid caps have a number of attractive characteristics for investors. Not least, they have outperformed the S&P/ASX 50 Index over one, three, five, seven and ten years as at 30 June 2020. Despite this consistent outperformance, mid caps usually comprise only a small proportion of broad-based portfolios which invest in the S&P/ ASX 300, and are omitted altogether in small cap portfolios which are limited to the S&P/ASX Small Ordinaries Index.

What are the benefits of a mid cap stock?

An important characteristic of the mid cap universe is the sector diversification it offers investors. Most apparent is the reduced exposure to the Financials and increased exposure to Australia’s growing IT sector. Mid caps also provide relatively more exposure to Communication Services, Consumer Discretionary and Industrials than large caps. Because mid cap sector exposure is more evenly distributed across market sectors, they are less susceptible to movements due to macro themes, such as weakening commodity prices. This particularly suits bottom-up stock pickers, as good companies are rewarded on their merit, rather than the prevailing market sentiment. 

What is the difference between small caps and large caps?

Most stocks in the large cap S&P/ASX 100 Index are extensively researched by the professional investment community. They are mostly well known, mature companies with a large shareholder base. Investors like to hold large, mature companies because they are generally considered to be more predictable and less risky than their small cap counterparts. In contrast, small companies tend to be less well researched and understood. This provides opportunity for skilled small cap managers to identify - through their own extensive research, resources and experience - companies that have the potential to be future leaders, and companies that have the propensity to fail. By picking the winners and avoiding the losers, there is potential for significant generation of above market returns.

Why do actively managed small cap portfolios often outperform actively managed large cap portfolios?

There are many high-quality small companies operating across all areas of the Australian economy. Some of these companies will one day grow into large, mature businesses. Identifying these stocks at the beginning of their journey provides investors with the potential for significant capital growth along the way. As small companies flourish, revenue and earnings growth are typically expanding at their fastest point in the company’s lifecycle – growth that larger, more mature companies would find difficult to replicate.

On the flip side there are many poor-quality companies in the S&P/ASX Small Ordinaries Index. Just as some companies will become large, successful businesses, other companies will spend years floundering, or fall victim to unfavourable market conditions or poor management decisions. Investing in these companies can result in significant (or total) capital loss.

Do small cap funds offer attractive returns?

The S&P/ASX Small Ordinaries Index has higher volatility than the S&P/ASX 100 Index, but has potential for strong growth with the stock selection expertise of a professional small cap manager. 

In the S&P/ASX Small Ordinaries Index, the negative returns from numerous low-quality companies often erode the value created from more successful businesses. This means attempts to mitigate risk by diversifying across the index, for example via passive investments or low active share, is often not the optimal strategy for investors with regards to the risk/reward outcome. The comparison of returns from the S&P/ASX 100 Index and S&P/ASX Small Ordinaries Index is too simplistic for one important reason; the index returns ignore the impact of above market returns that active managers can produce, which can be particularly significant in small caps.

Investors should consult with a financial adviser to discuss whether an investment is appropriate for an individual’s investment objectives and risk appetite, and to assess a fund manager’s track record and risk management process.

Responsible investment

Sustainability is one of the six key criteria used in the evaluation of companies in the team's investment process. ESG issues are also frequently raised with senior management during engagement with companies, which contribute towards the team's investment view.

First Sentier Investors has a dedicated responsible investment team which works with the investment teams in order to support FSI's commitment to integrating ESG issues into investment decision-making and ownership practices. The RI team sources relevant research, helps to refine processes, coordinates collaborative engagements and provides advice on technical issues. Overall responsibility for ESG integration, however, lies with the investment team.

Learn more about the Australian Small Companies team's approach to responsible investment

Meet the investment team

Dawn Kanelleas

Head of Australian Small and Mid Cap Companies

Michael Joukhador

Senior Portfolio Manager

Pavlos Totsis

Senior Portfolio Manager

Tahlia Gugusheff

Portfolio Manager

Want to know more?

Contact your Financial Adviser