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Take advantage of the secret power of small and mid-cap shares…
Money Morning | 22 April, 2010
From Gary Booysen on the top floor...
Dear Money Morning Reader,
“In a typical stock market cycle the big businesses bounce back first and the quality small and medium cap companies follow,” says Marc Ashton in this week’s Finweek.
But it’s often a daunting task to pick from the myriad small- and mid-sized companies that seldom make it to the front pages. You probably wouldn’t even have heard of most of them. But that’s why it’s handy to have someone like Anthony Sedgwick in your corner. Sedgwick runs Nedgroup Investments Entrepreneur Fund which targets all equities that fall outside the Alsi Top 40.
The idea is to achieve capital growth from companies overlooked by traditional investors.
This fund is 95.93% invested in domestic equity while the balance is made up of cash. It holds a significant amount of money with R755.5m currently under management.
You’d have doubled your money if you’d invested in it five years ago but so far this year the small caps have significantly outperformed the Top 40.
This could be an ideal time to get involved in a fund like this if the market continues to play “catch up”.
The JSE Top 40 Index is up a paltry 2.71% while the Small Cap Index is up 8.13%. Sedgwick is well ahead of the curve with a 9.07% return over the last three months.
The fund is classed as fairly high risk but he uses some large cap companies to reduce the risk profile. While the goal is capital growth these companies also provide a stabilising dividend income. Currently the funds largest exposure (5.82%) is the super defensive British American Tobacco. It also has exposure to other defensives like, Spar, Shoprite, Adcock, Discovery, Pioneer Foods and Mr Price.
For more information go to: http://www.nedgroupinvestments.co.za/Fund/Details/39 or call 0860 123 263
Turning to the markets...
The JSE all share index slumped 0.25% yesterday. The gold mining index slipped 0.24%. Resources fell 0.75%. Banks and financials weakened 0.34% and 0.23% respectively. Industrials bounced 0.26% and the platinum mining index jumped 0.77%.
London's FTSE100 climbed 0.6%. The Dow Jones traded flat, up 0.07% and the Nasdaq closed up 0.17%.
Tokyo's Nikkei closed down 1.27%. Hong Kong's Hang Seng lost 0.26%.
Brent crude is currently trading at $86.17 per barrel.
Spot gold's trading at $1,148.43 and platinum was last quoted at $1,748.00.
And here's how the rand is performing against the major currencies:
R/$7.42
R/₤11.44
R/€9.95
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