Since its launch, the fund has trailed its peers in only two years, 2010
and 2016. A key to this outperformance is the fund’s downside protection,
outperforming the index in falling markets.
To achieve this, managers Paul Moroz and
Christian Deckart, who was promoted to lead manager in January 2018, use a highly
disciplined, research-focused, bottom-up investment process looking for
companies with strong business models that earn a high return on capital
arising from a sustainable competitive advantage.
The managers also spend a great deal of time focusing on a company’s
management. Once they have identified a potential investment candidate,
they build out and stress-test financial models under a number of different
The managers are also careful to ensure they are buying a company at a
level that is well below their estimate of its true worth. Their approach
is a patient one, and when they buy a stock, they expect to hold it for 10
years or longer. In reality, the average holding period comes in at around
six to eight years.
The portfolio is rather diversified at 70 names, with the top 10
representing about a third of the assets. Country and sector weights are
the result of the bottom-up stock selection process. And at the end of
March, the fund was aggressively positioned with about 93% invested in
equities and roughly 7% in cash.
As of the end of February, top holdings included U.K. infrastructure and
services provider Softcat PLC (LSE: SCT), and U.K.
technical product specialist Diploma PLC (LSE: DPLM),
Australian business management software supplier Myob Group Ltd. (ASX: MYO), German IT systems provider Bechtle AG (DE: BC8.F), and Swedish building systems
supplier Bravida Holding AB (ST: BRAV).
Sectorally, the fund is positioned for growth, with an overweight in
technology, industrials, and consumer defensives. It has no exposure to
utilities or telecoms, and very little in real estate, which reduces its
interest rate sensitivity. Geographically, the fund has its largest
weightings to the U.K. and Europe (about 56%), Asia (26%), and
comparatively little exposure to North America (15%).
The fund continues to be an excellent pick for those looking for global
small cap exposure. Given the potential risks, I don’t see this as a core
holding. Instead, it can be a great addition to an otherwise
Mawer Global Small Cap Fund
Mawer Investment Management
Global Small/Mid Cap Equity
Small Cap Blend
Christian Deckart since July 2015; Paul Moroz since October 2007
Dave Paterson, CFA, is a money manager and expert on investment fund research and due
diligence on a variety of investment products.
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only and is not intended as personalized investment advice.