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Australian Unity Acorn Microcap Trust

Australian Unity Acorn Microcap Trust
Rebate n/a
Minimum Investment $1,000

About the Fund
The first of its kind, the Fund is one of Australia’s few specialist funds to focus solely on microcap stocks. Microcaps are defined as the companies falling outside the top 250 companies, that is, smaller companies on the Australian Stock Exchange (ASX) ranked by market capitalisation.

These companies are generally under-researched and the Fund’s investment manager aims to uncover significant investment opportunities for capital growth over the long-term.

pdf download Product Disclosure Statement
pdf download Additional Information
pdf download Application Form
pdf download Fund Update
pdf download Performance Summary
pdf download Annual Report
   

Who is the investment manager?

Acorn Capital Limited (Acorn Capital) manages the microcap Australian shares portfolio of the Fund. Australian Unity Funds Management Limited and Acorn Capital manage the Fund’s cash.


What does the Fund invest in?

The Fund gains exposure to microcaps by investing in the Acorn Capital Wholesale Microcap Trust, which primarily invests in microcap Australian companies listed or soon to be listed on the ASX.

The Fund generally invests between 80-100% of its assets in Australian shares, with up to 20% able to be invested in cash and similar investments.

What is the Fund’s investment process?

Acorn Capital’s experienced team of analysts use a disciplined investment process to select stocks in an under-researched sector of the market.

The Acorn Capital team narrows the microcap investment universe down from more than 1,800 to a portfolio of typically between 65 and 80 stocks. Through this process, Acorn Capital aims to exploit the undervaluing of stocks that arise from information gaps about microcaps, and to identify opportunities for long term capital growth.

Acorn Capital’s portfolio construction takes the following  approach:


 

Australian Unity Acorn Microcap Trust
APIR Code AUS0115AU
Inception date December 2002
Minimum Initial Investment $1,000
Minimum Additional Investment $500
Minimum Regular Saving Plan $100 per month
Entry/Contribution Fee 4.10%
Minimum Withdrawal Amount $1,000
Exit/Withdrawal Fee Nil
Management Costs 2.50% pa
Buy/Sell Spread Buy: 0.05% Sell: Nil
Income Distributions Annually

Identification of the eligible universe
The identification of eligible microcap stocks involves excluding from the microcap universe all companies that:
 
Are currently suspended;
Typically have a market capitalisation of less than $5 million; or
For other reasons are impractical investments.

This initial screen effectively removes over 500 companies from the eligible universe.

Identification of the approved list

Identification of the research and the subsequent Approved list is achieved by applying investment criteria to the eligible universe.

Acorn Capital categorises companies as either mature or developing.

Research into these two groups demands different analytical approaches. Mature Companies are ranked on factors including price, earnings, liquidity and profit. Developing companies are screened with an emphasis on appraising the management’s history, balance sheet value and potential to generate earnings in the future.

The screening reduces the eligible research list investment population to around 300 companies-those considered worthy of additional research.

An evaluation of company management is then undertaken which may require visits to evaluate physical facilities, followed by the preparation of future earnings and cash flow estimates, or, in the case of developing companies, an assessment of the value of intellectual property, exploration, etc.

Acorn Capital’s research focus includes:
 
The quality of management;
Outlook in respect of the external environment- cyclical factors;
Business strategy;
Competitive strengths;
Profit and cash flow (current and forecast)

This step of the process identifies the Approved list of investments of typically between 120 and 150 stocks.

The final step in the investment process is to build the fund portfolio, typically expected to hold between 65 and 80 stocks. The portfolio is constructed around specific risk controls and constraints designed to appropriately manage portfolio risk.

Trading and execution are of the utmost importance to successful investment management of microcap portfolios; given the sectors wide bid/ask spreads and the possibility of substantial market impact.

Acorn Capital has adopted a trading strategy designed to minimise market impact while seeking to maximise potential investor returns.

Derivatives

Acorn Capital may use derivatives in the management of the funds, but will generally not use derivatives for gearing purposes or speculative activities.

More information
The Fund’s performance and unit prices are available to view at: www.australianunityinvestments.com.au/amt

Important information
This investment product is issued by Australian Unity Funds Management Limited ABN 60 071 497 115, AFS Licence No 234454. This information is intended only to provide a broad summary of this financial product. Investment decisions should not be made upon the basis of its past performance or distribution rate, since future returns will vary. You should refer to the current Product Disclosure if you wish to know more about this product. The information provided here was current at the time of publication only.

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