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PURE MICROCAP VALUE FUND

MONTHLY PERFORMANCE AS AT 31/08/2021

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Latest unit price

$1.5476

Return since inception (March 2009)

64.02%

Return 1 month

5.36%

PURE MICROCAP VALUE FUND

Projected EPS Growth
1 Year Forward
(on a weighted basis)
+33.5%

Projected EPS Growth
2 Year Forward
(on a weighted basis)
+26.9%

Number of companies
34

Top 5 Holdings
% of NAV

39.3%

Top 20 Holdings
% of NAV

87.5%

Top 10 Holdings
% of NAV

62.9%

Cash Position
% of NAV

1.1%

MARKET UPDATE AND COMMENTARY

The US Federal Reserve gave its strongest signal that it is likely to begin tapering its massive bond-buying program after acknowledging it had met two of its key goals required to unwind it. The Federal Reserve chairman recognised the US economy had made clear progress towards achieving full employment, and inflation had gathered pace sufficiently to warrant the removal of bond buying.

The US Federal Reserve has been buying $120b USD of bond securities each month since July 2020, the biggest quantitative easing programme in the history of economics. Whilst there appears to be a clear consensus amongst US Federal Treasury members about the cessation of the bond-buying programme, the exact timeline remains unclear. However, we believe it is likely to happen towards the end of 2021.

Domestically, Australia's most populated states, NSW and Victoria, remain in a prolonged lockdown that will have distortive economic effects for the 1H22 period; however, we expect a difference of two halves. Unwinding the lockdowns towards the end of October with resultant pent-up demand will resurge economic conditions in the last two months of this half.

The investment strategy of the Microequities fund managers returned 5.36% in Pure Microcap Value Fund in August. Our investment strategies bring the total return net of fees to 64.02% for the Fund since its inception in October 2017.

During August, 32 out of the 34 companies in the Fund (86% by weighting) reported their full-year 2021 financial results. The weighted average earnings per share growth were 53.7%. Asset managers have ensured that this portfolio is poised to deliver substantial EPS growth over the coming years.

There were notable results from our best performing managed funds and asset classes throughout the August reporting season, including:

  • Our two investments in radiology services businesses both reported double-digit organic revenue growth and a clean set of results despite lockdowns during the year. The outlook remains solid, and we believe they are strong candidates as M&A targets in the long term.
  • Readytech (ASX:RDY), an enterprise software provider that creates programs for payroll, student management software, local government and justice software, reported 15% organic revenue growth, 27% total revenue growth and 21% EBITDA growth. Based on our strategy and management, the outlook sees a continuation of solid growth with an achievable 5-year target to double revenue.
  • The enterprise software and hardware business in the hospitality, sports, and stadium market have completed its turnaround from negative to positive EBITDA. We project further upside from potential acquisitions, new revenue streams and a new business pipeline.

 

Important information: This information is not intended to be financial advice. Past performance is not indicative of future performance. Microequities Asset Management Pty Ltd is a corporate authorised representative, number 462438, appointed by Microequities Asset Management Group Limited, holder of AFSL number 287526. Application for units in the Fund is limited to wholesale or sophisticated investors within the meaning of Section 761G(7) and 761GA(7) of the Corporations Act 2001.

Important information: This information is not intended to be financial advice. Past performance is not indicative of future performance. Microequities Asset Management Pty Ltd is a corporate authorised representative, number 462438, as appointed by Microequities Asset Management Group Limited holder of AFSL number 287526. Application for units in the Fund is limited to investors that are wholesale or sophisticated investors within the meaning of Section 761G(7) and 761GA(7) of the Corporations Act 2001.