Acorn Capital, a prominent micro-cap investor, launched the Acorn Capital Investment Fund on the ASX in May 2014 after a $50 million IPO. NAOS listed on the ASX in February 2013 after raising $17.3 million. NAOS Emerging Companies, a listed investment company, says two-thirds of its stock is held by SMSFs. Ward’s view is echoed by specialist micro-cap investors. Also, the younger the trustee, the more likely they are to hold stocks outside the ASX 300." Funds that have outperformed held a few successful micro-cap stocks. “We are seeing more small and micro-cap stocks in SMSF portfolios. SelfWealth founder Andrew Ward says two trends have emerged.
A small stock when it listed on the Australian Stock Exchange in late 2012, Xero increased more than tenfold in a year, at its peak price of $42.96 in March this year.
The peak result was 29 per cent in 2007.īut the analysis shows many SMSFs own stocks that once would have been considered too risky for retirement savings.Ī widely held stock in SelfWealth’s community was Xero, the booming cloud-based accounting software provider. That is up from 16 per cent a year earlier and 8 per cent after the GFC in 2008. But the selloff reinforces the higher risk when buying this part of the market, which has less liquidity and greater potential for capital loss.Ībout 21 per cent of SMSF trustees plan to invest in small-cap or speculative shares in the next 12 months, according to research house Investment Trends’ April SMSF report. Recent sharemarket weakness could be an opportunity for investors to buy micro-cap stocks at lower prices. Specialist micro-cap fund managers report greater interest from SMSFs, and more funds are being launched to cater for this. There is talk of SMSF trustees embracing different asset allocation strategies and holding riskier stocks to boost returns. Micro caps typically have a market value below $250 million. But those seeking growth are increasingly scouring the market for micro-cap stocks that potentially offer sharply higher returns. Generally these investors – many of them self-managed superannuation funds (SMSFs) – stick to the top 50 industrial stocks for higher dividends. Fo rtune hunters seeking stocks that soar tenfold – the famed 10-baggers – are usually portrayed as speculators punting on “penny dreadful" mining stocks, not portfolio investors risking their retirement savings on the next big thing.