Monash Investors
Small Companies Fund

 

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The Monash Investors Small Companies Fund (Fund) is an unlisted retail unit trust offering investors an Australian equity exposure with a strategy of outperforming the S&P ASX Small Ordinaries Total Return Index over the medium term (5yrs).

The Fund has been in operation since July 2012, and over this time after all fees has outperformed the Index by approximately 4% per annum and deliver an average total return of approximately 10% per annum.

This fund is appropriate for investors with “High” and “Very High” risk and return profiles. A suitable investor for this fund is prepared to accept high risk in the pursuit of capital growth with a medium to long investment timeframe. Investors should refer to the TMD for further information.

 

Current Unit Price

Latest Monthly Report

Monthly Performance Report: March 2025

The Monash Investors Small Companies Fund declined 5.3% in March, as equities generally continued their decline (with the Small Ordinaries down 3.6%).

As we write, the market has continued its rout with the Small Ordinaries down further into April, and the Monash Fund is down similarly. In addition to reviewing the month’s key contributors (and detractors), we set out how we’re thinking about managing through this seemingly sudden and dramatic tariff-induced shift in market sentiment.

Commentary
The principal detractor this month was the write-off of our holding in Opthea, costing the Fund nearly 2.7% for the month, or just on half our total monthly loss. Having displayed so much promise, we – along with many others in the investment and pharmaceutical industries – were surprised and disappointed in the failure of its critical trial. The results are hard to reconcile with earlier indications, and ultimately – in our view – render its hoped-for treatments for wet Age-related Macular Degeneration worthless. As we’ve noted in the past, we’ve invested in Opthea knowing it would be a binary situation. If it worked, the payoff would have been a multiple of our investment. If it failed, we stood to lose our entire investment. Again, earlier trial results and our broader analysis of this opportunity led us to believe the odds of success justified the risk of failure. Whether we were wrong in setting the odds on any one situation like this is unknowable from such a small sample size. But how and whether we engage with these types of opportunities certainly is a topic worthy of further discussion.

In taking a step back and considering this position, it’s important to keep in mind the context. While we lost 2.7% this month, most of that was prior-period unrealised gain, with our cost base here of 35c/share reflecting a total investment of less than 1% of the Fund. To the extent we may invest in binary situations like this, we’re always very careful from a sizing perspective. From our initial position size, we stood to lose less than 1% – a quite manageable level of ‘value at risk’. Conversely, if all went to plan, the upside was 5-10 times our money, for a 5%-10% NAV boost. The question then is what are the odds of each of those scenarios?, and as noted above, we may have our view on that, but we believe one’s effectiveness in making such judgement calls needs to be considered over time and not from any one investment.

It’s also important to note that we have had meaningful success with other such binary set-ups. Telix being the obvious example within the Fund. We invested in Telix at its pre-IPO stage when it too faced a binary outcome dynamic. Telix succeeded through to commercialisation, growing to become a top holding for the Fund, and having generated significant value for our investors over the years.

With this context laid out, and having reflected on the experience with Opthea, the two learnings we’ve taken here are as follows: 1/ better control position sizing when it’s working out. While we invested less than 1% in Opthea, we missed a trick by not trimming at least some of our position into its significant price strength after our purchase. In fairness (to ourselves), we’d determined to cap the holding around a 3% weight which it reached, but we’d not planned to trim any unless it moved further north. We feel we’d be a little more balanced with this if facing the same set-up in the future, perhaps buying around 1% and trimming to keep exposure at 2%, at least until through the riskiest part of the ownership journey. 2/ waiting until an interesting concept has matured and proven out. To the Telix example, above. While we had the good fortune of owning this one from day dot, the bigger money has been made in the period since the company’s treatments have proven successful.

Ultimately, our job is to constantly consider the risks and upside potential for all investments across the portfolio as we seek to prudently manage your hard-won capital. We’ll continue to assess these opportunities and take appropriately-sized positions from time to time, managing risk both at the individual stock level, as well as from an overall broader portfolio perspective. All while seeking to generate meaningful returns to investors over time.

Outside of Opthea, we suffered an 18% decline to Lovisa, costing us 0.8%, as that company continues to de-rate. As outlined last month, we remain enthused about the long-term potential with this business, and are increasingly interested as its shares fall further. With a range of attractively-priced good businesses in front of us, we’re not yet looking to Lovisa as a top-up opportunity. But it’s certainly going in the right direction in this respect, and we believe we’ll likely have an attractive set-up to add to our holding through this volatile market. Finally of note, we continued to suffer for our uranium and lithium holdings with each of Paladin, Peninsula, and Pilbara plowing new lows, costing us 1.3% between the trio.

Offsetting some of the damage were our small basket of gold stocks which rose for their safe-haven nature, contributing 0.6%. This excludes Bellevue Gold however which has mine-specific operational issues and is presently suspended ahead of what will be a negative market update. Moving into April, our gold basket is providing a source of liquidity as we seek to rotate into more attractive opportunities. Metro Mining rose 10%, contributing 0.4%, as investors increasingly focus on the significant cash generation expected from this business in the quarters ahead. Finally, Smartpay rose 50% to contribute 0.7% on the back of takeover offers from fellow ASX-listed payments company, Tyro, as well as from a US-based operator.

Navigating Current Uncertainty
Markets have been weak over the past couple months with uncertainty gradually increasing, and last week’s US tariff announcement accelerating the market’s decline. Global equity markets have been extremely volatile with the Trump Administration’s announced sweeping tariff plans. Investors are rightly worried about what a change in the global trade regime may mean for individual companies, as well as economic activity in general.

How we’re approaching this environment is fairly simple and straightforward, and aligned with our long-term orientation. First, we don’t have a view on whether the next big market move is going to be up or down. Second, we take a long-term view with assessing our companies and their prospects. We’ll let others speculate about whether uncertainty is already over or under-discounted in prices. Instead, we’ll focus on the fundamentals of our businesses, what their risks are, how they will be impacted in various economic and tariffed environments, and critically – how attractively they’re priced relative to the cash we expect them to generate over time. We wish to own a diverse portfolio of good smaller ASX companies, targeting 40-50 names with plenty of idiosyncrasies among them. Again, the key factor behind them though is they should be attractively valued – pricing in the expectation of strong returns over time.

Market declines of 10% or more are routine and in our view shouldn’t drive wholesale change to asset allocation. Rational, value-oriented investors will be inclined to increase exposure as the market falls, recognising that at progressively lower levels we’re getting more value for our investment dollar. The corollary to a fall in share prices – all things equal – is higher future expected returns. The rub though is that a changing world order in trading terms means things aren’t all equal. And that’s where our job as analysts and investors gets interesting, as we continually assess and reassess the prospects for individual companies across a portfolio and opportunity set.

Summary
Undoubtedly, it’s been a tough patch in the market, and for the Fund. Opthea has disappointed, but for the most part we believe our process around investing in such situations remains robust. Some favoured holdings such as Lovisa (outlined in detail last month) have de-rated, but we remain enthused about their long-term prospects. Having trimmed Lovisa at much higher levels, this stock – along with others – will have a top-up price, and we seek to enhance our long-term holding return through actively re-positioning in response to price movements through time. In short, these declines are welcomed and provide opportunity to add. Elsewhere, we’ve suffered for the de-rating to uranium’s prospects by investors. Paladin is a good example of a company that’s suffered from a couple (manageable) company-specific issues, together with a decline in the price of uranium. Having fallen 70%+ from its 2024 highs, and with our own views remaining constructive toward the likely price trajectory of uranium over the medium term considering the anticipated supply deficit, we remain invested and see considerable upside potential from here.

The big money in equities over time, in our view, comes from owning and holding good businesses. No one rings a bell at the bottom. Our approach simply is to remain wholly focused on identifying a diverse set of good, growing, attractively-priced companies, actively rotate capital where appropriate into the most compelling of these, and generally maintain a fully-invested posture through the ups and downs of the market.

Thank you for your trust and support. We welcome your direct enquiry any time.

March 2025

Performance of the Fund

(after fees)

Fund Strategy

The Monash Investors Small Companies Fund (ARSN 606 855 50) is a high conviction fund with a strategy of outperforming the S&P ASX Small Company Index over the medium term (5 yrs).

The target universe is Australian Small Companies, defined as all stocks outside the S&P ASX 100 Index.  However, should our research uncover compelling opportunities within the S&P ASX 100 Index, up to 20% of the Fund can be invested there.  When this research uncovers a company likely to suffer material adverse business conditions we have the flexibility to invest up to 20% of the Fund in shorting these opportunities.

The Fund seeks to only invest in compelling opportunities. To identify these investment ideas, Monash Investors primarily employs fundamental, bottom-up company research and the judgement of its experienced portfolio managers.

For all business development enquiries, please contact

Cameron Harris
Investment Specialist
P. +61 400 248 435
E. cameron@gsmcapital.com.au

Michael Haddad
Portfolio Manager
P. +612 8069 7965
E. michael@monashinvestors.com

For all investor enquiries, please contact

Apex Fund Services P: 1300 133 451 or by email at registry@apexgroup.com
Monash Investors Small Companies Fund Registry Services, GPO Box 4968  , Sydney NSW 2001

For all other enquiries

E. contactus@monashinvestors.com

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Current Unit Price and Unit Price History

 

 

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MAIF FUND FACTS

ENQUIRIES AND COMPLAINTS

The Responsible Entity has established procedures for dealing with complaints. If an investor has a complaint, they can contact the Responsible Entity or the Investment Manager during business hours.

The Responsible Entity will use reasonable endeavours to deal with and resolve the complaint within a reasonable time but in any case, no later than 30 days after receipt of the complaint. Other type of complaints and complex complaints may have a different maximum response timeframe. We will let you know if a different maximum response timeframe will apply to your complaint.

If an Investor is not satisfied with the outcome, the complaint can be referred to the Australian Financial Complaints Authority (AFCA). The AFCA provides a fair and independent financial services complaint resolution service that is free to consumers.

Website: www.afca.org.au

Email: info@afca.org.au

Telephone: 1800 931 678

In writing to: Australian Financial Complains Authority, GPO Box 3, Melbourne VIC 3001

All investors (regardless of whether you hold Units in the Fund directly or hold Units indirectly via a Platform) can access Perpetual’s complaints procedures outlined above. If investing via a Platform and your complaint concerns the operation of the Platform then you should contact the Platform operator directly.

Become an investor

The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL 235 150) (Perpetual) is the Responsible Entity of and issuer of units in the Monash Investors Small Companies Fund and Monash Investors Small Companies Trust ASX: MAAT and Monash Investors Pty Ltd (ABN 67 153 180 333 AFSL 417201)(Monash Investors) is the investment manager of the Funds.

Monash Investors issues and operates this website. All opinions and estimates on this website constitute judgements of Monash Investors and are subject to change without notice. The information on this website is provided for general information purposes only, and is not to be construed as solicitation of an offer to buy or sell any financial product. Accordingly reliance should not be placed on this website as the basis for making an investment, financial or other decisions. The information on this website does not take into account your investment objectives, particular needs or financial situation. Whilst every effort is taken to ensure the information on this website is accurate, its accuracy, reliability or completeness is not guaranteed. A product disclosure statement (PDS) and Target Market Determination (TMD) issued by Perpetual is available for the Funds on this website. You should obtain and consider the PDS and TMD before deciding whether to acquire, or continue to hold, an interest in the Funds. Initial applications for units in the Funds can only be made pursuant to the application form attached to the PDS.

Performance figures contained on this Website are not necessarily indicative of future returns and should be used as a general guide only. Returns on investments necessarily are volatile and subject to change and likely to vary from year to year. These returns are likely to vary from year to year. Returns have been calculated using exit prices after taking into account all ongoing fees, and assuming reinvestment of distributions. No allowance has been made for taxation. Future returns may bear no relationship to the historical information displayed. Returns in a Fund can be particularly volatile in the short term and in some periods may be negative. Neither Perpetual nor Monash Investors makes any guarantee or representation in regards to the performance of any of the funds, nor the specific rate of return to investors or the return of capital.

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