Acorn Capital Investment Fund Limited (ASX:ACQ) invests in a diversified portfolio of Microcap Companies.

Microcap Companies are defined by ACQ’s manager, Acorn Capital Limited (the Manager) as those entities which have an equity valuation less than the 250th largest, by full market capitalisation (and not free-float adjusted), ASX-listed entity.  Microcap Companies include both Listed Microcaps (being those listed on ASX) and Unlisted Microcaps (being either entities that are not ASX listed, or non-ASX listed instruments of Listed Microcaps).

ACQ’s primary objective is to achieve after-fee returns on its investment portfolio in the long term that are higher than the S&P/ASX Small Ordinaries Accumulation Index, through long-term capital growth by way of investment in a diversified portfolio of Microcap Companies.  This will be achieved via investments in Listed Microcaps and Unlisted Microcaps (where the Manager determines that such opportunities present relative better value).

ACQ offers investors a number of potential benefits:

  • Exposure to a manager with a successful record of investing in Microcap Companies. Acorn Capital is a leading boutique investment manager with a track record of managing investments in Microcap Companies that have outperformed the All Ordinaries Accumulation Index and the S&P/ASX Small Ordinaries Accumulation Index on a per annum basis since 2000;
  • Access to a distinctive investment strategy, through the investment in both Listed Microcaps and Unlisted Microcaps, the second of which potentially provides investors with exposure to a large investment universe (in terms of investment opportunities);
  • Exposure in an efficient manner to a diversified portfolio of investments in both Listed Microcaps and Unlisted Microcaps;
  • Access to a market that the Manager considers to be inefficiently priced as a result of perceived information gaps amongst Microcap Companies due to a lack of company-specific research;
  • Opportunity to diversify an investor’s existing portfolio by gaining exposure to an investment universe that is compositionally different to the ASX-250 by both industry sector and stage of development; and
  • Access, through Microcap Companies, to a sector that has historically been the breeding ground for the larger capitalised companies of the future.

Investment Philosophy

  • Identify the best investments within each industry based on relative value, remaining fully invested across all industries;
  • Exploit inefficiencies in the pricing of listed and unlisted microcap stocks;
  • Investment opportunities for long term capital growth are identified through research and regular company interaction; and
  • Manage risk through creation of diversified portfolios.

Investment Strategy

  • Research Driven Stock Selection - Significant potential value added due to lack of research in microcap sector
  • Economic Sector Diversified - Enables relative rank, provide diversification by industry, optimise risk / reward
  • Style agnostic - Avoid style bias, capture both growth and value, developing and mature companies
  • Long term investor - Minimise transaction costs and maximise participation in the primary market
  • Stock Numbers - Create diversified portfolios (typically 60-80 stocks) to reduce volatility