It’s the end of the roll for small cap fund manager Sigma Funds
Small cap fund manager Sigma Funds Management is reportedly on the brink of closing down.
Sigma has told its clients of the move and will wind up in the coming days, according to a report by the AFR.
The company has not yet commented but the speculated reason is underperformance.
According to Sigma’s website they were focused on long term gains even if it meant short term pain.
“Sigma’s portfolios will not always rank at the top of the short-term performance tables,” they say on the website.
“But over the time horizons that are important to our clients, we expect to continue our track record of outperformance relative to the relevant Australian share market benchmarks over five year periods.”
However, on a one year and five year basis all their strategies are down compared to the relative indexes.
The fund manager was established over a decade ago by ex-Credit Suisse bankers and in 2016 were backed by Italian asset manager Azimut. They had sought to enter the Australian market for several months prior to that but chose Sigma and acquired 51 per cent of the firm.
Among their clients was Zurich, who chose them to run their Small Companies Fund in February 2018.
The markets have not played out the way Sigma anticipated.
They admitted the situation was not stable in their December 2018 quarterly strategy, noting the portfolio had become more defensive.
In their most recent update in March, seven of 11 sectors in their flagship Select Equities Strategy were down compared to the market. These included health and IT where there have been several small and large cap gainers.
Sigma also admitted they were reducing their exposure to small caps.
As of this morning, the Zurich Investments Small Companies Fund was down 4.61 per cent over the last 12 months compared to the Small Ords Index which was only down 0.14 per cent. While the latter is recovering from last year’s 4 month downturn, the former has not.
Among the funds top holdings were OFX Group (ASX: OFX) who are 16 per cent lower than a year ago and chicken musher Ridley Corp (ASX: RIC) who are down 11 per cent in 12 months.