2020 is proving not to be the year for the ASX’s big bank stocks, making way for the smaller finance players to make their mark.
One of the “Big 4”, the Commonwealth Bank (ASX:CBA), has witnessed less of a decline but is still down by 18 per cent while the other three are down over 20 per cent.
Yet the broader finance sector has only lost 3 per cent in 2020 and eight small caps have gained over 65 per cent this year.
Here’s a list of the ASX financial small caps with YTD gains above 65 per cent:
| Code | Company | Price | ReturnYRoll% | MktCap$ |
|---|---|---|---|---|
| FNX | Finexia Financialgrp | 0.07 | 233 | $8.7M |
| SWF | Selfwealth | 0.665 | 177 | $138.9M |
| LRT | Lowell Res Fund | 1.2 | 140 | $32.8M |
| AVC | Auctus Invest Grp | 0.46 | 130 | $27.1M |
| AEF | Australian Ethical | 4.66 | 98 | $524.8M |
| SEQ | Sequoia Fin Grp Ltd | 0.375 | 90 | $45.0M |
| N1H | N1 Holdings Ltd | 0.078 | 73 | $6.4M |
| RMC | Resimac Grp Ltd | 1.52 | 66 | $599.4M |
Micro cap Finexia Financial Group (ASX:FNX) is the biggest winner having more than tripled this year. It provides services in stockbroking and wealth advisory.
Until August it was known as Mejority Capital (ASX:MJC) before it acquired corporate advisory firm Creative Capital.
Coming in second is investment platform SelfWealth (ASX:SWF), which has gained from increased stock market activity since COVID-19 first broke out.
A significant proportion from this has come from millennial investors participating for the first time and SelfWealth claims to be Australia’s cheapest online broker at $9.50 per trade – lower than what some of the big banks charge.
Money managers in the right space
The next two gainers are listed investment funds Lowell Resources Fund (ASX:LRT) and Auctus (ASX:AVC). Both stocks have performed in accordance with their underlying assets.
Lowell has investments in many of 2020’s winners in the resources sector such as Musgrave Minerals (ASX:MGV) and De Grey Mining (ASX:DEG).
Auctus specialises in private equity opportunities such as energy storage and student accomodation.
Next on the winners list is Australian Ethical Investment (ASX:AEF) which was also growing prior to COVID-19 and has continued to throughout the pandemic.
Investors have been seeking ESG options because they have been perceived as safe haven assets.
Australian Ethical is one of the few money managers to have netted returns in 2020.
The final fund manager on the list is diversified investment play Sequoia Financial Group (ASX:SEQ).
Brokers & lenders
Lenders N1 Holdings (ASX:N1H) and Resimac (ASX:RMC) take up two of the remaining three spots on the list.
Lending stocks generally have held up in recent months, defying fears that financial hardships would cause people to tighten their belts or that bad debts would rise.
Resimac booked a net profit after tax of $55.7m in FY20, up 79 per cent from FY19.
The smaller N1 Holdings isn’t yet profitable but witnessed an increase in its revenue, particularly its commercial lending fees and interest segment which was up 196 per cent.