American Century Investments (ACI) and Nomura Asset Management (NAM) have together launch the Nomura Funds Ireland - American Century Global Small Cap Equity Fund.
The announcement of a new UCITS fund is a response to increasing client demand for small cap exposure and more broadly diversified portfolios, and it will chiefly invest in small-cap companies across both developed and emerging economies to create long-term capital growth.
The fund utilises a “bottom-up” growth philosophy, focused on identifying investments in small cap companies worldwide exhibiting sustainable and accelerating earnings growth. The team behind the fund also believe that the direction of earnings growth is a more powerful predictor of stock price performance than the absolute level of growth
There also an environmental element to the fund. The fund will also factor in ESG issues into the fundamental analysis, and will operate under UN Global Compact guidelines. This means the fund will not invest in companies that are on the exclusion list recommended by the Council on Ethics of the Norwegian Government Pensions Fund Global.
American Century Investments’ senior portfolio manager Trevor Gurwich and portfolio manager Federico Laffan will will manage the fund. The pair have worked together for more than 10 years and are supported by a team of eight analysts which manages US$2.3 billion in small cap assets.
Trevor Gurwich, senior portfolio manager, believed the new fund could improve long-term returns and maintain the portfolio’s strong position in the market.
He said: “The small cap markets provide a dynamic and large universe. In general, global small caps are expected to grow earnings faster than their large cap peers, and global small cap valuations remain attractive. Our portfolio will be positioned in companies that we believe have strong fundamentals and will continue to deliver better earnings revisions than the overall market. We also believe combining global small caps with either global large caps or regional mandates may improve diversification and enhance long-term returns.”
Peter Ball, Managing Director at NAM UK, spoke positively of the fund and the partnership between both firms.
He said: “Since entering into this strategic business partnership in 2016, both firms have been able to leverage each other’s strengths for the benefit of clients around the world. Partnering with ACI’s distribution team, Nomura will leverage its distribution and client relations expertise, to provide this new investment solution to clients.”
