Simplicity, the Swedish independent manager, has added a global small cap strategy to provide greater diversification for those already attracted to its Swedish small cap (Småbolag Sverige) fund.
The new fund invests in companies with market cap below $5bn. Because of the potential for smaller companies to grow faster, the manager says it may suit investors looking for better return prospects than investing in a traditional global equity strategy.
Smaller companies are also more interesting for active managers because they are less known and not as analysed as larger companies, Simplicity added.
To reduce volatility risk, the fund aims to invest in companies that have already done well, that have sound cashflows and are undervalued according to its own analysis.
In line with Simplicity’s approach to ESG, the portfolio will exclude companies that exploit fossil fuels in the same way the manager excludes companies involved in tobacco, alcohol, pornography, gambling and weapons.
To begin with, the Simplicity Småbolag Global will have some 80-90 holdings, out of a universe estimated at some 5,000 companies.