Auckland-based small-cap boutique manager Pie Funds has unlocked its Australasian Emerging Companies Fund, seeking a ‘war chest’ to take advantage of current market volatility.
Sam de Court, Pie head of client services, said a change in market conditions prompted the manager to open a window for new investors in the $48.3 million fund, which soft-closed shortly after its April 2013 launch.
“We had no intention of re-opening the Emerging fund – in fact, up until a couple of weeks ago we thought we would return the money to investors,” de Court said. “But the market has changed. There’s opportunities we haven’t seen since 2011. And if we go into a market correction with a big war chest that’s when we can take the most advantage.”
He said the manager hadn’t yet determined a cap on the fresh intake “but we won’t be opening the floodgates”.
In a letter to Pie investors, managing director, Mike Taylor, said the offer would remain open for “a limited time only”.
“This unique opportunity is available firstly to existing loyal Pie investors, but will be restricted to a maximum of $250,000 per person,” the letter says. “In the event any capacity remains, Pie will open the Fund to new investors.”
The initial offer would remain open until the end of February with funds to be invested by the end of the following month. However, de Court said the close date may be pushed out depending on demand.
The Emerging fund, which targets Australasian stocks with market capitalisation under $150 million, returned an annualised 40 per cent since inception.
The existing six Pie products (three of which have been soft-closed) range between about $50 million to $75 million under management with liquidity issues in the often thinly-traded small-cap sector limiting fund size.
He said all Pie funds were currently overweight cash with allocations in the asset class ranging between 25-42 per cent.
“We probably have the highest weighting to cash of all NZ managers at the moment,” de Court said. “Cash is the best place to be coming out of a correction.”
He said Pie had also put its planned KiwiSaver product on the back-burner.
“We’ll reconsider it next year,” de Court said. “Launching a KiwiSaver product is a big undertaking and we want to focus on what we’re doing now.”
He said to date most KiwiSaver businesses were built for scale rather than the boutique model.
“We had a lot of interest from investors,” de Court said. “But there’s a big difference between having 2,000 members and 20,000.”