Pie Funds Management has re-opened three ‘soft-closed’ products following a review of capacity constraints.
Paul Gregory, Pie head of investments, said the internal review found the three formerly closed-to-new-investor funds – Australasian Growth, Australasian Dividend and Growth 2 – could cope with further flows.
But the almost $100 million Pie Australasian Emerging Companies Fund remains hard-closed.
The manager shuttered the three funds over 2016/17 citing concerns that further rapid growth could stymie performance of the Australasian small-cap specialist funds.
However, Gregory said the latest analysis indicated Pie would still be able to easily enter and exit positions across the small-cap portfolios even with growth in funds under management (FUM).
He said liquidity was a stock-specific factor in the small-cap space, which Pie closely managed.
“Sometimes as funds grow small-cap managers need to do major shareholder disclosures on holdings, which is OK but we don’t want, on average, to be a substantial shareholder for every company in the portfolio,” Gregory said.
Pie also re-opened the funds after queries from investors and the Financial Markets Authority (FMA) about the definition of ‘soft-closed’.
“We had lots of feedback from investors and the FMA that it wasn’t apparent what ‘soft-closed’ means,” he said.
Soft-closed funds allow existing unit-holders to keep contributing while blocking access to new investors.
All the three newly-reopened Pie funds invest in the broadly similar small- to mid-cap Australasian equities universe with each portfolio focusing on a different return profile.
The largest of the trio, Growth 2, has about $180 million under management followed by the Australasian Dividends ($126 million) and Growth ($78 million) funds.
Last week, Pie listed the Australasian Dividends fund on the direct-to-investor platform, InvestNow – the first of its products to attempt this distribution route.
All told, Pie has more than $1 billion under management across a product suite of 10 funds and the $30 million plus Juno KiwiSaver scheme.
Gregory said in July that Pie’s global and multi-strategy funds would drive the manager’s growth over the long term.
“The core Australasian products have a natural cap on assets under management for capacity reasons, as all small cap does if you’re serious about maintaining your ability to generate outperformance for clients,” he said.
The boutique manager’s newest products – the Multi-Strategy and Climate-Friendly funds – reported FUM of $60 million and $26 million, respectively, as at the end of June.
Earlier this year, Pie abandoned efforts to find a new cornerstone investor to drive further growth.
In a July statement, Pie founder, Mike Taylor, said: “Multiple non-binding indicative proposals were received, reinforcing the value Pie and JUNO have created and recognising the solid growth to date, but, when considering strategic capabilities and fit, none were superior to management’s plan.”
