Pie Funds is to again shutter its almost $400 million Australasian Growth 2 product to new investors at the end of March, citing capacity issues.
Following the call, three of the nine Pie funds will be ‘hard-closed’ to new money leaving the boutique’s global range, conservative product, Australasian dividend and ‘Chairman’s Fund’ open for investor flows.
The $160 million plus invitation-only Chairman’s Fund invests in several of the group’s other products.
In September 2019, Pie re-opened the-then ‘soft-closed’ Australasian Growth (Growth 1), Growth 2 and dividend funds to further investment after earlier shuttering the products over 2016/17. While Pie swiftly closed the door again on Growth 1 (one of the manager’s first funds released in 2007) by mid 2020, Growth 2 had more than doubled in size since the 2019 grand reopening.
The dual-location manager, boasting offices in Auckland and Havelock North, also wound-up its multi-strategy fund late in 2019 after a run of poor performance.
Chris Bainbridge, portfolio manager of the Pie Growth 2 fund, said in the firm’s latest newsletter that for small cap investors “size is the enemy of performance”.
“As the size of the fund increases, we’re forced to either sacrifice liquidity or move up the curve into larger and more efficiently priced companies. Both options inhibit performance and performance is why Growth 2 exists,” Bainbridge said in the newsletter. “Accordingly, we’re pleased to say that Growth 2 will close at the end of this month with the aim of preserving future performance.”
Growth 2 returned about 43 per cent after fees over the 12 months to the end of 2020 against the benchmark 12.2 per cent and an annualised 19.3 per cent for the five-year period compared to the index performance of 10.5 per cent.
The about-to-close fund would “continue to be managed in the same way with no change to the existing strategy”, Pie chief, Mike Taylor, said in the newsletter.
While the once-closed dividend product remains open, the almost $140 million Pie emerging Australasian equities funds remains off-limits to new investment.
Taylor, who also serves as portfolio manager of the Pie conservative fund, said this February had proved a “very tough month” for low-risk funds in NZ amid rising bond yields.
He said the Pie conservative fund, down 0.9 per cent in February, had dialed back duration and tilted its equity exposure to “recovery names”.
“Occasionally there will be months like February, but in general it is more uncommon than common to have negative monthly returns driven by a sell off in bonds AND equities at the same time,” Taylor said in the newsletter.
After a tumultuous period of staff movements over the last couple of years, Pie has restocked to a team of about 35, including hiring former ANZ chief investment officer, Graham Ansell, in an advisory role.
Ansell joined Pie near the end of last year as adviser to the Pie investment committee.
“Graham has been on the committee for about six months now,” Taylor said. “He’s a great addition given his experience at ANZ. His role is to provide the committee with independent thought and independent governance.”
The boutique manager also appointed Anna Sullivan as chief operating officer (COO) last November to replace Paul Gregory, who resigned to assume the investment director role at the Financial Markets Authority (FMA). Gregory was previously Pie head of investments, moving to the COO role in April 2020 after incumbent, Lance Jones, resigned.
As at the end of last year, Pie reported about $1.2 billion under management (about half of which resides in closed funds, including Growth 2) and a further $300 million in its Juno KiwiSaver scheme.