Australian microcap fund manager Perennial Partners says there are signs of life in the smaller end of the market after a “very tough year” in 2022 that saw investors exit the sector in droves.
Perennial oversees a number of funds including the six-year-old microcap fund. The latter lost more than a quarter of its value last year and was worth circa-A$170 million in January.
While Perennial classifies sub-A$500 million companies as microcaps, half of its portfolio consists of companies worth less than $150m, or pre-IPO minnows.
“We had quite a big drawdown over calendar 22,” Perennial head of smaller companies and microcaps, Andrew Smith said this week on a webinar.
“I think what we observed was a lot of the part-time investors in microcaps that might have come down into the microcap end of the market to try and get some extra return … they left in droves last year.