Initiation of coverage on K2 Australian Small Cap Fund (Hedge Fund): An opportunity to invest in a growth area of the market

Peter Rae

Independent Investment Research

In the 12 months to 30 June 2016 the S&P/ASX Small Ordinaries Index significantly outperformed the broader market as pressure on the banking, energy and resources sectors hurt large cap share prices. Despite some significant growth opportunities in the small cap universe, many Australian share portfolios remain heavily weighted to large caps. The K2 Australian Small Cap Fund (Hedge Fund), (ASX code: KSM) provides investors an opportunity to gain exposure to an actively managed portfolio of domestic small cap equities with the benefit of ASX liquidity. KSM is an exchange traded managed fund (ETMF) that provides exposure to a long/short portfolio of domestic small cap equities, however has historically had a long bias. KSM was listed in December 2015 and is one of two ETMFs managed by K2 Asset Management Ltd. Since establishment in December 2013, the Fund has performed strongly with the NAV (including distributions) rising 14.7%p.a, significantly outperforming the S&P/ASX Small Ordinaries Accumulation Index. Independent Investment Research (IIR) has initiated coverage of KSM. Our report contains details of KSM including performance analysis and our investment rating.


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Peter Rae
Independent Investment Research

Peter has 35 years’ experience in the banking and finance industry, including 15 years as an equities analyst. Peter was a sector head in the equities research team at Morningstar with a focus on consumer and industrial companies.

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