Well, October 18 was a brutal month for microcaps with the S&P/ASX Emerging Companies Index closing down 10.9% for the month, Yikes! Although things have stabilised in November there has been no major recovery of the losses in October. Not that the larger cousins escaped without injury, the S&P/ASX All Ordinaries was down a hefty 6.5% for October. Both indexes suffered one of their worst monthly drawdowns in years. 

As noted in our last quarterly update we are now moving to monthly updates on our Microcap Fund Managers and what month to start with!

Normally we pick out the good performers and the laggards but with negative absolute performance right across the universe, there seems little point in highlighting either. Doing so would be equivalent to judging the best-looking pig at The Royal Easter Show some might say. 

All investors and managers at the end of the day are trying to achieve positive absolute returns in the first instance and then positively outperform their selected benchmark. While the majority of managers achieved the later it will provide little solace to investors when looking at the final value of their investments on their October statements. 

As equity participants, we have got to take the rough with the smooth and take a long-term view. Looking at the 3-year results of managers where available demonstrates that Australian microcap fund managers by in large have an excellent track record of delivering both respectable relative and absolute returns over time.