Tim Johnston

Bell Asset Management has launched the Bell Australian Small Companies Fund which will actively seek to identify opportunities in quality companies sitting outside the ASX 100.

The fund’s aim is to outperform the S&P/ASX Small Ordinaries Accumulation Index over the medium to long term*.

The fund launch comes three months after Tim Johnston, James Nguyen and Scott Hudson joined Bell from Tyndall Asset Management to establish and manage a new Australian Small Companies strategy.

Johnston says the team has a proven process and takes a bottom-up, fundamental, long only view of the market, seeking quality with a valuation overlay.

“We believe small caps offer an attractive option for investors, particularly in the current environment. Historically, small caps have delivered strong returns for investors able to take a long term view.

“Small caps represent a broad and diverse universe with significantly less analyst coverage than large cap companies. At this end of the market active managers have a real opportunity to generate superior returns through research and analysis, particularly as many small companies are earlier in the growth lifecycle and therefore have the potential to compound earnings over time,” Johnston says.

The fund will hold between 30 and 70 stocks, creating a portfolio of quality small caps, with a maximum cash holding of 10 per cent.  The fund can also invest in initial public offerings (IPOs).

The fund complements Bell’s global equities offering, which has applied a quality-first approach to global equities since 2003. While each strategy operates with its own distinct philosophy, both reflect Bell’s commitment to rigorous, bottom-up research and disciplined stock selection and extend the firm’s coverage into the domestic small-cap market.

The new fund joins the Bell Global Equities Fund, the Bell Global Emerging Companies Fund and the Bell Global High Conviction Fund and rounds out Bell’s investment fund lineup.

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The new strategy will operate as a dedicated and independent team, complementing Bell Asset Management’s existing strengths in global equities. The team will join in the coming months and report to Bell Asset Management’s CEO Michael Lovett.

The appointments follow a strategic decision by the Bell Asset Management Board to grow through diversifying the firm’s investment offerings and by further leveraging its established, institutional-grade platform across distribution, operations, compliance and administration. The Australian Small Companies team and the Global Equities team will operate as two distinct investment teams with separate mandates, processes and portfolios.

Lovett said the appointments represent an exciting step forward for the firm.

“As boutique fund managers face increasing pressure globally to scale, Bell Asset Management sees a growing opportunity to support exceptional investment teams with a scalable platform designed to enable long-term success.

“These appointments reflect a strategic and deliberate move to broaden our investment capabilities while leveraging the strength of our platform. Tim, James and Scott bring outstanding expertise in Australian small caps and a clear alignment with our investment culture.

“The partnership is strongly aligned with our firm’s long-term growth ambitions and reinforces our commitment to building a diversified, high-performing investment management business.

“Over time, we aspire to partner with additional high-quality investment professionals and continue building Bell Asset Management into a broader and more diversified investment management firm,” Lovett said.

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