7/31/2019 Microequities Deep Value Microcap Fund April 2012 update

1/1

MICROEQUITIES ASSET MANAGEMENT |AFSL 287526 |Suite 702, 109 Pitt Street, Sydney NSW 2000

Office: +61 2 9231 6169 Fax: +61 2 9475 1156 invest@microequities.com.au

APRIL 2012 FUND UPDATE by Chief Investment Officer Carlos Gil

MARKETS AND ECONOMY

The unprecedented accommodative monetary stance of the US Federal Reserve provides the most skeptic equity

investor little respite for remaining in fixed income and cash. The Federal Open Market Committee reiterated during the

month its known previous stance of maintaining historically low borrowing costs until at least 2014. Nothing new there.

However, perhaps surprisingly, Fed Chairman Bernanke reminded markets that despite expectations that growth will

pick up at a moderate pace, the Fed saw the need to provide further reassurance by stating that should growth stagnate

they would be prepared to take more balance sheet actions as needed.

The signaling by the Fed provides investors with a pretty compelling hedge. Essentially the Fed is saying economic

growth is improving at a modest pace, and if this growth continues were going to give you low rates to at least 2014. If

for whatever reason the growth doesnt continue we are going to provide further measures (essentially printing money

via quantitative easing) to stimulate and deliver growth. I cannot recall seeing a more equity friendly stance in my 20

years of investing. Given the US 10 year Government bond rate is yielding around 1.93%, US investors dont have a

difficult capital allocation decision to make, with equity assets being an obvious choice.

Microequities Deep Value Microcap Fund returned a positive +1.50% versus the All Ordinaries Accumulation Index

positive +1.10% in April; this brings the total return net of fees to 140.48% for the Fund compared to 62.90% for the

All Ords Accumulation since inception in March 2009.

Our Deep Value Microcap Fund posted its 5th

consecutive monthly positive return with a 1.5% return for the month. The

Fund received strong new investment inflow and we will be deploying these funds to bulk up our position in the

financial services sector. This is a sector that we are well acquainted with, have recurring revenue streams and given the

current out of favor sentiment we can buy two exceptional businesses at highly convincing price points. We are buying

these businesses with a long term vantage point and we are prepared to absorb the short term challenges facing the

sector. From a holistic perspective, the investment case is sound.

*Deep Value Microcap Portfolio as of 30th

of April 2012

1.9%

41.3%

6.3%8.3%13.6%

9.4%

11.8%

3.1%

4.3%Cash

Software & Services

Telecommunications

Services

Hotels Restaurants &

Leisure

Media

Health Equipment &

Services

Commercial Services &

Supplies

Diversified Financials

Utilities

Latest Unit Price

$2.1215Latest Fund Performance as at April 30, 2012

FUND AOAI* OP*

1 Month +1.50% +1.10% +0.40%

3 Month +12.59% +4.73% +7.86%

6 Month +16.62% +4.74% +11.88%

12 Month +11.78% -4.62% +16.40%2 yrs comp pa +9.95% +0.29% +9.67%

3 yrs comp pa +27.13% +10.50% +16.63%

Inception +140.48% +62.90% +77.58%

(Returns are calculated after all fees and expenses and reinvestment of

distributions. Inception of Fund March 2009) *AOAI: All Ordinaries

Accumulation Index. *OP: Out-performance.

Past performance is not indicative of future performance.

mailto:invest@microequities.com.aumailto:invest@microequities.com.au