Many Australian Equity investors hold a large allocation of their wealth in traditional Large-Cap companies. At the larger end of the market, and especially in the Top 20, the Index is heavily weighted towards financials which is largely made up of banks. For others there may be direct investments with the ability and access Micro-Cap, Private Equity, Venture Capital and Property opportunities. Many of these investments are unique, opportunistic and can be very rewarding. However, analysing and monitoring these investments can also be very time consuming.
Companies that sit outside the S&P/ASX50 Index are often ignored. However, it’s these companies who have a proven business model and are at the point in the business life cycle where revenue and earnings are often rising at a fast rate. An investment into the broad Small and Mid-Cap universe can provide a great opportunity for investors seeking sector diversification and additional growth.
The Contact Ex-50 Fund holds a majority of its portfolio in founder-led companies.
Founder-led companies are those whose founder holds a position of influence; CEO, Chairman, Board Member, Family Member or a substantial shareholder. Founder-led companies benefit from the long-term guidance of their founders. Executives who founded a firm often see it as their life’s work. Founders are highly motivated to think long-term and have invested a sizable portion of their life savings into their companies. They are aligned with those of their shareholders. Founders know much more about the company’s business. They have a clear idea of where they want to go, and they will guide the business in that direction. Many non-founder executives do not have the vision that a strong founder has.