Since launching the Capital H Inception Fund in 2018, CEO and CIO Harley Grosser has sought to deliver the best 10-year returns of Australian small cap funds.

To date, Mr Grosser is pleased with the fund’s performance of 36% per annum after fees over the past three years – and even closed the fund off in March of 2021, in part to maintain that momentum.

The closure of the Inception Fund to new investors also came as Mr Grosser and his team launched their second fund – the Capital H Active Fund.

Like its stablemate, the Active Fund will target predominantly the smaller end of the market, but Mr Grosser told Reach Markets he’s hesitant to put too many restrictions on how the fund invests.

“We’ve always been really industry agnostic, and that’s because small caps fall into industries that are often so obscure,” he said.

“There are industries that we’ve come across that you’d never really know existed if it wasn’t for one company – you kind of have to keep your opportunity set as broad as possible.”

Mr Grosser said staying industry agnostic gives him more opportunities to find companies he likes, using bottom-up analyses to find businesses offering good growth potential.

Drop it like it’s hot

In the past few weeks, the Inception Fund has been in a selling phase after being fully invested following the COVID-crash early in 2020–  returning to a similar cash position to before the pandemic started.

This is the first time since COVID began that we’ve been in a selling phase, but we remain bullish on our core holdings and are not too concerned about the market, Mr Grosser said.

“The main question I get asked when I do investor roadshows or speak to my investors, is what’s my feel for the market,” he said.

“My honest answer is that we’re sort of playing in a space that’s relatively detached from what the broader market is doing – We don’t have any stocks that are trading on 50x revenue or those crazy multiples that are reported as why the next pull-back is coming.”

To hear more about which companies Mr Grosser does hold, join us for ‘The Insider: Meet the Fund Manager’ on Friday 7th May at 12 pm where he will provide an overview of market themes, trends and insights, followed by an interactive Q&A. Book here.

‘The Insider: Meet the Fund Manager’ is a free webcast series which gives you direct access to prominent fund managers. This session is live and interactive and includes a live Q&A. Spots are limited, so please book into this session as soon as possible.

Past performance is not a reliable indicator of future performance.

Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.

Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you. The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.