Top Singapore fund LionGlobal wins with ‘forgotten’ small-caps

The company sees the small- and mid-cap strategy continuing to succeed over the longer term as well

Lion Global Investors’ strategy of investing in the shares of small and medium-sized Singaporean companies has made it one of the best performers in the city-state.

The company likes construction and technology shares, some non-bank financial companies and export-related sectors such as offshore and marine, said Kenneth Ong, a fund manager at the firm.

The LionGlobal Singapore Trust Fund has returned more than 36 per cent this year, making it the top performer among Singapore funds larger than S$200 million that invest in the local market, according to data compiled by Bloomberg.

“We are still finding companies with attractive valuations, some of which are still net cash,” Ong, whose firm had US$58.6 billion in assets under management as at June, said. “The SMID (small and mid-cap) sector in Singapore has been unloved and forgotten for the past decade.”

The Republic is seen by many investors as a safe haven amid trade wars, supply-chain diversification away from China and attractive dividend yields.

The Monetary Authority of Singapore’s roll-out of a S$5 billion local stock-market revival programme to improve valuations and boost liquidity has also contributed to gains.

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The growth in valuations of larger companies is creating a “natural liquidity waterfall” in smaller stocks, added Ong.

Lion Global sees the small and mid-cap strategy continuing to succeed over the longer term as well.

“Small and mid-cap stocks will eventually enter the MSCI index benchmark, improving the global visibility of these companies,” said Erica Lau, another fund manager at the firm. “Singapore is in a unique position to offer both dividends as well as opportunities in the small and mid-cap space.” BLOOMBERG