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Grandeur Peak Global Micro Cap Fund subscription offering info
Sorry for the confusion. We have three large buckets of clients: individual investors, institutions, and financial advisers.
The “DIRECT PURCHASERS” section of the Indication of Interest Form is the section to be used by individual investors and institutions.
The “ADVISER PLATFORM PURCHASES” is only meant to be used by our financial adviser clients. These financial advisers use a trading platform at Schwab, Fidelity, TD Ameritrade, Pershing, or such that is specifically designed for Advisers. For example, an advisory firm that uses Schwab for their client trades will have a specific Adviser Code with Schwab, and every trade they place with Schwab will have that code on it so that Schwab can track the assets accordingly. This gives Schwab an additional management tool. Consequently, we will be able to put the fund on the Schwab Adviser platform in an already closed status and then ask Schwab to only allow trades from advisers having the specific codes that we have approved (which is why we need our adviser clients to tell us what their code is). Unfortunately, this would be much more complicated to execute on the individual investor platforms, so a similar approach is not available there (thus the need for individuals to come direct instead).
Perhaps we should have sent two separate forms tailored to the type of client. For your audience the short answer is to ignore the ADVISER PLATFORM PURCHASES section since it is meant just for the financial adviser audience.
I do not want to open a new account at GP from my planning perspective, but I do hold GP funds in Fido account.
As a individual investor, am I correct in my understanding, that the MicroCap fund through this process will only be available at GP (direct purchase) and not at Fido?
Sorry, if this has been asked before but reading all the posts to this thread made it more confusing
@Mulder420 After hearing two different stories from two different people at GP, I emailed in my form sans adviser code (just left that whole section blank). I received a confirmation email. We'll see what happens...I've got no interest in opening another account at GP...especially if they only allot me $1000 or so, depending on total subscription. David gave some other options to check out, as well.
The primary reason I am going to open my account with GP (besides my other four accounts are there) is that once I fund my initial Global Micro Cap position allotment, I am going to initiate a systematic investment plan. If I don't initiate the systematic investment plan when I initially fund my Global Micro Cap Fund allotment, there is no telling when I may be able to add more $$$ to it later. Even if they give me a $1,000, I will still be able to systematically fund it so I can increase my position.
This quite similar to how Bridgeway oversees its Ultra Small Company Fund.
@TheShadow good points, but I still think I will pass on opening an account there...have too many scattered accounts right now, but if I get it through Schwab...great!
I assumed that the advisor code was to permit paid advisors who hold their clients' money at brokerages like Schwab to buy shares on behalf of their clients -- and that if you're not an advisor or an advisor's client, you have to invest directly with GP.
I don't get why there is all the hype about paying 2.00%!
I don't quite get it either JoJo26. In a different post I see disparaging remarks about one of the best founds ever, SEQUX, and then this post clamoring for a fund with no record at all.
My concern doesn't have to do with the track record. The guys at GP have a long history of managing money globally on the smaller end of the market cap spectrum. However, paying 2.00% is just outrageous, IMO. Micro caps probably shouldn't be a large allocation of many investors portfolios so I think it's possible to get the exposure through some small cap funds that may dip down or that at least stay true to their "small" cap form.
It's a compelling fund that they're offering, but I can't see myself investing in this through a taxable account.
Actually, David piqued my interest with his mentioning of YASLX/YASSX in the update email. Down quite a bit for the year, but that's always a great time to jump in. Avg market cap of the portfolio is 569 mm according to M*. Low turnover, quality boutique firm. Question is, how small will they keep it?
It may be a viable option if GPMCX isn't in the cards for everyone.
Since inception, Grandeur Peak Emerging Opportunities has outperformed its average peer by 9.5% annually. Global Opportunities has outperformed by 6.5%, Global Reach by 5.0%, and International Opportunities by 4.1%.
While low-cost index funds and ETFs have some advantages, there are also some places where they can't go - or can't go well. International micro-caps are one such place. When last I checked, the SPIVA analysis still showed that as one corner of the market where active beat passive. The reason's simple: indexed products need to be highly liquid and scalable. The space Grandeur Peak specializes in, isn't. Similarly, larger fund companies need products that meet those same requirements (Fidelity would have no conceivable use for a fund that had to close at $25 million or $125 million or pretty much anything short of a few billion) so when they try investing in this space, they limit themselves to the larger, more liquid names. Those, as it turns out, aren't automatically the most attractive opportunities. The French and Fama research, for example, tend to find "the small cap premium" primarily in micro- and nano-cap stocks rather than in the companies with a billion dollar market cap.
One of my better long-term performers is Wasatch Microcap Value (WAMVX), a small fund from the firm that the GP guys left. WAMVX is very small, charges over 2% and has beaten its peers by 2.5% annually for more than a decade. I approached it with the same skepticism that you have, a skepticism that I really do respect. My conclusion was that the manager was capable of earning his keep, so I invested. I'd be happier if he charged 1% and I was ahead by 3.5% annually but that deal wasn't available.
I get where you're coming from and definitely don't disagree with the argument for 1) allocating to small/micro caps (to harvest the "small cap premium") and 2) going active in the space - tons of inefficiencies for good (and even average) managers to generate alpha... 2.00% is just a little steep for me. I don't really like paying more than 1.50%, but did make an exception for GPEOX.
Just another viewpoint: anyone who owns a substantial slug in their older global funds may not particularly need to chase the micro fund - GPROX has 30% in micros and GPGOX has 25%.
While I own gprox and gpeox, it sounds as though gpmcx will provide first access to nano stocks selected by the management team. Then at some point these stocks will migrate from gpmcx to the other Grandeur Peak funds. In my opinion gpmcx might very unique from the other GP funds.
Rereading (carefully) the August 31, 2015, prospectus for GPROX (which I own). Under "Principal Investment Strategies": the fund may invest up to 90% of its total assets (under normal market conditions) in micro cap companies, those with market caps below $1 billion. (My bold.) The fund may also invest up to 50% (under normal market conditions) of AUM in emerging and frontier markets.
I'll have to spend a few days figuring out whether it is worth it for me, a small retail investor who is not a trader, to also hold GPMCX.
I'm expecting there will be a fair amount of overlap. IMO, the micro exposure in Global Reach is enough for most investors to have allocated to the space.
Yes...I am quite sure there will be a degree of overlap with the other GP funds. As I am looking for a small cap holding for my taxable account, this appears to be a nice fit for that space. GPGOX resides in my IRA account, and I am pleased with its performance.
It does become a bit of a funny question. Do you want the tiny stuff? Or would you like the tiniest of the tiny stuff?
Based on my understanding of the intent for GPMCX, there will be overlap but not a lot. GPMCX is supposed to be the lead in to GPROX and by inference to GPGOX, GPIOX and probably GPEOX too.
To be honest, I'm not buying GPMCX because I think something is missing from my portfolio. I'm buying it because I think the GP guys are really good and the stocks this fund will invest in have to be some of the least followed stocks in the world. I expect it to be volatile so it's never going to be a big position for me, but I expect they'll earn a better return, even after the 2% expense ratio, than most of the rest of the global small cap universe.
Separately, I do wonder a little whether the SEC's proposed liquidity requirements, which have been mentioned in several other discussions, could have an impact on a fund like this because I wouldn't really expect a lot of their investments to be highly liquid. I really hope the SEC won't dilute the ability of a fund like this to achieve it's best.
I agree with you. My reasons for subscribing were:
1. There is only one other Global Micro Cap Fund (with a load) besides GP's fund; 2. This is going to be a growth oriented micro cap fund; there are not many established micro cap funds with consistent performance records for growth oriented micro cap funds open to retail investors ( I like Lord Abbett Micro Cap Growth Fund but it is closed and not available to retail investors); 3. Robert Gardiner's past micro cap experience which I hope he brings to this fund; and 4. Not sure how many micro cap funds invest in nano cap stocks; but, there are some hedge funds that invest in nano caps (which I can't afford).
Thank you for your interest in our new Global Micro Cap Fund (GPMCX). As anticipated, requests from current Grandeur Peak Fund shareholders far exceeded our $25 million target. During the Indication of Interest window we received requests totaling over $85 million. We have allocated the available $25M across all parties who expressed interest. Our allocation objective was to be fair and consistent across shareholders and to allow all interested shareholders an opportunity to purchase the Fund. We capped larger requests at a consistent level in order to keep our total allocation to around $25M. Keeping the Fund at this very small size will allow us to be fairly unconstrained as we look for interesting micro-cap investments across the globe.
Comments
Eric Heufner, GP's president, writes:
Sorry for the confusion. We have three large buckets of clients: individual investors, institutions, and financial advisers.
The “DIRECT PURCHASERS” section of the Indication of Interest Form is the section to be used by individual investors and institutions.
The “ADVISER PLATFORM PURCHASES” is only meant to be used by our financial adviser clients. These financial advisers use a trading platform at Schwab, Fidelity, TD Ameritrade, Pershing, or such that is specifically designed for Advisers. For example, an advisory firm that uses Schwab for their client trades will have a specific Adviser Code with Schwab, and every trade they place with Schwab will have that code on it so that Schwab can track the assets accordingly. This gives Schwab an additional management tool. Consequently, we will be able to put the fund on the Schwab Adviser platform in an already closed status and then ask Schwab to only allow trades from advisers having the specific codes that we have approved (which is why we need our adviser clients to tell us what their code is). Unfortunately, this would be much more complicated to execute on the individual investor platforms, so a similar approach is not available there (thus the need for individuals to come direct instead).
Perhaps we should have sent two separate forms tailored to the type of client. For your audience the short answer is to ignore the ADVISER PLATFORM PURCHASES section since it is meant just for the financial adviser audience.
For what interest that holds,
David
As a individual investor, am I correct in my understanding, that the MicroCap fund through this process will only be available at GP (direct purchase) and not at Fido?
Sorry, if this has been asked before but reading all the posts to this thread made it more confusing
Thanks all.
The primary reason I am going to open my account with GP (besides my other four accounts are there) is that once I fund my initial Global Micro Cap position allotment, I am going to initiate a systematic investment plan. If I don't initiate the systematic investment plan when I initially fund my Global Micro Cap Fund allotment, there is no telling when I may be able to add more $$$ to it later. Even if they give me a $1,000, I will still be able to systematically fund it so I can increase my position.
This quite similar to how Bridgeway oversees its Ultra Small Company Fund.
Actually, David piqued my interest with his mentioning of YASLX/YASSX in the update email. Down quite a bit for the year, but that's always a great time to jump in. Avg market cap of the portfolio is 569 mm according to M*. Low turnover, quality boutique firm. Question is, how small will they keep it?
It may be a viable option if GPMCX isn't in the cards for everyone.
Since inception, Grandeur Peak Emerging Opportunities has outperformed its average peer by 9.5% annually. Global Opportunities has outperformed by 6.5%, Global Reach by 5.0%, and International Opportunities by 4.1%.
While low-cost index funds and ETFs have some advantages, there are also some places where they can't go - or can't go well. International micro-caps are one such place. When last I checked, the SPIVA analysis still showed that as one corner of the market where active beat passive. The reason's simple: indexed products need to be highly liquid and scalable. The space Grandeur Peak specializes in, isn't. Similarly, larger fund companies need products that meet those same requirements (Fidelity would have no conceivable use for a fund that had to close at $25 million or $125 million or pretty much anything short of a few billion) so when they try investing in this space, they limit themselves to the larger, more liquid names. Those, as it turns out, aren't automatically the most attractive opportunities. The French and Fama research, for example, tend to find "the small cap premium" primarily in micro- and nano-cap stocks rather than in the companies with a billion dollar market cap.
One of my better long-term performers is Wasatch Microcap Value (WAMVX), a small fund from the firm that the GP guys left. WAMVX is very small, charges over 2% and has beaten its peers by 2.5% annually for more than a decade. I approached it with the same skepticism that you have, a skepticism that I really do respect. My conclusion was that the manager was capable of earning his keep, so I invested. I'd be happier if he charged 1% and I was ahead by 3.5% annually but that deal wasn't available.
For what that's worth,
David
The fund may also invest up to 50% (under normal market conditions) of AUM in emerging and frontier markets.
I'll have to spend a few days figuring out whether it is worth it for me, a small retail investor who is not a trader, to also hold GPMCX.
press
Based on my understanding of the intent for GPMCX, there will be overlap but not a lot. GPMCX is supposed to be the lead in to GPROX and by inference to GPGOX, GPIOX and probably GPEOX too.
To be honest, I'm not buying GPMCX because I think something is missing from my portfolio. I'm buying it because I think the GP guys are really good and the stocks this fund will invest in have to be some of the least followed stocks in the world. I expect it to be volatile so it's never going to be a big position for me, but I expect they'll earn a better return, even after the 2% expense ratio, than most of the rest of the global small cap universe.
Separately, I do wonder a little whether the SEC's proposed liquidity requirements, which have been mentioned in several other discussions, could have an impact on a fund like this because I wouldn't really expect a lot of their investments to be highly liquid. I really hope the SEC won't dilute the ability of a fund like this to achieve it's best.
I agree with you. My reasons for subscribing were:
1. There is only one other Global Micro Cap Fund (with a load) besides GP's fund;
2. This is going to be a growth oriented micro cap fund; there are not many established micro cap funds with consistent performance records for growth oriented micro cap funds open to retail investors ( I like Lord Abbett Micro Cap Growth Fund but it is closed and not available to retail investors);
3. Robert Gardiner's past micro cap experience which I hope he brings to this fund; and
4. Not sure how many micro cap funds invest in nano cap stocks; but, there are some hedge funds that invest in nano caps (which I can't afford).
What's the other Global Micro Cap Fund? All the searching I've done on M* and I can't figure it out.
When do you think we'll start seeing allocations? I'm hoping today!
But I guess you could call Mark Siddoway. (smile)
The other global micro cap fund is ALPS | Metis Global Micro Cap Fund with A, C, and I classes.
Prospectus link: http://www.sec.gov/Archives/edgar/data/915802/000139834415004432/fp0015045_485bpos.htm
I just called GP. The CSR indicated we should probably receive an email sometime today concerning everyone's allotment.
Thank you for your interest in our new Global Micro Cap Fund (GPMCX). As anticipated, requests from current Grandeur Peak Fund shareholders far exceeded our $25 million target. During the Indication of Interest window we received requests totaling over $85 million. We have allocated the available $25M across all parties who expressed interest. Our allocation objective was to be fair and consistent across shareholders and to allow all interested shareholders an opportunity to purchase the Fund. We capped larger requests at a consistent level in order to keep our total allocation to around $25M. Keeping the Fund at this very small size will allow us to be fairly unconstrained as we look for interesting micro-cap investments across the globe.