ALGER Sicav-Alger Small Cap Focus Fund
Promotional document for professional investors only as defined by MIFID II
By Amy Zhang, CFA, Senior Portfolio Manager, Alger, a La Française partner firm
1. You were able to master the crisis well with your fund. What measures had you taken to avert a "deeper fall"?
Since the beginning of the year, I felt as though the COVID-19 virus could spread to the U.S. Also, I felt this could be the “year for health care.” To that extent, I positioned the portfolio in a very defensive way and in a more recession-resilient sense, looking for company specific drivers that are idiosyncratic, that I believe may not be affected by macro. I was proactive and raised more cash before the correction in March, which enabled me to take advantage of volatility based on risk/reward potential.
2. Even before the crisis, the Healthcare sector was already a key component of the portfolio. Did you give this sector an even higher weighting during the crisis? If so, which companies are you currently focusing on in particular?
Our largest sector weighting is still health care, which has been since the end of last year, as I thought this would be the year for health care, even before the pandemic. Diagnostic companies continue to do well, and medical devices company will be the fastest to snap back in our opinion. Specifically, we have some companies that are part of the solution doing diagnostic testing for COVID and flu testing. One example that is one of our top holdings is Quidel Corporation. Quidel is a diagnostic testing company that has a very broad platform, but really specializes in respiratory testing and the bulk of that is flu testing. They also launched COVID-19 testing recently. Overall I believe we are very well positioned with our healthcare holdings as they are both defensive and high growth, with strong fundamentals.
3. The fund has been performing at a high level since its launch. What do you do better than other fund managers who invest in US small caps?
I think our strong performance is a testament of our unique investment process which is very resilient, as we demonstrated outperformance both in the up market and down market. It’s an alpha generation strategy and I believe our greatest strength is stock selection with in-depth bottom up research. We invest in companies that we believe have the potential to save lives, reduce costs and improve efficiency and productivity for corporate America. A common theme of our holdings is innovation and turning data into actionable information. Our major themes include aging population for high quality health care, humanization of pets, cloud computing, 5G, automation e-commerce. We also constantly try to unearth new investment themes. I think anything that's levered to digital transformation will continue to do well in the “new normal” environment.
Another unique aspect of our strategy is that we invest in what we believe are high growth and high financial quality companies that are less economically sensitive and driven by long term secular growth. I think growth will be more scarce in this market because many companies are having negative growth. We look for companies with durable revenue growth that can continue to expand margins because we are long term and for us, it's about still investing in compounding over 3 to 5 years and beyond. We invest in what we believe are exceptional small companies that have potential to become exceptional large companies. We let our winners run so they are compounders over the years.
Associated risks include: exchange rates, volatility, market fluctuations, political, social and economic risks, currency risk, risks associated with investing in smaller, newer issuers, capital risk loss
PROMOTIONAL DOCUMENT FOR PROFESSIONAL INVESTORS ONLY AS DEFINED BY MIFID II. The information and material provided herein do not in any case represent advice, an offer, a solicitation or a recommendation to invest in specific investments. Past performances do not guarantee future performances. Investment products referenced in this presentation are not directed at and suitable for all types of investors. Potential subscribers are requested to carefully and independently assess the legal and commercial documentation provided and notably the risks entailed and the fees. Investors are to make their own risk analysis and not rely solely on the information that has been provided to them. The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Where Alger has expressed opinions, they are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Issued by La Française AM Finance Services, home office 128, boulevard Raspail, 75006 Paris, France, regulated by the “Autorité de Contrôle Prudentiel” as investment services provider under the number 18673 X, affiliate of La Française.
The prospectus of Alger Sicav (Luxembourg SICAV) was approved by the CSSF on April 17, 2020. The management company is La Française Asset Management. La Française Asset Management is a management company authorized by the AMF under the number GP97076 on July 1, 1997.
In relation to the investment fund mentioned in this document, the latest prospectus, the KIID and the annual and semi-annual reports have been published containing all the necessary information about the product, the costs and the risks which may be incurred. The latest versions of these documents are available at: www.la-francaise.com, www.fundinfo.com, with our paying agents: BNP PARIBAS Securities Services, Via Ansperto no. 5 20123 Milan, Italy; Allfunds Bank SA Calle Estafeta 6-Complejo Plaza de la Fuente, Edificio 3, La Moraleja, Spain;; Erste Bank der oesterreichischen
Sparkassen AG, Graben 21, 1010 Vienna Austria.
This is an advertising document. The state of the origin of the fund is Luxembourg. In Switzerland, this document may only be provided to qualified investors within the meaning of art. 10 para. 3 and 3ter CISA. In Switzerland, the representative is ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich, whilst the paying agent is NPB Neue Privat Bank AG, Limmatquai 1/am Bellevue, P.O. box, CH-8024 Zurich. The prospectus, the key information documents or the Key Investor Information Documents, the articles of association, as well as the annual and semi-annual reports may be obtained free of charge from the representative. Past performance is no indication of current or future performance. The performance data do not take account of the commissions and costs incurred on the issue and redemption of units