Over the past year WAM Microcap Limited's (ASX: WMI) portfolio has returned 28.1% over the past year before expenses and fees. This was really good.
It's a listed investment company (LIC) that invests in shares with market capitalisations under $300 million at the time of acquisition.
There are few fund managers out there that have achieved has strong of a return over the past year.
I'm very willing to invest in fund managers that offer something completely different to generic ASX portfolios like Vanguard Australian Share ETF (ASX: VAS). I think small caps have the best chance of creating the biggest returns over the next decade, however they are likely to be the most volatile.
The Wilson Asset Management team are experts at identifying small caps but WAM Capital Limited (ASX: WAM) is now too large to effectively invest in small caps. WAM Microcap is really getting back to the roots of WAM's best hunting ground.
WAM Microcap has increased its cash position at the end of September 2018 to 21.3% and it outperformed the S&P/ASX Small Ordinaries Accumulation Index by 0.6% in the latest month alone.
In FY19 its portfolio has outperformed its benchmark by 5.7% before fees and expenses.
WAM Microcap has already started paying a decent dividend and currently has an ordinary grossed-up dividend yield of 4%. It also paid a 2 cents per share special dividend to reward shareholders for a great first year.
Foolish takeaway
WAM Microcap is currently valued at a 7% premium to its pre-tax NTA after taking into account the dividends. Although it's better to buy things at a discount to the NTA, I think WAM Microcap is far more attractive than some of the premiums the other WAM LICs are trading at.
Plus, WAM Microcap's portfolio may be able to generate the biggest returns over the long-term.
