Bell Australian Small Companies Strategy
The Bell Australian Small Companies Strategy offers a disciplined, bottom-up approach to investing in Australian small companies, targeting quality businesses trading at attractive valuations.
Small caps reward patient, research-driven investors and penalise those without a rigorous risk framework. With over 75 years of combined investment experience and a forensic approach to managing macro, factor and idiosyncratic risk, the strategy is designed to deliver consistent alpha across market cycles.
Overview
A disciplined, bottom-up approach
The strategy invests primarily outside the S&P/ASX 100, focusing on high-quality companies trading below intrinsic value. Fundamental research drives stock selection, supported by quantitative tools for portfolio construction and risk management.
Quality focus
Investing in durable businesses with strong fundamentals.
Valuation discipline
Seeking opportunities below intrinsic value.
Quant support
Monitoring risk and factor exposures.
Institutional process
Disciplined and repeatable framework.
Features
Tim Johnston, James Nguyen, Scott Hudson
Outperform the S&P/ASX Small Ordinaries Accumulation Index over the medium to long term
Primarily Australian listed equities, with limited New Zealand exposure
5–7 years
AUD
Why Australian Small Companies
The Australian small caps universe is broad, diverse and less efficiently priced than large-cap markets. Many businesses are earlier in their lifecycle, with the potential to grow earnings over time as they scale, gain market share and improve returns on capital.
Lower levels of broker coverage and market attention can create opportunities for mispricing. For active investors with a disciplined process, this can provide a fertile environment for identifying quality companies before their long-term potential is fully reflected in market prices.
Inefficiency
Lower levels of research coverage can create pricing gaps for experienced active investors.
Growth
Many small companies are earlier in their lifecycle and have the potential to compound earnings over time.
Diversification
A broad opportunity set provides access to companies across industries, business models and growth profiles.
Active edge
Stock-specific dispersion can create opportunities for disciplined bottom-up investors.
Investment Process
The investment process is grounded in fundamental company research. The team assesses business quality, management capability, financial strength, earnings durability and valuation to identify companies that meet the strategy’s quality and return requirements.
Quantitative tools are used to complement this research by supporting portfolio construction, risk management and monitoring of factor exposures. This helps ensure the portfolio remains aligned with the team’s stock selection insights and overall risk framework.
Quality assessment
Evaluate business model durability, management capability, balance sheet strength and financial returns.
Fundamental analysis
Develop a detailed view of earnings drivers, competitive position, valuation and downside risk.
Risk management
Quantitative tools support monitoring of portfolio exposures, factor risks and overall balance.
Portfolio Construction
The portfolio typically holds 30–70 stocks. Position sizing reflects conviction, expected return, risk and liquidity. Quantitative monitoring ensures outcomes are driven by stock selection rather than unintended exposures.
30–70 holdings
Max 10% per position
0–10% cash
No gearing
How To Invest
Contact Us for more informationContact
Bell Distribution Team
