With R6,9bn under management the mid-and small-cap category is the third-largest specialist equity category after large caps (R23bn) and industrials (R7,6bn).The sector does not resonate well with investors looking for much broader multi-asset mandates. Most of the funds were formed in the late 1990s, when there was high demand for sectors promising high growth, much of it from "exciting" businesses with opportunity to take market share from slower rivals. Only two funds were launched in the past 10 years, by wealth management groups Nedbank Wealth and AlphaWealth.Though popularly known as small-cap funds, the universe of these funds is made up 85% by mid caps. The funds have a mandate to invest in anything outside the Top 40, though there is a grey area now that Life Healthcare and Bidvest are simultaneously mid caps and in the Top 40. These funds are not obliged to sell shares when they come into the Top 40 and this presents unexpected opportunities. Recently, there was a short wi...
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