Perennial Value has created a ‘boutique within a boutique’ by carving out the small caps segment of the firm and handing responsibility for this business, plus equity ownership, to key employees.
The arrangement sees Grant Oshry, a small caps portfolio manager who joined Perennial Value as a dealer in 2003, assume full responsibility for the $14.4 million Perennial Value Smaller Companies Trust.
However John Murray, the managing director of Perennial Value, still has input into the portfolio. “Grant has the ultimate responsibility for the portfolio, but I look at it on a daily basis as well,” Murray said.
Oshry, as well as research analyst Damian Cottier and newly-appointed senior equity analyst Andrew Smith, formerly head of research at small-to-mid-cap broker Linwar Securities, will have access to 25 per cent of equity in the business, Murray said. “We’ve taken that next step. We thought that we had some very good people coming through and turned our minds to what we needed to do to retain and encourage people.”
This led to the formation of Perennial Smaller Companies Pty Ltd, an affiliated business of Perennial Value, in the second half of calendar 2007. Oshry, having focused on the small cap component of Perennial Value since 2006, was groomed to lead the business. But as Smith settles into his position at Perennial he will also adopt portfolio management duties.
In the two years to May, when Oshry held direct influence over the portfolio, the Perennial Value Smaller Companies Trust generated an annual return of 21.9 per cent against the 14.5 per cent of the benchmark S&P/ASX Small Ordinaries Accumulation Index.
While Oshry and Smith will only manage small caps, Cottier will cover small and large cap stocks. In addition, four other analysts within Perennial Value who work across the domestic index will also provide research on this area of the index. “Our philosophy has been that analysts cover small and large cap stocks,” Murray said.
Since the creation of the new smaller caps business, the 1.2 per cent management fee applying to the smaller companies trust has not changed.