A quant manager has lost its entire cornerstone position in Colonial FirstChoice’s $320 million Australian small cap portfolio, with head of investments Scott Tully declaring small caps  would be best suited to fundamental stockpickers in future.

The 35 per cent allocation held by quant shop GMO has essentially been divided between a new mandate for 25 per cent to Schroder Investment Management, and a big upweight for Contango Asset Management from 15 per cent to 27.5 per cent.

Those two stand alongside Colonial First State Global Asset Management (27.5 per cent) as "core" managers in the small caps portfolio, Tully said.

Two managers with higher tracking errors and a leaning toward the smaller end of the small cap universe, Adam Smith Asset Management and Souls Funds Management, now each have 10 per cent allocations.

Schroder said its Smaller Companies Fund was a net 10 per cent ahead of benchmark since its December 2007 inception.