Longwave brings small-cap strategy to ASX

Longwave Capital Partners has launched an actively managed exchange traded fund on the ASX, giving investors listed access to its Australian small-cap strategy as the boutique targets opportunities beyond the large-cap market.

The Longwave Australian Small Companies Fund- Active ETF (ASX: WAVE) began trading today, converting the investment strategy, which has operated as an unlisted unit trust since October 2019, into an exchange traded format.

The fund returned 8.2% annually after fees to 31 August 2026, outperforming the S&P/ASX Small Ordinaries Accumulation Index by 2.6 percentage points a year, according to Longwave.

Longwave co-founder and chief investment officer David Wanis said smaller companies offered greater scope for active managers to identify mispriced opportunities, given comparatively limited analyst coverage.

"Small caps are the one part of the Australian equity market where the case for active management is unambiguous," Wanis said.

The fund holds around 100 to 120 ASX-listed companies across sectors, seeking to balance diversification with exposure to business capable of funding their own growth.

Longwave co-founder and portfolio manager Melinda White said the strategy aimed to capture growth while avoiding speculative or financially fragile businesses.

"Our process keeps the portfolio in the stage of the corporate lifecycle where returns are earned - companies that are growing quickly, are profitable or close to it, and fund that growth from their own cash flow rather than debt or new equity," White said.

Longwave co-founder and portfolio manager Jai Beathe said the investment process combines systematic assessments of company quality with the research team's fundamental analysis.

"We construct the portfolio by combining a systematic quality engine, which applies our definition of quality consistently and without bias to every company in the universe, with the human insights of our specialist small cap investment team," Beathe said.

The launch comes as Australian small caps trade at a significant valuation discount to larger companies. Longwave said the Small Ordinaries Index had a forward price to earnings multiple of about 15.5 times on September 30, compared with just over 17 times for the S&P/ASX 100.

WAVE will use a scale-based management fee that declines as funds under management grow and will not charge a performance fee.