A qualitative and quantitative win
Australian Equities (Small Cap)
Winner
NovaPort Microcap Fund
Finalists
Celeste Australian Small Companies Fund
Realindex Aust Small Companies – Class A
A well-practiced investment philosophy and an internal focus that blocked out the noise from competitors has given the NovaPort Microcap Fund the upper hand at this year’s Money Management/Lonsec Fund Manager of the Year Awards.
Novaport Capital principal and co-portfolio manager, Alex Milton said the fund had a strong focus on a patient and long-term approach to investment combined with a careful assessment on quality and risk management.
“In applying a high conviction benchmark unaware investment philosophy with an emphasis on absolute returns over the longer term, we have been able to avoid the short-term dynamics or themes driving the market that effectively create volatility,” he said.
Milton said the fund had faced the natural challenges associated with investing in microcaps, but that sector-specific hurdles had included lack of information and lower levels of transparency when compared with larger companies.
The judges praised the fund for its small-cap investment record and a strong bottom-up investment approach which had seen it produce pleasing results.
Milton said the challenges faced had become the big motivator for the fund, which had made it a competitive entrant in the category.
“Lack of research and management ‘risk’ is where we often find the opportunities that have produced some of our best company returns for the fund over time,” Milton said.
For nominee Celeste Funds Management, the decline in interest rates over the past three years had been the biggest hurdle for investing in small caps.
However, senior investment analyst, Paul Biddle said the fund had maintained sensitivity to the pricing of risk and had been wary of lofty valuations driven by low discount rates.
Using the fundamental index methodology saw the Realindex Aust Small Companies – Class A nab a place as a nominee this year.
Realindex Investments chief executive, Andrew Francis said the subsidiary of Colonial First State, had been assessed according to their economic footprint, while the fund focused on a disciplined rebalancing approach to generate long-term outperformance in the future.
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