The Airlie Australian Share fund has admitted it has been a “painful period” not holding buy now, pay later (BNPL) provider Afterpay but that it was concerned how the sector would behave in a full market cycle.
The fund, which is part of Magellan Financial Group, was a concentrated Australian equity fund which sought companies on the basis of their financial strength, management quality and business quality as well as company valuation.
In a webcast, manager Matt Williams was asked his views on the BNPL sector but admitted the fund had completely missed out on the trend.
“We totally missed that, it is not because I have my head in the sand, we have younger analysts too but they have poured it over the sector and we haven’t seen it perform through a whole market cycle yet and do not know how it will behave. They are not even profitable companies yet.
“So, we missed the fad but that has happened in the past such as in the tech boom and we have made it up when the bubble has burst but it is painful in the interim.”
Afterpay was one of the ASX 200’s best-performing stocks over the past year with returns of 195% over the year to 31 August.
According to FE Analytics, within the Australian Core Strategies universe, the Airlie Australian Share fund had lost 0.9% over one year to 31 July versus losses of 7.2% by the Australian equity sector.
Performance of Airlie Australian Share fund versus Australian equity sector over one year to 31 July
