Almost a year after starting up boutique fund manager Avoca Asset Management, former UBS small caps analysts John Campbell and Jeremy Bendeich are starting to significantly build their funds under management (FUM), due mostly to an influx of institutional money.
Avoca officially commenced operations on 1 May last year under the Bennelong Funds Management umbrella, with fund inception at 1 July last year. It has grown its FUM from around $10 million at 1 January this year to around $63 million currently, primarily due to interest from institutional investors.
As at 28 March Avoca had slightly outperformed its benchmark, returning 1.6 per cent against 1.1 per cent for the S&P ASX Small Ordinaries Index over the same time period.
Managing director and portfolio manager John Campbell said Avoca was beginning to build a rapport with larger asset consultants, and the fact they had earned meetings with several institutional investors was a positive sign.
The fund has so far been rated three stars by Standard & Poor’s and recommended by Zenith.
Attracting a higher rating from the retail ratings houses would be a necessary step in attracting significant retail money and gaining a foothold on platforms, but that would take time, Campbell said.
He hoped the fund would attract a further $150 million to $200 million by the end of the year, which should be possible if two or three institutional mandates were awarded in that time.
Bennelong chief executive Jarrod Brown said he’d been warmly encouraged by the response so far from the asset consultant community, but a four star or recommended or equivalent rating would be required from retail ratings houses to really be in line for retail opportunities.
"It follows that our expectations of growth in the short- to medium-term are likely to be skewed to wholesale investments," he said.
Brown said that now the fund had been fully operational for a number of months, it was encouraging that some of the investors monitoring the fund were starting to step up to the plate and invest.
Zenith senior investment analyst Steven Tang said Zenith had seen the positive way Bennelong had worked with other fund managers previously and was confident it would do the same with Avoca.
The fact the portfolio managers were employing the same processes as they did at UBS also contributed to the early recommended rating for the fund, he said.
