Long-term qualitative investment key for Aussie equity champs

With a focus on a qualitative investment strategy which backed the long-term growth of companies with strong management, the Greencape High Conviction fund has won the Money Management Fund Manager of the Year award for Australian Large Cap Equities.

The strategy was co-managed by David Pace and Jonathan Koh, and Pace said it ran long-only equity funds with a three-to-five-year horizon that had a “quality tint”.

“We have a qualitative bias: we’re into backing better than average people in better than average businesses,” Pace said.

He attributed the success of the fund to applying that process in a very disciplined way.

“I always make the point internally that we have 14 years of evidence to demonstrate that what we do works, it might not work every quarter or year but over time it does,” Pace said.

VIEW ALL

View all

Finding companies with solid managerial performance and talent was the key component to the equities they selected.

“We’re big backers of quality management boards, the emphasis is on what they’ve done rather than what they’re going to do,” Pace said.

“We spend a lot of time looking at past management track records and board performance, and analysing the extent to which that’s generated economic value.

“When the COVID-19 penny started to drop, the questions we were asking management were: what are your crisis management qualifications, how long have you had your crisis management plan in place and what does that look like under various economic scenarios?”

Pace said the fund’s qualitative tilt had come to the fore with this fallout, as quality management teams that would get their crisis management plans in place early.

“They were the ones that were very early talking about how they capitalise on a crisis,” Pace said.

“Good jockeys end up riding good horses and the same is true of management teams, if they inherit business that aren’t great, they tend to bring them up.”