OC shines with "absolute return in style"

OC Dynamic Equity Fund australian equities Forager Australian Shares fund Fidelity Future Leaders Fund funds management Fund Manager of the Year

11 May 2018
| By Hannah Wootton |
image
image
expand image

A sensible and steady approach has seen the OC Dynamic Equity Fund take out the highly contested Australian Small Cap Equities award for 2018.

The fund takes a “sensible approach to risk management”, employing a “reasonably detailed screening process”.

OC chief investment officer, Robert Frost, said that the fund will only invest in stocks where the team can understand the key drivers behind the company.

“There are a lot of companies in small caps which conceptually sound good, but it’s difficult to forecast the key drivers or the business model might be a bit opaque, and our view is that [this] makes it difficult to value the business.”

While these companies may end up doing quite well in the long-term, Frost stands by deciding to screen them out of the fund’s investible universe.

The fund is also quick to cut its losses early.

“You end up spending a disproportionate of your time on stocks that are performing badly and things that are going wrong [otherwise], rather than redeploying your capital into something that is arguably performing better,” Frost said.

With the fund’s volatility for the year to last quarter’s end 0.58 per cent less than the ASX Small Ordinaries benchmark and returns 11.74 per cent higher at 26.73, according to FE Analytics, this steady approach has clearly paid off. The Lonsec judges pointed to OC’s commitment to allocating around 20 per cent of the fund’s net asset value to what it calls ‘concept models’ and ‘event driven’ opportunities as key to its victory.

While still utilising the bottomup approach common to small cap investments, OC also employs a macro overlay to its analysis.

“Unless you’re looking at the bigger picture sometimes, you can miss what’s going on if you’re just purely talking to the companies and looking bottom-up,” Frost said.

Finalist Fidelity pointed to a three-pillared stock selection process as key to its Future Leaders Fund’s success.

Portfolio manager, James Abela, said that the strategy focused on identifying stocks that have viability, sustainability and credibility.

A general willingness to go against the crowd and invest in sectors of the market that other people do not saw finalist, the Forager Australian Shares Fund, perform strongly in 2017.

Chief investment officer, Steve Johnson, and senior analyst, Alex Shevelev, said that “for the most part, it’s been key to our success”.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

JOHN GILLIES

tHOSE 989 WHO ARE CEASED WILL GO ON TO LIVE A LONG AND HEALTHY LIFE JG...

4 days 13 hours ago
Chris Cornish

What a sticth-up. Looks like Labor Senator Jess Walsh follows Stephen Jones who follows what the industry super funds ...

4 days 10 hours ago
Peter Swan

This report is a blatant display of far-left factional partisanship, treating superannuation funds as state property and...

4 days 11 hours ago

ASIC has cancelled the AFS licence of a Sydney wealth firm, the fifth Sydney firm to see a cancellation since the start of the year....

2 weeks 5 days ago

More than 20 winners from the funds management industry have been crowned at this year’s awards....

1 week 5 days ago

ASIC has obtained interim orders from the Federal Court to freeze the assets of a registered managed fund and prevent its former director from leaving Australia. ...

6 days 10 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND