Hunter Hallhas been given at least one thumb up byAssirtwhich has judged the ethical boutique fund manager as “competent” overall, awarding four stars to Hunter Hall’s Value Growth Trust fund.
Assirt research analyst Jody Fitzgerald says factors that made the fund manager competent rather than “strong” or “very strong” were that it had only marginal increases in funds under management up until two years ago, while it’s IT systems were “not outstanding”.
The Assirt report into Hunter Hall also comments on the small size of the manager’s investment team, although it does note the group is “staffed with highly competent individuals who have clear and well-informed stock views”.
“With three full time stock researchers, this is quite small for an investment team which has a scope to invest up to 75 per cent in international stocks,” Fitzgerald says.
“But this is mitigated by their buy and hold strategies in place; they don’t tend to turn over stocks that much.”
Fitzgerald says the small number of stocks in Hunter Hall’s portfolio — currently standing at about 30 — also poses some liquidity issues. She says there are about four stocks making up 50 per cent of the investment portfolio.
The failure to achieve a higher rating from Assirt comes despite the fact that Hunter Hall was the only ethical investment manager to outperform the average Australian equities manager in the turbulent environment of the last six months. Hunter Hall has also outperformed the S&P/ASX300 in the last quarter and returned more than 20 per cent since starting out in 1993.
The performance helped Hunter Hall’s flagship fund, the Value Growth Trust, to its four-star rating from Assirt.
But the research house has warned investors over the manager’s approach to performance based fees.
“Investors should note a performance based fee is payable on investment returns above the S&P/ASX All Ords despite the ability to invest in international equities,” Assirt says in its report.
Assirt says Hunter Hall is expected to launch two new products – the Australian Value Trust and the Global Ethical Trust – by the end of the year. Assirt will be conducting a rating of these after their launch.
Hunter Hall adopts a value style approach to investing with an ethical overlay. Its ethical investment screen is described as “light green” which means it excludes companies that derive profits from tobacco, armaments, gambling, cruelty to animals and destruction of the environment.
