Investors Mutual has completed a tremendous fightback to be named winner of the Australian equities broad cap category of this year's Money Management/Lonsec Fund Manager of the Year Awards.
The absorbing of Cannae Capital partners in 2010 brought an influx of new personnel into the company, enabling it to overcome tough times in 2008-2009 when it suffered from poor performance and staff turnover, according to Lonsec.
The appointment of former Cannae Capital managing director Hugh Giddy as IML head of research has added extra support for the fund.
Absorbing Cannae Capital has been a major boost for the fund, refining its investment processes and creating a well-resourced investment team. The Australian Share Fund now has 11 investment analysts.
The usual staff ownership, plus the institutional backing of Treasury Group, has also given IML the benefits of a boutique with significant resources behind it.
Portfolio manager Anton Tagliaferro emphasised IML’s careful investment as an important factor in the fund’s win.
“We’ve always been a low-risk manager, and [over] the last two years we’ve invested in good quality stocks that represent value,” Tagliaferro said.
IML has searched for companies with recurring earnings, good management, and companies that have continued to perform despite the past few years. They also look for companies with the ability to deliver dividends throughout the next year.
That careful analysis has led to returns of 13.03 per cent in the three years leading up to March 2012.
Cyclical companies need to be avoided, Tagliaferro says.
“Companies that can grow their earnings independently of the economy will continue to do well,” he said.
Investing in cyclical companies often comes down to timing, and making sure that they are at the bottom of the economic trough, he added.
Former winner Fidelity was named as a finalist thanks to its strong and committed 12 per cent per year returns, according to portfolio manager Paul Taylor.
The three portfolio managers and eight analysts are a key advantage over its rivals, Taylor says.
The Fidelity Australian Equities fund has a rigorous, institutionalised process, Taylor said.
“The more people that we talk to, the better we do. We’re trying to outwork our competitors,” he said.
Fidelity also has analysts throughout the world, to deepen its breadth of research and knowledge. Competitors, suppliers, and distributors are all within Fidelity’s sights.
Global research is relevant even for domestic companies, Taylor said.
Having global research access to companies can mitigate the potentially biased stockbroker research widely available to investors in Australia, Taylor said.
“There’s a lot of information out there, but you have to go out there and source that information, and for a smaller domestic Australian company that’s very difficult,” he said.
The stable investment team at Schroder Australian Equity Fund led to it being named a runner up this year.
“That has certainly paid dividends in an environment which over recent years has been pretty challenging,” Schroder’s head of Australian Equities Martin Conlon said.
