Financial services' new kid on the block

A relative newcomer has been named the winner of the Rising Star category at the Money Management/Lonsec Fund Manager of the Year Awards this year.

Alphinity Investment Management was born out of a close-knit team of former AllianceBernstein analysts, who left their former employer and established the new boutique under the auspices of Challenger Financial Services Group in July last year.

Alphinity had the advantage of being recognised as a great investment team thanks to their track record at AllianceBernstein, said Johan Carlberg, principal and portfolio manager of Alphinity.

Lonsec was ‘comforted’ by the fact that the entire team moved across from AllianceBernstein to establish Alphinity, creating a cohesive and stable unit, the research house said.

“We have brought the bulk of the team across and we have worked together for a number of years, so our philosophy and process is the same as we applied at Alliance. That’s what’s been recognised so early on,” Carlberg said.

The team of five investment professionals have various backgrounds, from management consulting to pure financial market backgrounds, but with an average industry experience of 18 years.

As the team at Alphinity has brought their expertise into their own business, Lonsec praised its advantage in business viability compared to other start-up boutiques in the industry.

“A lot of people have been following us over the years and are familiar with us and are favourably disposed to the new structure that we have set up,” Carlberg said.

Alphinity also draws on Challenger’s institutional resources, allowing the team to focus on investment management.

Alphinity chose Challenger as a partner because of its years of experience as a financial backer of boutiques, Carlberg said.

Alphinity focuses on undervalued companies that are about to enter an upgrading cycle and utilises strong fundamental research combined with quantitative factors.

“We’ve found that works across the different phases of the market cycle, and we’ve outperformed with that process in strong equity markets, and during the GFC,” Carlberg said.

“The way we use those quantitative factors is as just another tool in the fundamental research; we don’t take any other quantitative factors at face value,” he said.

Karara Capital was named as runner-up in the emerging market category.

“The most important thing is our people, our experience and our expertise,” said Karara managing partner David Slack.

Karara is the third investment firm Slack has established.

“It is all about the people working harmoniously together as a team, with a large amount of experience and expertise combining together with a philosophy that is consistent with how we’ve always managed money,” Slack said.

Karara follows a fundamental, style-neutral approach to stock picking. Like Alphinity, they look for where the market is under-appreciating companies, and pick ones with sustainable profits.

“From that point of view, it’s important what we don’t focus on. We don’t focus on highly speculative companies, and companies that are very difficult to value,” Slack said.

One of the important elements in their stock selection is their expertise in understanding economic development and how it impacts on the companies they research, he said.

“Not only do you have to have the company performing well itself, but its operating conditions need to be conducive for good profit performance,” Slack added.

Phoenix Portfolios, third finalist in the category, also has a good relationship with Cromwell Property Group, which is far more meaningful than what a lot of other boutiques have with their incubators.

“Our team is one that has worked in property for a long time, and in many respects, I would argue, we come at problems with very different perspectives,” said Stuart Cartledge, Phoenix Portfolios director.