Greencape ascends for a second year

Proving that it is on the right track, Greencape Capital has been named the Rising Star for the second year in a row.

Since last year’s win, the Melbourne-based boutique has continued to strengthen its presence in the retail market by adding another member to its investment team, David Tonkin (analyst), who joins David Pace (portfolio manager/analyst), Matthew Ryland (portfolio manager/analyst) and Marc Hester (analyst).

Perhaps testament to the team’s expertise when stock picking, its two funds, the Greencape High Conviction Fund and the Greencape Broadcap Fund (both Australian equity funds), have outperformed during the falling market.

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“We see that as a material milestone given that the funds did very well in a rising market,” Pace said.

“Since the market peaked on November 1, both funds have outperformed their respective benchmarks.”

Pace attributes this to a process based on “fundamentals rather than momentum”.

Greencape’s investment philosophy is grounded in the belief that markets are inefficient and that qualitative factors are generally under appreciated in investment decisions.

“We are a stock-picking house, so the driver of portfolio construction for us is compelling investment ideas as opposed to macro economic considerations,” he said.

“The track record thus far for picking stocks that are doing better than market has been good.”

In judging this year’s award, Lonsec considers Greencape’s investment process to be well developed and comprehensive.

“Importantly, there is a clear focus on quality and value, and the process inherently drives a high level of investment conviction,” Lonsec explained.

Lonsec added that it sees Greencape enjoying the dual benefit of staff and institutional ownership.

“The 75 per cent ownership by key staff is significant and it minimises staff departure risk and ensures the interests of the team are aligned with investors. The 25 per cent holding by Challenger has afforded Greencape significant up front capital and ‘turnkey’ solutions for all back-office administration and sales and marketing support.”

The other name in this year’s Rising Star category is finalist Vianova Asset Management, which also boasts a good track record despite being only a few years old.

Managing director of the Australian fixed interest manager, Bryan Madden, said Vianova’s portfolio had performed “quite well relative to the index and relative to other managers”.

“We have had a very defensive portfolio ever since we commenced and that’s certainly paid off over the last six months or so,” he said.

“We’re a thematic investor, so we try to look at the global themes in terms of dictating what we hold here in Australia. We have been concerned about a number of things in the last few years, such as the amount of liquidity in the system and the potential for inflation.”

As a result, Vianova was holding virtually no credit when the crisis hit.

“We didn’t think the rewards you got for holding credit paid for the risks and that’s proven to be correct,” Madden said.

Vianova, which is partly owned by Australian Unity Investments, has two primary product offerings: the AUI Vianova Strategic Fixed Interest Trust and the Core Plus fund.

Sara Rich

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