(20-Jan-2005) Souls doses out the good investment medicine
(20-Jan-2005)
What does a company better known for operating suburban chemist shops know about funds management? Everything, if the predictions of researchers are anything to go by.
According to the likes of Assirt and Mercer, Souls Funds Management — the investment management offshoot of the Washington H Soul Pattinson chemist chain — is as likely as any to be the next big thing in boutiques.
Souls actually started life in 1997 as Veritas Asset Management, but it wasn’t until 2003 that it partnered up with Soul Pattinson, and recognition of the group’s capability, particularly in small caps, is now starting to balloon.
As well as managing its own funds, Souls has been in high demand of late by larger managers wanting to include it in the line-up of multi-manger small cap funds.
Initially owned wholly by staff, Souls managing director Vincent Parrott says it was always the intention of the boutique to find a partner.
“We got together with Washington H Soul Pattinson in September 2003 as it has always been an investor in businesses and wanted to get into funds management,” he says.
“We were well-established and wanting to get a genuine partner.”
While Souls has a stake in the boutique fund manager, the staff still have significant equity in the business.
“We operate independently of Souls as it operates by taking a stake in a business and then allowing the business to operate autonomously,” Parrott says.
“We are structured to operate as a separate entity.”
Souls has always been an Australian equity manager and Parrott says it has no intention of “being all things to everybody”.
“We are style neutral, so neither value nor growth, and we have a bottom-up research approach,” he says.
“We don’t ignore value or growth styles, but we have a very niche stock-picking approach, looking to get some insight on a stock.”
Souls has an Australian small companies fund open at present, which has 54.1 per cent one-year return and a 23.1 per cent five year return.
“Our mission is to have a small cap fund that is very competitive,” he says.
“Small cap funds do have capacity constraints and we will close it eventually.”
The group’s Australian Equity Fund has achieved a 28.6 per cent one-year return and a 17 per cent five-year return.
Parrott says it has greater capacity for inflows so will remain open for sometime.
The boutique fund manager also manages investments for Soul Pattinson’s super fund.
Distribution of Souls’ two funds has been through third parties such as platforms.
“We want to do investment management and leave distribution to third parties,” Parrott says.
Souls is also a small cap manager in multi-manager products of larger fund managers such as Colonial, AMP and Advance. Parrott says the boutique manager is not aiming to get funds under management for the sake of it.
“We are a core manager, a specialist manager,” he says.
“We will stay focused in our specialisation with size constraints.”
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