Blackwattle Investment Partners has announced its fifth investment portfolio, taking over the management of the Watermark Absolute Return equities fund.
The fund, launched in 2019, last reported $90 million of funds under management.
According to Blackwattle, it will be rebranded to the Blackwattle Small Cap Long-Short Quality Fund, which will result in improved risk-adjusted performance for investors. Previously, the fund employed a “variable beta” strategy where its market exposure was actively managed, with Watermark retaining very low market risk settings in recent years.
The strategy will now focus more on smaller companies and retain higher market exposures through the investment cycle.
“We are extremely privileged to take on the management of the Watermark Fund,” said Michael Skinner, Blackwattle’s managing director and chief investment officer.
“The entire Blackwattle team is fiercely focused on protecting unit holder capital, and delivering strong above market returns.”
The new portfolio will have ex-Watermark portfolio manager Daniel Broeren and Robert Hawkesford at the helm, bringing a combined 40 years of funds management experience, alongside senior analyst Andy Chuk from the Watermark team.
It will join Blackwattle’s range of funds which include an Australian small cap quality, mid cap quality, large cap quality and long-short 130/30 quality fund.
The transition follows Watermark founder Justin Braitling’s decision to retire after over three decades in the industry.
Informing the fund’s unitholders of his retirement intentions, Braitling said: “After 30 years of investing in Australian public companies as an institutional investor, I have decided it is time to retire and pursue other interests.
“I have enjoyed tremendously my years managing money for our investors and believe deeply in the merits of the fund’s strategy.”
In transferring management responsibilities, all front and back office staff of Watermark, other than Braitling, have already or will soon join the new investment manager.
It will retain administrator Apex Group and responsible entity Equity Trustees (EQT).
The fund will now enter a six-month transition period allowing Blackwattle time to bring up the fund’s market exposure and deploy the capital in the new investment universe.
EQT added: “This includes a blended benchmark (50 per cent RBA cash rate/50 per cent S&P/ASX Small Ordinaries Accumulation Index) for the first six months from 20 October 2023, at which point it will revert to S&P/ASX Small Ordinaries Accumulation Index.
“In this transition period, the new investment manager will retain at least 50 per cent of the fund’s capital in cash and may reduce the fund’s market exposure further using SPI futures (or similar), to a maximum fully hedged position (market neutral) if deemed appropriate.”
Blackwattle commenced operations in May this year with initial seed capital commitments of over $60 million to offer investment solutions across Australian equity and global markets.
The Blackwattle team has committed over $10,000,000 of personal capital into the business and managed portfolios.
