Global SMID fund receives Lonsec rating
The Fairlight Global Small and Mid-Cap fund has been awarded a ‘recommended’ rating by Lonsec.
The fund invested in a concentrated portfolio of 30-40 stocks in developed markets with market caps of between US$500 million ($650.9 million) to US$20 billion, with a strong focus on quality.
It was managed by Fairlight partners Nicholas Cregan and Ian Carmichael and supported by a team of small and mid-cap experts.
Lonsec said the ranking had been awarded based on the fund’s strong stock selection and the quality style.
“Preliminary indications are positive, with the fund returning 23.3% per annum over the two-year period to 31 December, 2020, outperforming the benchmark by 7.6% per annum and the Lonsec global peer median by 5.9% per annum. Pleasingly, these returns have been delivered with lower volatility than the peer median,” it said.
“While this has been driven by strong stock selection especially within industrials, financials and consumer discretionary, Lonsec notes that the manager’s quality style has provided a strong tailwind over the period, especially during the COVID-induced downturn.”
Cregan commented that Fairlight specifically set out to offer Australian investors exposure to small and mid-cap stocks which had historically been overlooked.
“Historically, emphasis was on diversification to large international equities and it was difficult for Australian investors to access the GSMID space, a significant but under-researched area of the market. We set up Fairlight to give Australian investors access to the best quality niche leaders in this investment universe,” Cregan said.
“Over the past two decades smaller global firms have had higher risk-adjusted returns than larger stocks on average and as such we think an allocation to GSMIDs is beneficial to total portfolio outcomes. We also believe current valuations make it an opportune time to invest in this exciting space.”
According to FE Analytics, the Fairlight Global Small and Mid-Cap fund returned 11.2% during 2020 versus returns of 5.9% by its MSCI World SMID Cap index benchmark.
AUTHOR
Laura Dew
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