Melbourne boutique manager, Datt Capital, saw its Absolute Return fund delivered a return of 23.22% to the end of 30 June, 2020, net of fees, compared to the ASX200 Total Return Index loss of -7.93% during the same time period.
The manager said the fund’s positive performance was thanks to not trying to moderate its speed in terms of reducing its positions when winning, but instead focusing on its core, medium-term holding strategy and letting its portfolio structure temper its risk profile instead of trying to time markets via hedging.
Datt Capital said the current environment has provided “exceptional” opportunities for active investors and described the fund’s investment style as “active contrarian investing with an inclination towards growth with a strong emphasis on risk control”.
“We are finding opportunities in the current environment which we feel is exceptionally good for active investors. Our current opportunity set surpasses our present investable funds,” Emanuel Datt, managing director and chief investment officer, Datt Capital, said.
“Our response in March revealed that we know when to be in the game. We quickly cut non-core positions and recognised the opportunity for what it was: the perfect environment for a skilled active manager to thrive.
“The portfolio remains directed towards growth opportunities and special situations where we feel there remains considerable upside despite the forecast of weaker macroeconomic environment.”
Also, the fund’s commercial real estate (CRE) debt portfolio performed as expected, with a focus on short duration, low LVR and double-digit yielding deals restricted to the core Australian cities (Sydney and Melbourne) continued to bear fruit.
As far as the equity portfolio was concerned, it performed very well in June and was helped by finding inefficiently priced opportunities in the market, with current equity positions including budget online broker Self Wealth (ASX:SWF), mineral development company Adriatic Minerals (ASX:ADT) and exploration company Alice Queen (ASX:AQX).
“If an investment manager is not aligned in a similar manner it's akin to them playing a video game with other people's money as they are not taking the risk and pain of crashing personally,” Datt concluded.
For June, the fund provided a net return of 8.24% for the month.