Hyperion identifies market share winners
A focus on companies winning market share from weaker competitors has helped Hyperion Asset Management to see strong performance for all three of its growth funds.
According to FE Analytics, within the Australian Core Strategies universe, the Hyperion Global Growth Companies, Small Growth Companies and Australian Growth Companieshad all seen double-digit growth over one year to 31 July, 2020.
The best-performing fund was the Global Growth Companies fund which had returned 22% over one year compared to average returns by the global equity sector of 2%.
Performance of Hyperion Global Growth Companies versus global equity sector over one year to 31 July 2020
This was followed by returns of 16.8% for the Australian Growth Companies and 15% for the Small Growth Companies versus average losses by the Australian equity sector of 7.2% and by the Australian small and mid-cap sector of 1%.
Since the start of the year to 31 July, all three funds had continued to make positive returns with the Global Growth Companies fund returning the most at 20%. The Australian Small Companies fund and the Small Growth Companies fund both returned 8%.
All three sector lost money over the same period with the global equity sector losing 3.6%, the Australian equity sector losing 9% and the Australian small and mid-cap sector losing 4.8%.
Mark Arnold, chief investment officer at Hyperion Asset Management, said the pandemic had been a catalyst for shifting market share between companies as weaker companies went out of business.
“The portfolio has comprised of stocks which have a strong value proposition, are growing revenue and are able to take market share away from their competitors. The weaker businesses that our stocks compete against are more sensitive to market conditions and are more adversely affected in a downturn,” Arnold said.
“There is an acceleration of market share gains because competitors find it harder to compete in a weaker economic period and the pandemic makes people more aware which particular brands or goods they are choosing.”
This approach applied across three of Hyperion’s fund but Arnold said it was easier in the Global Growth fund as this had a larger universe of available stocks.
Australian-listed stocks that Arnold identified as having performed well recently included cloud-based accounting software firm Xero, logistics software firm Wisetech and healthcare firm Fisher & Paykel.
Jason Orthman, deputy chief investment officer, added: “We buy modern, disruptive businesses which are useful in modern times and help you operate or consume remotely. The pandemic has caused an acceleration of uptake in modern technology and it has become a central focus of how people work and go about their daily life nowadays”.
Share price performance of Xero, WiseTech and Fisher & Paykel versus ASX 200 since start of the year to 28 August 2020
AUTHOR
Laura Dew
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