Boutique equities fund manager Hyperion Asset Management will close its institutional business to all new inflows and “soft close” its retail funds, citing capacity as the issue.
This means the fund manager will no longer admit new investors into its growth companies fund and its small growth companies fund, although current unit holders can continue investing in both funds, the $5.5 billion fund manager said.
Hyperion managing director Tim Samway said the firm is taking a “proactive approach” to sidestep capacity issues, as it could no longer justify accepting more inflows.
“By limiting funds before reaching our capacity we will preserve the concentration of high quality stocks in our portfolio and provide ample headroom for future outperformance and inflows from existing retail clients,” Samway said.
“We’re looking into the future and we can see that we’re just going to be handling too much money as it is now and we thought we’d act proactively to slow down and in some cases completely stop the flow of money into our funds so that we could preserve future performance for existing clients.”
Adding companies for the sake of it would restrict the firm’s ability to deliver earnings growth to clients and beat the market, he added. The firm has 27 stocks in the growth company fund and about 21 in the small growth companies fund, with some overlap between the two.
“We’re focused on very high quality companies that have organic growth prospects, and there’s not that many of them in the market. We can only find about 35 companies in Australia that fits through our process. They’re delivering quite high level earnings growth, but there are not many of them that are doing it in a low risk way,” Samway said.
The firm expects loss of income in the short term as they will forgo performance fees and management fees.
Hyperion’s Australian growth companies fund’s total performance, net of fees, was 12.7 per cent per annum, beating the benchmark by 2.4 per cent.
Its small growth companies fund’s total performance was 17.1 per cent, beating the benchmark by 10.3 per cent.
Hyperion’s top five holdings include REA Group, Seek, Twenty-First Century Fox, Domino’s Pizza, and Brambles.
