Why this fund wants you to ignore its 121% performance
Despite seeing 121% performance over the last 12 months, the Forager Australian Shares fund team believes it is “not reflective” of the portfolio.
The fund was the best performer out of all Australian small and mid-caps funds over 12 months to 31 March, with returns of 121% compared to average returns by the sector of 60.7%.
But the firm was cognisant that these returns would be unlikely to be repeated. In a monthly report, it said: “We believe you should largely ignore the return showing as the fund’s one-year number. Those dysfunctional markets are the starting point 12 months ago and we don’t think they were reflective of the underlying portfolio”.
The reason was this was that the results were coming off a low base from the market downturn. In the first half of 2020, the fund lost 23% compared to losses of 7.9% by the sector.
Commenting, Alex Shevelev, senior analyst at Forager, said: “We are pleased with the performance but we have to be cognisant that it is coming from a low starting point. In March 2020, there were large price swings for small-cap stocks with low liquidity and that was often on low volumes so the NAV was marked lower and we didn’t think that was reflective of those businesses we held”.
He said the fund returned 11% per annum since inception in 2009 and 12.2% per annum over the past 10 years, far more normalised figures than 121% seen this year.
“We are trying very hard to temper investors’ expectations and pointing them to the long-term numbers. We are trying to be honest and upfront with them,” he said.
AUTHOR
Laura Dew
Recommended for you
Two former senior Global X employees have launched their own ETF provider, ETF Shares, focused on offering index ETFs for advisers and retail investors.
With GCQ Funds Management and Lakehouse Capital making their recent ETF debuts, the two fund managers unpack why financial advisers are essential to their respective launches.
ETF provider Global X is set to launch its latest ETF, focused on artificial intelligence infrastructure.
Index provider MSCI has unveiled two measures to make it easier for financial advisers and wealth managers to access transparent insights into private assets.
