Hyperion pushes small to mid-caps
When it comes to Australian equities, small and medium-sized companies are likely to perform better than their large-cap counterparts, according to fund manager Hyperion Asset Management.
Expressing that view in greater detail, Mark Arnold, chief investment officer for Hyperion, said that his firm's investment process, with its over-arching aim of identifying Australian companies with fundamentally positive long-term economics, had lead to this conclusion.
"We are focused on long-term growth potential which means we look at sectors and companies alike over a five- to 10-year time horizon, and hold stocks for an average of 10 years," he said.
"And when it comes to the ability to realise growth potential, small-cap and medium-cap companies are often better placed than the big players.
"We start by assessing a company's addressable market over a 10-year period, which means looking at the sector as a whole," Arnold continued.
"If the sector is growing and the company is small relative to the market, it has higher organic growth potential, and that means better returns over time."
According to Arnold, companies for which there was the prospect of a global rollout should also not be overlooked.
"Products which are successful in one geographic location can often perform successfully in others," he explained.
"That's why we have invested in the University pathway provider, Navitas, and financial software provider IRESS Financial Solutions.
"Both have products that have proven themselves here, and are now being rolled out in other countries including the UK, the US and Canada," Arnold continued.
"(But) what it all comes down to is an ability to assess every company on its long-term economic merits."
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