Since its inception in January 2008, Solaris Investment Management has become an active Australian equities fund manager, utilising a fundamental bottom-up research approach.
It has a boutique structure that promotes a high level of accountability and alignment of interest and it is these attributes that make Solaris Investment Management this year’s Money Management/Lonsec Rising Star.
Solaris is comprised of the former investment team at Suncorp Investment Management — a team that established a successful long-term track record managing Australian equities for institutional and retail investors.
It is the investment team’s experience, depth and stability that Lonsec considered to be the manager’s key competitive advantages over its rivals, with an average total of 16 years experience.
The research house also cited the team’s experience managing portfolios over various investment cycles as critical, especially in environments of heightened volatility.
Although a new entrant to the market, Lonsec said despite Solaris’ limited performance track record, the current investment team has successfully implemented the investment process at Suncorp and it believes the boutique structure in place promotes a high level of accountability and alignment of interest.
Denis Donohue, managing director at Solaris, said recognition for the fund manager was proof it was on the right track and that it had built a strong foundation despite being in its infancy.
“While we have worked together as an investment team for many years, our business is relatively young and has grown steadily since inception. Our investment process was forged over one and a half decades and has reliably produced strong returns while effectively managing risk,” he said.
Of particular note is the fact that the Solaris Core Australian Equity Fund outperformed the S&P/ASX 200 index by 2.76 per cent for the 2009 calendar year, culminating in a three year annualised rolling outperformance of 3.33 per cent, which exceeded its investment objective of 3 per cent.
Yet the year was a tale of two halves for the manager, with the market continuing its flight to defensives at the start of the year before any appetite for risk returnedin March.
“The main contributors to our performance were overweight positions in those stocks with our highest expected returns. We were also successful in avoiding any ‘landmine’ stocks, and as such our underweight positions also contributed significantly to the portfolio’s outperformance.
"Our overweight positions within the food and beverage and tobacco sector, together with underweights in the property trust sector and our active positioning within the banks, proved to be the largest driver of performance for the year,” Donohue said.
