Outperforming the benchmark with +20% return since inception
9 May 2017: Small and microcap Australian equity specialist, Spheria Asset Management Pty Limited (Spheria), is set to celebrate the one-year milestone of the Spheria Australian Microcap Fund (the Fund) with an impressive performance track record and positive outlook for growth in funds under management (FUM).
The Fund, which invests in listed companies outside of the ASX Top 250, has an objective to outperform the S&P/ASX Small Ordinaries Accumulation Index over the medium to long term. Since inception on 16 May 2016, the Fund has delivered performance after fees of 20.3%, outperforming the S&P/ASX Small Ordinaries Accumulation Index benchmark, which returned 7.3% for the same period, by 13.0%.
Spheria often invests against trend, in some cases, buying companies that are unloved and therein mispriced by the market. The process is predicated on finding companies that have a competitive edge and are underpinned by predictable and sustainable free cash flow.
Importantly, Spheria will not invest in concept stocks that are “bleeding cash” and therefore reliant on the benevolence of the market to survive. Spheria’s ideal investment is finding a perceived “value” name in anticipation of one day becoming a “growth” stock. Previous investment examples include Pacific Brands and Blackmores, which were both invested in when they were out of favour.
Spheria Portfolio Managers Marcus Burns and Matthew Booker, with the support of Adam Lund, have built a strong reputation as specialist microcap and small cap stock pickers, bringing together over 50 years of combined investment experience.
Mr Burns said it has been a tremendous year for the Fund and for the business. “This is an exciting milestone for us and for our investors. We are really pleased to deliver such a great result in what has been a tough year for many active managers,” he said.
Mr Booker believes there is enormous opportunity by investing in a considered manner. “In a hostile environment, we enjoy seeking out the next big winners. Our process is geared to these types of markets.”
“For example, Class Ltd, an SMSF software company, which looks expensive on current multiples but we believe it is inexpensive based on scope to further penetrate the market and take share from weaker competitors,” Mr Booker added.
The Fund is one of only a very few Australian microcap funds that has been given a ‘Highly Recommended’ rating by Lonsec. Lonsec has also nominated Spheria as finalist in the ‘Emerging Manager of the Year’ category for the upcoming Money Management Fund Manager of the Year Awards 2017.
Spheria’s investment team owns 60% of the business which is supported by leading multi-affiliate investment management firm, Pinnacle Investment Management Limited (Pinnacle). Pinnacle owns a minority stake in Spheria as part of its stable of seven specialist investment managers, collectively managing over $25 billion.
The Fund has been given a ‘Recommended’ rating from Zenith Investment Partners and is available on ASGARD, BT Wrap, HUB24, IOOF Pursuit, Macquarie Wrap, mFund, Netwealth Super and Netwealth (IDPS) platforms.
Spheria Asset Management (Spheria) is a fundamental-based investment management firm with a bottom-up focus specialising in small and microcap companies. The principals of Spheria, Marcus Burns and Matthew Booker, are the ex-Portfolio Managers of the Schroders Smaller Companies & Microcap Funds.
Spheria’s investment philosophy is to purchase securities where the present value of future free cash flows can be reasonably ascertained and the security is trading at discount to their intrinsic value. Assessing risk is fundamental to Spheria’s investment philosophy. Explicit risk controls include a preference for companies with low or no balance sheet gearing. When the company does have debt, Spheria ensures that free cash flow can support the said level of gearing and is appropriate for the nature of the business.
To find out more about Spheria, please visit www.spheria.com.au/
The Lonsec Rating (assigned as follows: WHT0066AU Spheria Australian Microcap Fund — February 2017) presented in this document are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445. The Ratings are limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial products. Past performance information is for illustrative purposes only and is not indicative of future performance. They are not a recommendation to purchase, sell or hold Spheria investment products, and you should seek independent financial advice before investing in these products. The Ratings are subject to change without notice and Lonsec assumes no obligation to update the relevant documents following publication. Lonsec receives a fee from the Fund Manager for researching the products using comprehensive and objective criteria.
For further information regarding Lonsec’s Ratings methodology, please refer to our website at: http://www.beyond.lonsec.com.au/intelligence/lonsec-ratings
The Zenith Investment Partners (“Zenith”) Australian Financial Services License No. 226872 rating (assigned February 2017) referred to in this document is limited to “General Advice” (as defined by the Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Zenith usually charges the product issuer, fund manager or a related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessment’s and at http://www.zenithpartners.com.au/RegulatoryGuidelines