Australian equities manager, Hyperion Asset Management (Hyperion), today announced that it will hard close its small-cap fund, the Hyperion Small Growth Companies Fund (the Fund) to new investment, effective 31 May 2016.
As of 1 June 2016, distributions from the Fund will be paid out in cash, reinvestment of distributions will no longer be possible and regular savings plans which contribute to the Fund will also be ceased. Redemptions from the Fund will be processed as usual.
Hyperion Managing Director, Tim Samway, said that the strong outperformance of the Fund over the past 14 years necessitated the difficult decision.
“Our long term performance has consistently driven strong inflows to our funds, which is of course a positive on many levels.
“However Hyperion’s success is based on our ability to create concentrated, high quality portfolios, without regard to benchmarks or short-term trends. This means we must be more mindful than other managers of factors which might affect our ability to outperform – and of course, fund size is a major such factor,” he said.
Mr. Samway explained that future performance would suffer if Hyperion eschewed its rigorous investment criteria and simply topped up portfolios with lower quality stocks in order to grow assets under management.
“The inverse relationship between funds under management and performance is well established. And that’s another reason we have decided to safeguard future investment performance by taking a proactive approach to limiting assets under management now,” Mr Samway said.
In conclusion, Mr Samway said that the Fund is now nearing capacity, so closing it will keep assets under management below capacity, and ensure ample headroom for future out-performance.
“We will keep the Fund closed to new investment until we judge that there’s sufficient capacity to re-open it. Our first priority must always be to produce the best possible long term results for our clients, something our recent award-winning performance across our major funds – and being named Morningstar Fund Manager of the Year – shows that we’ve achieved,” he said.
Mr Samway concluded by saying that investors hungry for more of what Hyperion has to offer have no cause for disappointment.
“Keeping a close eye on capacity is a key part of managing all our funds, always with the aim of delivering strong long term outcomes for investors. That includes being open to other opportunities which offer prospects for the kind of outperformance we’re known for. So I would suggest that investors watch this space.”
