Australian equity specialist DNR Capital has announced that the DNR Capital Australian Equities High Conviction Fund has been awarded a “RECOMMENDED” rating by Zenith, only 12 months after the fund was launched.
The fund is based on the successful 14-year track record of the DNR Capital Australian Equities High Conviction strategy that was previously only available through DNR Capital’s SMAs (Separately Managed Accounts) and IMAs (Individually managed Accounts).
“The fund offers investors a concentrated exposure to Australian equities, typically 20 to 25 stocks, and was launched as a result of pent-up demand from financial advisers using our existing structures”, noted Robert White, DNR Capital CEO.
“This is our first unit trust offering, now available on the major platforms” added White.
Zenith notes that “although the Fund remains in its infancy, DNR Capital has a long and successful track record managing individual and separately managed accounts using what is essentially the same strategy. Zenith believes that DNR has been able to successfully implement the strategy in a unit trust format.”
The annual return for the high conviction strategy since its inception in 2001 is 12.6% p.a. as at 30 June 2016 which is 3.7%p.a. above the S&P/ASX 200 Accumulation Index over the same time period. The Fund, in its first year returned 5.20%p.a. against the ASX200 Accumulation of 0.6% p.a., representing a 4.6% out-performance of its benchmark.
The DNR Capital investment philosophy is to focus on quality businesses and enhance returns by combining a thorough valuation overlay. DNR Capital identifies mispricing in quality businesses by applying its quality filter referred to as the ‘quality web’ alongside its strong valuation discipline. The result is a portfolio which is high conviction, after tax focused and invests for the medium-term.
The Zenith report notes “DNR Capital’s investment philosophy is based on the premise that markets are inefficient and short term focused, which gives rise to potential outperformance over the medium to long-term.”
Jamie Nicol, DNR Capital founder and CIO added “Quality companies at reasonable valuations are what we look for. It’s clear that those stocks with the most defensive earnings streams are now trading at a premium. As a consequence, we are finding value in some of the more contrarian opportunities, which we refer to as de-rated quality stocks such as Henderson Group and ALS Limited, along with positions in stocks we feel are turning their businesses around such as Woolworths. Additionally, we retain exposure to a range of growth segments like those exposed to the benefits of infrastructure spend, SaaS, innovation and online market places.”
