Lonsec upgrades Flinders Emerging Companies Fund



March 6, 2017


As a result of Lonsec’s comprehensive Australian Small Companies review process, it has upgraded the Flinders Emerging Companies Fund from ‘Investment Grade’ to ‘Recommended’.

According to Lonsec’s rating definitions, a ‘Recommended’ rating indicates that the research house has strong conviction that the financial product can generate risk-adjusted returns in line with relevant objectives, which is to outperform the S&P/ASX Small Ordinaries Accumulation Index by 5% (gross) over rolling 3 year periods.

The Fund is a true to label small companies fund investing in around 45 Australian stocks predominantly within the ASX100-300 (Industrials + Resources). The Flinders Emerging Companies Fund has a ‘growth’ investment style and utilises a bottom-up, fundamental research process.

In upgrading Flinders Investment Partners, Lonsec’s research report noted an increased conviction in the investment team and process, which they have been following closely for almost two years now. They consider Co-Portfolio Manager team of Dr Andrew Mouchacca and Mr Richard Macdougall to be highly experienced and relevant in the small and microcap space.

Co-portfolio manager Andrew Mouchacca said, “we have been very busy with reporting season so it was great to see the ratings upgrade, as it’s a real recognition for all the hard work that has been put in to getting the business up and running and performing well. We are confident that the small companies sector can continue to be attractive to investors and advisers. Our strategy is to take a broad approach across industrial as well as resource sectors to ensure we don’t miss any opportunities to identify companies with growth potential.”

“Delivering alpha is our passion; we are a performance manager who will strictly manage capacity to maintain outperformance for our clients. We work hard to identify opportunities having over 600 meetings p.a. and it is great to have our efforts and process recognised”, said Mouchacca.

Commenting on reporting season outcomes co-portfolio manager Richard Macdougall said “It’s been a mixed bag and we have seen some pretty severe reactions to even a small miss in earnings expectations or a change in growth trajectory. Some companies have re-rated very quickly and while we’ve been a little surprised at some reactions, it highlights the need for good research in this sector and I’m pleased we have been able to deliver solid returns as a manager who focuses on growth. We have seen a rotation towards value companies in recent months, which happens from time to time. However, with the risk appetite at low levels, we are seeing plenty of undervalued and growing companies to look into”.

Flinders is the first of the two investment boutiques who joined Prodigy Investment Partners, a multi-boutique funds management firm led by Steve Tucker. Prodigy offers a market leading partnership structure to its investment partners, a point recognised by Lonsec in the research report, who noted that firm’s corporate structure promotes a high level of alignment between the investment team and the end investors. Following the upgrade of the Flinders Emerging Companies Fund, CEO of Prodigy Steve Tucker said, “It’s great for Flinders’ to get this recognition from Lonsec. They have done an outstanding job in a tough market environment for the investors, which is a testament to the investment team and robust investment process. Unlike many peers, Flinders Emerging Companies Fund has capacity and we are keen to grow hand in hand with our clients”.

The Fund was recently added to Netwealth platform on the back of increased adviser demand, and is already available on CFS First Wrap, Hub 24, Macquarie and Powerwrap platforms.


SOURCE: Flinders Investment Partners


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