Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
‘Extravagant’ monetary and fiscal policy to support small caps
Boutique investment firm Datt Capital has posted a 26.9 per cent return for the 2019-20 financial year, beating its absolute return benchmark. The unique Datt Capital Australian Equities Absolute Return Fund invests in a concentrated portfolio of Australian assets across multiple asset classes, but primarily debt and equity; is industry- and market-cap-agnostic, investing solely in the best opportunities that provide the best risk-adjusted returns.
The fund manager says it achieves this by using its proprietary research library and unique investment process that helps drive creativity and independent thought. It has a predominantly smaller and micro-cap company focus, which CIO and founder Emanuel Datt suggests is a fertile hunting ground. Commenting on the result, he highlights that the “26.86 per cent return reflects the potential of ASX-listed small to mid-cap companies for growth and value opportunities.”
Some of the best performing stocks in the portfolio were Adriatic Minerals (ASX ADT), Selfwealth Ltd (ASX:SWF) and Dusk Group Ltd (ASX: DSK).
“Datt Capital adopts an active contrarian approach to investing with an inclination towards growth. We utilise a long-term investment approach that focuses on capital preservation and absolute wealth accumulation, however not at expense of growth,” says Datt.
Datt also agrees that the fund’s style of investing seeks out opportunities but emphasises risk control. He says “whilst risk control is our core focus its not achieved by having a widely diversified portfolio. Our focus is a concentrated approach to portfolio construction and a benchmark-unaware philosophy.” That is, a concentrated portfolio of Australian listed assets across multiple asset classes.
Looking forward, Datt “expects buoyant equity markets to continue for now, given government fiscal and monetary stimulus continues to be extravagant. Inflation has clearly become an issue with prices of commodities and labour costs having increased notably over the last 12 months, and recent monthly CPI figures in both Australia and the US showing significant upward price pressures.”
“We continue to look for growth and value opportunities across the ASX listed small to mid-cap companies,” he says.
“Investors need to invest in high-performing assets to maintain purchasing power and protect wealth in an environment where rising prices are increasingly likely over the short to medium term,” Datt says.
