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.
Who was the top performing global fund in 2020?
Brisbane-based equity manager, Hyperion, has once again topped the table of equity managers covered by independent research house Morningstar. The group swept three categories for its outstanding performance in 2020, in large-cap Australian shares, small-cap Australian shares and large-cap global shares. According to Morningstar the funds in order returned 33.3%, 33.7% and 46.0% respectively in what was likely the most difficult year for investing in generations.
There wasn’t a value stock in sight, with the unashamedly growth-focused house’s preference for disruptive businesses benefiting from structural rather than cyclical growth continuing to stand-out amid the pandemic. The portfolio management team, led by Mark Arnold and Jason Orthman, have been outspoken in the importance of appropriate position-sizing within portfolio. They understand that with information freely available and the significant growth in passive investing, the size of your holding in each company is as important as the inclusion of that company.
It was this position-sizing focus that was key the performance of the Global Growth strategy, with its largest holding, Tesla (NASDAQ: TSLA) making up 12% of the fund after increasing close to seven-fold during the year. Commenting on the polarising company, Arnold says “Tesla stock has been misunderstood because it’s just been treated as a car company, but it’s much more than that.”
Among the other key names within the global strategy were Amazon, Paypal and Square Payments, each of which is having a disruptive influence on the traditional way of doing business, and benefited significantly from the digital accelerator that was COVID-19. The 46% return was more than 40% above the MSCI benchmark index, demonstrating that active management can indeed outperform.
A similar theme drove performance in the smaller and larger Australian company funds, which outperformed their benchmark indices by 24% and 31% respectively. Hyperion’s preference for non-bank financials and avoidance of price-taking commodity and related businesses saw them avoid the worst of the sell-off. In the large-cap space, the fund benefited from a 9.8% position in buy-now, pay-later global leader Afterpay Ltd (ASX:APT), along with holdings in accounting software star Xero (ASX:XRO) with Fisher and Paykel Healthcare (ASX:FPH) all hitting all-time highs.
According to the Australian Financial Review, the global growth strategy is now seeing more than $100 million in monthly inflows, sending the strategy over $1 billion in assets under management. This is in direct contrast to the regular outflows being experienced from the many “value’ managers that dominate Australian equity markets.
Such has been the success of the strategy that reports suggest the ASX code HYGG has been reserved, with the group set to join the active ETF (or quoted managed fund) party. As highlighted in our previous article this new structure is affording greater flexibility for financial advisers and investors alike.
