Lauren Ryan from Thinktank speaks to Laurence Parker-Brown for our IN60 series. The Inside Adviser
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The leaderboard: Top 5 growth alternative managed funds
Alternative investments encompass a range of non-traditional assets, including private equity and hedge funds, which typically require a longer term investment horizon due to their illiquid nature.
Growth oriented alternatives, a segment of this category, target assets that aim to increase in value over time and may offer protection in bear markets.
Investing in alternatives is akin to sailing in uncharted waters, where one must weigh the promise of outsized returns against the perils of higher fees, reduced liquidity, and at times difficult oversight.
As at November 30, 2023, the top five performers in a selection of approximately 50 growth alternative funds have averaged a return of 5 per cent over the past three years.
Over this three year time-frame the PM Capital Global Opportunities Fund was the clear top performer, returning 18.8 per cent and outperforming the Credit Suisse Equity Market Neutral Hedge in AUD benchmark by 19.5 per cent.
The breakdown
PM Capital Global Opportunities Fund Limited
PM Capital Global Opportunities Fund distinguishes itself with a high-conviction, contrarian approach to global equities, leveraging a 130/30 exposure.
The fund operates a concentrated portfolio of 35 to 40 stocks, focusing on specific industry themes. Recent contributors include Siemens and Bank of America, while MGM China and Wynn Resorts were recent detractors.
L1 Long Short Fund Limited
L1 Capital blends quantitative and qualitative analyses to identify undervalued high-quality businesses. Successes include Westgold Resources, which benefitted from gold price hikes. On the downside, the fund’s Capstone holding faced an 18 per cent decline, reflecting global economic uncertainties and overall copper market volatility.
NGE Capital Limited
NGE Capital Limited, operating as an internally managed Listed Investment Company, offering investors the opportunity to diversify into a portfolio characterised by its concentration and high conviction.
This actively managed portfolio primarily consists of financial assets, while the company’s investment mandate focuses on achieving positive returns irrespective of market fluctuations.
The primary goal of NGE is to deliver robust risk-adjusted returns to shareholders over the medium to long term. Top holdings include Danakali, Yellow Cake plc and Greek NPE basket.
Regal Investment Ut
The Regal Fund aims to deliver risk-adjusted absolute returns over five-plus years, focusing on alternative strategies with low equity market correlation. It adapts to market dynamics through a diversified internal strategy portfolio.
Recently, the Global Alpha strategy excelled, particularly in short positions. Contributions also came from Private Credit and Resources Royalties strategies, marked by successful Canadian transactions. Long positions in technology and consumer sectors within the small companies underperformed.
Barwon Global Listed Private Equity Fund AF
The fund targets investors seeking exposure to a private equity portfolio through the underlying fund (Barwon Global Listed Private Equity Fund), which focuses on listed private equity. It aims to mirror top-tier private equity managers’ returns, outperforming public equity markets in the medium term.
Notable recent contributors were NB Private Equity Partners Ltd, Golub Capital BDC Inc, and abrdn Private Equity Opportunities Trust plc.
On the downside, Blackstone Group Inc, KKR & Co Inc and Apollo Global Management had substantial decreases of 13.0 per cent, 10.1 per cent and 13.7 per cent respectively.
Summary of performances
PM Capital Global Opportunities Fund stands out with its high-conviction, value-driven strategy, executing both long and short positions. Its portfolio is a tapestry of about 35 to 40 stocks interwoven with overarching industry themes.
Similarly, L1 Long Short Fund’s meticulous approach blends quantitative analysis with qualitative insights, recently buoyed by Westgold Resources.
NGE Capital touts concentrated, high-conviction investments, aiming for enduring risk-adjusted returns.
Regal Investment Fund’s diverse alternative strategies seek to yield returns with minimal market correlation.
Barwon Global Listed Private Equity Fund, through indirect exposures, navigates the listed private equity landscape, and was recently affected by significant players such as Blackstone and Apollo Global Management.
