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Less than half of active Australian equities funds beat ASX 200

06 December 2017 By Hannah Wootton


Of ASX 200-benchmarked active funds in the Australian Equities sector, almost half (47 per cent) have beaten the index’s returns over the last decade, according to data from FE Analytics.

Results were similar across three and five-year measurements, with around half of the sector beating the benchmark over these time frames. However, things have been better over the near term – 57 per cent of the funds are beating the ASX 200 over the past year to 30 November, 2017, climbing to 74 per cent over the last six months.

The Cooper Investors’ CI Brunswick fund outperformed the index by the greatest amount, delivering annualised returns of 8.90 per cent in the decade to 30 November, 2017, compared to the ASX 200 index’s returns of 3.66 per cent over the period.

Last month, Cooper Investors closed the fund to new and additional investments from external parties for the foreseeable future to safeguard the chances of outperformance. “We now believe, in current market conditions, that in order to protect returns for existing investors we have reached the capacity limit for the strategy,” the firm said.

The $1bn Macquarie’s High Conviction fund, which is also currently closed to new or additional applications, is another high-profile name beating the index. Its annualised returns over the last 10 years were 4.26 per cent higher than those of the index.

The Grant Samuel Tribeca’s Alpha Plus A, Lazard Select Australian Equity, Greencape High Conviction and Fidelity Australian Equities funds also performed well, all being in the top 40 per cent of funds to outperform the index.

There were some common themes in the investment approaches of the best performing funds. They were all concentrated portfolios, each holding less than 50 investments at once. Lazard and Macquarie’s funds’ portfolios were especially limited, aiming to have no more than 30 holdings each at any time.

Lazard, Macquarie and Greencape all emphasised high conviction investments in the above funds, increasing potential for higher returns. Lazard specifically looked for investments with high active share and low beta characteristics over time. Macquarie highlighted including both value and growth shares in their fund’s portfolio as a key concern.

Antares was also a notable presence in the top performers, having the most active funds of any manager beating the ASX 200 index. Its Elite Opportunities Professional, Elite Opportunities Shares Personal, High Growth Shares Personal, Australian Equities Professional and Australian Shares funds’ annualised ten year returns all exceeded those of the index by at least 20 per cent.

The Maple-Brown Abbott Australian Geared Equity Ordinary fund was the worst performing active fund in the sector. Its ten year annualised returns as of 31 October, 2017 came in at –5.82 per cent, putting its performance at almost 10 per cent lower than the benchmark’s. It was the only active fund benchmarked against the ASX 200 to record negative annualised returns over the decade.

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