Vertex Capital: an absolute winner

Vertex Capital Managementwas able to achieve low volatility and good absolute returns in its Relative Value Fund this year to win theMoney Management/AssirtFund Manager of the Year category for alternative assets.

It ranked ahead of the other finalistsPlatinum’s International Brands Fund andColonial First State’s Wholesale Fixed Interest Strategies fund.

Assirt hedge fund analyst Daniel Liptak says one of the reasons the fund has been ranked first is because it holds a four-star rating with Assirt and has managed to produce 19 months of consistent positive returns.

Vertex Capital Management managing director Kim Ivey says the fund has seen a return of 29.7 per cent for the calendar year 2002 through achieving positive returns from both long and short positions within the fund.

Ivey says the manager was able to avoid volatility and negative returns by assessing risk and balancing stock picking against these risks, as well as cutting losses where necessary.

Liptak says a key driver for the Vertex fund was the appointment of portfolio manager Craig Turnbull at the end of 2001, who has managed to add value through his qualitative visions.

Ivey says that when Turnbull joined Vertex he brought a great skill set to the manager and has had a positive effect on the fund’s performance.

A stand-out feature of the fund, according to Liptak, is a strict investment philosophy that has seen it do exactly what it told investors it would do, leading to results in excess of its objectives.

Ivey says the fund manager has adhered to this strategy and process very well, a strategy based on using a systematic framework to make disciplined decisions on long and short positions.

Achieving a seven per cent return on the portfolio’s long side during falling markets was evidence of the effectiveness of this process, Ivey says, as well as the fund’s ability to perform in both rising and falling markets.

Liptak says the runners-up in the category also achieved considerable returns and used effective strategies in pursuit of absolute returns, but that Vertex came out ahead.

The judging of the category was based on the Assirt star rating of the fund, the balance of risk and return, the avoidance of volatility, the past performance of the fund and losses against recovery.