Pengana takes a closer look
Legwork was not the sole criterion for Pengana winning the Rising Star category in the Money Management Fund Manager of the Year awards, although it would surely have won hands down if it were.
The manager embraces an extensive company visitation program across all its funds, reaching its apotheosis in the Pengana Emerging Companies Fund, the runner-up in this year’s Australian shares — small caps category.
Co-fund managers, Steve Black and Ed Prendergast have visited more than 500 companies throughout Australia on behalf of the fund since its launch in November 2004.
“That confirms our belief there’s a lot of value to be added to the fund by actually getting out into the market,” Black says.
Generating an “impressive taxi fare tab” on company visits is one of three peak competitor advantages the fund has developed over other small cap funds.
Another advantage is the 12 years experience Black and Prendergast each have in researching “nothing but small companies”.
“Thirdly, we’ve been up-front from day one that we intend to raise only a limited amount of money, because in small company investing it becomes very hard to outperform.”
So far, the retail-only boutique has raised $80 million of a targeted total of $400 million in funds under management (FUM) in the 17 months since its inception as at March 31 this year.
Over the same period, it has delivered investors a 52 per cent return on investment, Black says, outperforming the S&P Small Ordinaries Index by 14 per cent. The fund is also up 21 per cent against the small industrial index.
“We don’t invest in resource stocks, which has obviously been to our detriment over the period, but thankfully our stock picking skills have been sufficient to overcome this.
“The companies we are seeing, nobody researches, because quite often they are too small, so there is no substitute for the face-to-face approach.”
Runner up in the Rising Star category this year is the 2006 Fund Manager of the Year, MIR Investment Management, which won last year’s Rising Star award, as well as Australian equities.
Referring (almost wistfully) to MIR’s repeat nomination in this year’s Rising Star category, Triguboff says the manager still considers itself “as a young outfit, even if now we have significantly more FUM than we had back then”.
“It’s important to maintain the culture of youth and flexibility and excitement throughout your career,” he adds.
Rising star
Winner: Pengana
Finalist: MIR
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