Lonsec upgrades the DNR Capital Australian Emerging Companies Fund

Monday, September 06 2021

DNR Capital’s Australian Emerging Companies Fund1, has been upgraded to ‘Recommended’ by Lonsec Research, which says the Fund’s investment approach has been tested during a challenging environment since its launch in 2018 and “has delivered strong results.”

Lonsec says the DNR Capital Australian Emerging Companies Fund provides investors with access to DNR Capital’s highly regarded bottom-up stock selection approach, with a focus on quality companies trading at attractive valuations.

Lonsec notes the broader team and process have been able to generate considerable alpha versus the large cap benchmark during their tenure. While the process is less established in small caps, Lonsec believes it is reasonable that the team can achieve similar alpha potential in small cap equities through the application of its ‘quality’ approach.

According to the Fund’s latest performance report, it produced a return of 59.06% over 12 months 31 July2, compared with a return of 32.30% for the S&P/ASX Small Ordinaries Accumulation Index over the same period.

Since inception in August 2018, the Fund has returned an average of 19.42% a year2, compared with 8.57% a year for the index.

DNR Capital takes a concentrated approach, with the portfolio holding 20 to 45 stocks. Management of the Fund is led by Sam Twidale, who joined DNR Capital from Schroders in 2017. Lonsec says his global investment experience is a benefit in the management of the Fund.

DNR Capital’s stock research has a strong focus on identifying high quality companies. Stocks must pass an initial series of quantitative screens designed to narrow the investment universe. This approved list of companies is then subject to detailed qualitative analysis based on industry positioning, earnings strength, balance sheet strength, company management and ESG factors.

Lonsec believes this approach provides a disciplined and highly repeatable process which allows the manager to quantify a ‘quality score’ for each company.

Lonsec rates DNR Capital’s ESG policy, which involves integration within the investment process, as “above peers”.

“There is clear evidence of ESG integration within the research elements of the investment process. There is one resource within the team who is designated as ESG champion and serves to maintain the integrity of the ESG output that feeds into the process.”

Sam Twidale, Portfolio Manager for the DNR Capital Australian Emerging Companies Fund adds: “We will continue to back quality small cap companies because we believe they can successfully reinvest capital and achieve pricing power that allows them to grow above inflation. Additionally, these companies have strong balance sheets that allow them to ride out cycles, along with providing strategic optionality.”

For more information please visit: https://dnrcapital.com.au/individual-investors/ec-investor-managed-fund/

1 DNR Capital Australian Emerging Companies Fund, ARSN 627 783 957.
2 Performance is net of fees as at 31 July 2021. Past performance is not an indicator of future performance.

 

IMPORTANT NOTE: This media release has been prepared and issued by DNR Capital Pty Ltd, AFS Representative – 294844 of DNR AFSL Pty Ltd ABN 39 118 946 400, AFSL 301658. It is general information only and is not intended to be a recommendation to invest in any product or financial service mentioned above. Whilst DNR Capital has used its best endeavours to ensure the information within this document is accurate it cannot be relied upon in any way and you must make your own enquiries concerning the accuracy of the information within. The information in this document has been prepared for general purposes and does not take into account the investment objectives, financial situation or needs of any particular person nor does the information constitute investment advice. Before making any financial investment decisions you should obtain legal and taxation advice appropriate to your particular needs. Total returns shown are based on DNR Capital’s model portfolio and have been calculated before taking DNR Capital’s fees into account. No allowance has been made for taxation. Investment in the DNR Capital Australian Emerging Companies Fund can only be made on completion of all the required documentation. The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL No 235150 (as part of the Perpetual Limited group of companies) is the responsible entity and issuer of units and the PDS for the Fund. An investor should obtain and read the PDS and consider their circumstances before making any investment decision. The PDS is available at the Fund website at www.dnrcapital.com.au/invest, or a paper copy can be obtained, free of charge, upon request by calling DNR Capital Pty Ltd (‘Manager’), the investment manager of the Fund. This material is general information only and not an investment recommendation. The Manager or The Trust Company (RE Services) Limited does not guarantee the repayment of capital from the Fund or the investment performance of the Fund. An investment in this fund is subject.

 The rating for the DNR Capital Australian Emerging Companies Fund issued August 2021 is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. © 2021 Lonsec. All rights reserved.

Print this article