Leading investment research house Morningstar has upgraded the DNR Capital Australian Emerging Companies Fund1 as on 10/09/2022, citing its consistent application of the “proven DNR process” of identifying improving, sustainable or de-rated quality companies.

In its latest Australian Equity Sector Wrap, Morningstar upgraded the DNR Capital Australian Emerging Companies Fund to ‘Silver’.

The Fund was launched in August 2018 and since then it has produced a return of 12.41% a year. Its excess return over the S&P/ASX Small Ordinaries Total Return Index over the period has been 10.46% a year2.

3Morningstar says Portfolio Managers Sam Twidale and Mark Sedawie have “meaningful experience through a number of market cycles”. Their equity ownership in DNR Capital and co-investment in the Fund gives them significant skin in the game, providing meaningful alignment with investors.

One of the distinctive features of the Fund is Twidale and Sedawie’s willingness to spend time identifying quality opportunities in the energy, resources and materials sectors.

“Many small cap peers simply shy away from these businesses because of the complexities of forecasting their risks and rewards.” Morningstar says.

Twidale says a big part of DNR Capital’s investment thinking, which has contributed to the strong performance of the Fund, has been to avoid the excesses of the “growth bubble”.

“In an environment of low inflation and low interest rates, it was clearly the more growth-oriented sectors that thrived at the expense of value. While there are likely to be opportunities emerging from the rubble of the growth bubble bursting, we are conscious that the next decade could look very different,” Twidale says.

“Buying the dip in the previous winners may not be the most profitable strategy. We believe the more attractive investment opportunities could now be in the tangible side of the economy that has seen significant underinvestment.

“Industries set to drive earnings growth over the next decade could include trends like higher energy capital expenditure, the transition to electric vehicles, renewable energy investment and growth in liquefied natural gas demand.”


1DNR Capital Australian Emerging Companies Fund, PIM4357AU

2Performance as at 31 December 2022. Past performance is not an indication of future performance. No allowance has been made for taxation and fees are not taken into account.

3 Source: Morningstar Global Fund Report, 10/09/2022


This article 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. 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. 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 issuer of the PDS for the Fund. An investor should obtain and read the PDS and target market determination and consider their circumstances before making any investment decision. The PDS and target market determination are 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 on 07 3229 5531. Total returns shown for the DNR Capital Australian Emerging Companies Fund have been calculated using exit prices after taking into account all of Perpetual’s ongoing fees and assuming reinvestment of distributions. No allowance has been made for taxation. Past performance is not indicative of future performance. 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 to investment risk including loss of some or all of an investor’s principal investment and lower than expected returns.

Morningstar Disclaimer: © 2023 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) or Financial Advice Provider Disclosure Statement (NZ) at www.morningstar.com.au/s/fsg.pdf and www.morningstar.au/s/fapds.pdf . You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. The Morningstar Rating is an assessment of a fund’s past performance – based on both return and risk – which shows how similar investments compare with their competitors. A high rating alone is insufficient basis for an investment decision.