The DNR Capital Australian Emerging Companies Fund1 has been upgraded to a ‘Recommended’ rating from leading ratings house Zenith Investment Partners, which says the Fund “is well placed to deliver on its investment objectives.”
The Fund offers investors a concentrated exposure to high quality listed Australian small companies, reporting returns of 15.41% p.a.2 since its inception in August 2018, outperforming the S&P/ASX Small Ordinaries Accumulation Index by 9.50%p.a.2
DNR Capital’s investment philosophy is based on the premise that markets are inefficient and short-term focused, which gives rise to potential outperformance over the medium to long term. DNR Capital seeks to invest in quality companies at attractive valuations.
Zenith says it has “a favourable view” of DNR Capital’s investment process. “In addition, we draw confidence from the strategy’s strong positive asset growth, which ensures greater stability within DNR’s smaller companies business unit,” it says.
Sam Twidale, Portfolio Manager for the DNR Capital Australian Emerging Companies Fund says: “The Australian small cap sector is a particularly inefficient part of the market, providing significant opportunities to add value from applying a consistent and proven investment process. We believe our quality discipline is proving to be more relevant to this part of the market.”
DNR Capital defines “quality” companies as those with earnings strength and improving returns, superior industry positions, sound balance sheets, strong management and low ESG risk.
Zenith says: “Since DNR Capital’s investment philosophy and process have been applied to the smaller companies segment of the market, impressive results have been achieved.
Overall, Zenith believes “that DNR’s portfolio construction process ensures that the Fund has a bias towards high quality companies. We believe the Fund is well placed to deliver on its investment objectives.”
The Fund takes a concentrated approach, investing in between 20 and 45 stocks. Its investable universe is the ASX Small Ordinaries Accumulation Index. It has an active share greater than 75 per cent – a measure of active management that tracks the extent to which the Fund varies from the composition of its benchmark index.
DNR Capital backs quality companies because it believes 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.
To learn more about the DNR Capital Australian Emerging Companies Fund
1 DNR Capital Australian Emerging Companies Fund, ARSN 627 783 957.
2 Performance is net of fees and taxes as at 28 February 2021.
IMPORTANT NOTE: This media release has been prepared 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. 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 consider their circumstances before making any investment decision. The PDS is available at the Fund website at 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 to investment risk including loss of some or all of an investor’s principal investment and lower than expected returns.
The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned February 2021) referred to in this piece is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines