Equity Trustees: SGH ICE fund “Highly Recommended” by Lonsec

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Lonsec has upgraded its rating for the SGH ICE Fund to ‘Highly Recommended’.

In its report, Lonsec said that the strengths of the Fund include portfolio manager Callum Burns, who “is a high-calibre investment professional.  As architect of the strategy, he has significant tie-in to the investment philosophy”.

Lonsec also named strong long-term performance and being attractively positioned from a capacity perspective as strengths and commented on the Fund’s benchmark unaware, qualitative screening process.

“Within the context of the Lonsec Small Cap Australian Equities peer group, it’s important to acknowledge this ‘quality’ bias, as opposed to a ‘blue sky’ growth style, prevalent in the sector. Furthermore, Lonsec believes over time the Fund is likely to perform best in markets trading on fundamentals rather than momentum, with greater resilience in ‘down’ markets. As has been the experience with other strategies adopting similar investment philosophies, particularly at the global level, performance of these type of approaches has been strong in recent years, however Lonsec highlights that this style of strategy is expected to outperform most strongly during falling or stressed markets and may lag in strong growth markets.

“Lonsec believes risk management is a strength of the Fund. It is embedded in the nature of the stock selection model on two levels. Firstly, it aims to eliminate lower quality business models from the investable universe and focus only on companies believed to have a sustainable competitive advantage. Secondly, it aims not to overpay for higher quality businesses by having a clear valuation criteria.”

Mr Burns said that the upgrade reflects growing interest in, and support for, funds that look outside the mainstream ASX100 for Australian equities investments and who adopt the franchise investing style.

“Looking forward, we continue to believe that the Fund is well placed to perform in a variety of market conditions and offers a unique way to gain exposure to a truly diverse portfolio of quality companies with growing franchises.”

The chart below demonstrates the safe end of small caps style of investing implemented by the Fund.

Source: Lonsec Research Pty Ltd as at 31/12/2014

The Fund was also recently awarded the 2015 Morningstar Fund Manager of the Year for Domestic Equities – Australian Small Caps.


For more information please contact:

Callum Burns                                                  Harvey Kalman
SG Hiscock                                                    Equity Trustees
Phone: 03 9612 4650                                     Phone: 03 8623 5301

The Lonsec Rating (assigned February 2015) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445. The Rating is a “class service” (as defined in the Financial Advisers Act 2008 (NZ)) or is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product(s). In New Zealand it must only be provided to “wholesale clients” (as defined in the Financial Advisers Act 2008 (NZ)). Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold SG Hiscock & Company Ltd product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria.

For further information regarding Lonsec’s Ratings methodology, please refer to our website at: http://www.beyond.lonsec.com.au/intelligence/lonsec-ratings