We Want Your Money

Note: This is an unabashed request for investments and a slightly modified excerpt from our June Quarterly Report to investors (sorry Joe, I know you get upset when I publish the same thing twice).

Our funds management business will be four years old in November and we now have an excellent track record with the flagship Value Fund. The plan is to grow the Value Fund over the next few years to $150m to $200m, a level at which we think there is a sensible trade-off between business economics for us and prospective returns for our clients. At the very least, we aim to build a similar track record over the next three years in the International Fund.

We have met with a number of ratings agencies—gatekeepers to the financial planning world such as Lonsec and Zenith—over the past few months. We have also met with a number of overseers of approved product lists for financial planning groups. It’s a world obsessed with stock price volatility, correlations, Sharpe ratios and historical returns. It’s a world that we know is going to assess us on a monthly basis and pull money at the first sign of underperformance.

At the moment, we have investors who understand our long-term approach, understand that our returns will be volatile and understand that we do make mistakes. This is probably the main advantage we have over our value-investing competitors.

We would like to keep that advantage, which means more of the same sort of money and less return chasers. If we can grow the Value Fund to the $150m to $200m we want with patient, long term money, we can enjoy spending the next 20 years investing it sensibly on clients’ behalf, without any outside distractions.

Hopefully you know my views on this Fund in a portfolio context—it should form a smallish part of a well diversified portfolio. But as a Bristlemouth reader, you probably have the right mentality for us. If you’ve been sitting on the sidelines watching our progress, or have given us a small amount of money to see how we go, now is a good time to reconsider an investment. I’d like to see how much we can raise from within the family before heading outside.

The International Fund is a different prospect. While we are unproven in this space, our size is a tremendous advantage at the moment. You won’t find B&C Speakers (see the Quarterly Report)—with a €42m market capitalisation—in the Platinum or Magellan portfolios. And I still think currency diversification is essential for the average Australian investor.

I say this with a tinge of self-interest but a lot of concern. If you want to increase your allocation to international shares and think our fund is a sensible option for you, while the International Fund is small and the dollar is high, it makes sense to get on with it.