There are three key beliefs driving Australia’s #1 performing fund, Collins Street Value Fund: get an edge with research, challenge the status quo and invest with conviction.
Led by Portfolio Manager and Managing Director Michael Goldberg, the fund has gone from strength to strength since being created five years ago by Mr Goldberg and Vasilios Piperoglou.
Currently, the wholesale fund wears the title of being Mercer’s Best Australian Equities Fund for 2020.
While since inception, it’s delivered a 19.05 per cent per annum annualised net return to its investors, including a 64.78 per cent net return to investors during the COVID-19-impacted FY21— one of the few funds within its peer group to achieve such returns.
Mr Goldberg said the heady success the fund has enjoyed to date can be traced back to following its own beliefs when it comes to investment.
“Our investment philosophy is pretty simple — we’re value investors. We’re essentially always trying to buy $1 worth of asset for 50 cents. We achieve that goal through a number of different rules,” Mr Goldberg said.
Hands on research
The Portfolio Manager explained when the fund was looking at new investments, one of the first steps they’ll take is to carry out extensive research, including asking some uncomfortable questions.
“What we found, and it was a bit surprising, is that if we dig a little bit more and are prepared to get a little bit more uncomfortable than the next guy, that there’s a massive advantage,” Mr Goldberg said.
Stepping away from the computer screen and conducting research in-person was key for this type of research, the MD said, as it helps the fund gain a deeper understanding.
“Talking to people on the coalface really gives you that advantage and can really provide for some substantial improved outcomes from an investment perspective,” Mr Goldberg said.
The MD added it also allowed the fund to properly identify whether the market was reacting to a company emotionally, rather than intelligently.
Knowing whether or not they’d be challenging the status quo had proved extremely profitable in the past, Mr Goldberg said.
Our experience has been that the market very often gets the consensus wrong and that provides some exceptional opportunities.Collins St Value Fund Portfolio Manager Michael Goldberg.
“Its not just being contrarian for the sake of being contrarian, its about understanding why we like and why the market doesn’t like it — that’s more power for us to know what position we want to take.”
Once the fund had an understanding of why it likes the company, and its position within the market, Mr Goldberg said the fund’s next belief was to invest with conviction.
“We’ve spent the time and made the effort to understand the business, now we want to make sure we’re investing in a way that it can have an impact on our portfolio,” Mr Goldberg said.
This successful formula has seen Colins St invest in everything from the uranium sector to gold stocks and even big four bank ANZ (ANZ).
“If all of those things stack up, and the company is trading at a 30 to 40 per cent discount to what we think they’re actually worth, we’ll start doing due diligence and then invest,” Mr Goldberg said.
A fund for investors
Beyond its investment beliefs, Collin St also credits its success to its mandate of preserving capital, an idea born from when Mr Goldberg and Mr Piperoglou first created the fund.
“We came up with a unique approach to funds management. So, first things first, we aren’t losing money but preserving capital. But also, we need to make sure we’re able to align our interest with our investors,” Mr Goldberg said.
It was this mandate of preserving capital and creating value which drove the decision not to charge fixed management fees within the Collins St Value Fund.
Mr Goldberg said ultimately the lack of management fees has actually helped them create more profitable outcomes for investors as they’re not having to be all things to all people.
“That [no fixed management fee policy] really set our goals in line with what investors want to achieve,” Mr Goldberg said.
“There are funds out there which seek to be all things to all people, but we’re not an index fund. We’re a concentrated portfolio, looking for long-term, impactful success.”
Armed with this belief driven investment success, Mr Goldberg said he was confident the next five years with Collins St Value Fund would prove as profitable as their first five.
“You always want to make sure the people who are looking after your money are chasing the same outcomes as you,” Mr Goldberg said.