Hyperion Asset Management top performer over two decades and recent half

From

Mark Arnold

According to recent Morningstar reports, Hyperion Asset Management’s (Hyperion) funds have returned market topping performances both over the last two decades and in recent months, despite market volatility and a poor end to FY2020 for the ASX. 

Hyperion’s Australian Growth Companies Fund has been named the top performing non-geared fund over the 20-year period to 30 June 2020, outperforming 521 other large cap Australian equity funds[1]. The report, based on the Morningstar Direct Global Fund Manager database, shows that the Fund’s unit trust delivered an average annualised return of 9.80 per cent after fees over the two-decade period.

The Hyperion Broad-Cap Equities Composite delivered an average annual return of 10.6 per cent after fees during the 20-year period to 30 June 2020. The fund has been managed by Hyperion since September 2002.

The Fund was the nation’s best performing large cap Australian equity fund* for the 20 years to May 31 2020, according to the Morningstar Global Fund Manager database.

But despite adverse market conditions, Hyperion has managed to keep its significant lead more recently as well. Its Global Growth Companies Fund delivered a return of 14 per cent after fees from 1 Jan to 30 June 2020, outperforming Morningstar’s World Large Growth category by 10.21 per cent, while the Australian Growth Companies Fund and Small Growth Companies Fund not only still topped the Equity Australia Large growth and Equity Australia Mid/small Growth categories respectively over the same period, but were the only funds not to deliver a negative return.

The Small Growth Companies Fund was also the top performing small-cap fund of the decade to Dec 31 2019 according to Mercer’s 10-yr fund manager performance survey.

Outside of Australia, Hyperion’s Global Growth Companies Fund is also the best performing fund out of 70 Morningstar Equity World Large Growth category over a five-year period, as at 30 June 2020.

An approach that continues to deliver

Managing Director and Chief Investment Officer, Mark Arnold said, “Our performance demonstrates that it is possible to take a long-term view and deliver short-term results with the same fund, growing our investors money through lean times and bountiful. We design our portfolios in a way that allows us to consistently profit from market highs as well as to protect capital during periods of market volatility. Our results prove that you do not need to use complex hedging strategies and derivative products to protect your capital during downside movements.” 

The data compiled by SPIVA in the Australia scorecard reveals that over the 10 and 15-year periods, 83.9% and 85.30% of Australian equity general funds underperformed the S&P/ASX 200 on an absolute basis respectively.[2] The findings demonstrate that Hyperion is one of a very small group of managers able to consistently outperform over the short and long term.

Mr Arnold credits Hyperion’s consistent results to its strict proprietary investment process which allows the team to separate the winners from the losers.

“Going forward we believe it will be more crucial than ever to identify the winners as they become fewer and further between. COVID-19 has further pushed the global economy into a period of low growth and we think that only a select group of companies will be able to continue to grow in this challenging environment. We see this growth stemming from their ability to innovate and take market share from their competitors.

“We invest with the mindset of long-term business owners and evaluate not only the quantitative side but also the less tangible qualities including company culture, leadership team and investment in research and development.”

Disruption and innovation for returns

Jason Orthman, Deputy Chief Investment Officer, added that Hyperion’s focus on disruptive and innovative companies has had a large impact on the manager’s success over the past two decades. 

“We back these new-world companies that are challenging the status-quo and shaking up entire industries. These are businesses which consistently demonstrate that they can thrive in the disrupted world we live in. We think that many old-world companies’ business models are fundamentally challenged and with the overall economic pie no longer growing, earnings growth will come under increasing pressure and especially as they lose market share to disruptive newcomers. 

“We have been watching the electric and autonomous vehicle space for many years now and see that as one area which will have a big impact on transport in the future,” Mr Orthman added.

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[1] Luk, P. & Gupta, A. (2019) SPIVA Australia Scorecard. Available at https://www.spglobal.com/spdji/en/documents/spiva/spiva-australia-mid-year-2019.pdf.
[2] The large cap Australian equity funds report sourced from Morningstar Direct includes the following Morningstar categories: Equity Australia Large Value, Equity Australia Large Growth, Equity Australia Large Blend and Equity Australia Large Geared

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