Fairlight Global Small and Mid Cap Fund rated ‘Recommended’ by Lonsec

Fairlight Asset Management (Fairlight, FAM), a specialist firm investing exclusively in global small and mid-cap (Global SMID) equities and part of the Perennial Group, has been awarded a ‘Recommended’ rating by Lonsec for its flagship fund.

The Fairlight Global Small and Mid-Cap Fund (‘the Fund’) invests in a concentrated portfolio of 30-40 businesses with market capitalisations of between US$500m and US$20bn.

The Fund predominantly targets Global SMIDs in developed markets, with a strong focus on quality. Its goal is to outperform the MSCI World Small & Mid Cap Index (Net) in Australian dollars by 3-5% p.a (after fees) over rolling seven-year periods.

Fairlight was established in 2017 and actively manages approximately $350 million on behalf of investors.

Commenting on the Fund’s performance and investment strategy, Lonsec said: “Preliminary indications are positive, with the Fund returning 23.3% p.a. over the two-year period to 31 December 2020, outperforming the benchmark by 7.6% p.a. and the Lonsec global peer median by 5.9% p.a. Pleasingly, these returns have been delivered with lower volatility than the peer median.

“While this has been driven by strong stock selection especially within industrials, financials and consumer discretionary, Lonsec notes that the Manager’s quality style has provided a strong tailwind over the period, especially during the COVID-induced downturn.”

Fairlight’s four partners are Nicholas Cregan, Ian Carmichael, Will Dowd and Alvise Peggion. Cregan and Carmichael are responsible for Portfolio Management of the Fund, supported by a team of GSMID experts.

Mr Cregan said: “We are delighted to have been awarded a ‘Recommended’ rating, which is our first from Lonsec.

“Historically, emphasis was on diversification to large international equities and it was difficult for Australian investors to access the GSMID space, a significant but under-researched area of the market. We set up Fairlight to give Australian investors access to the best quality niche leaders in this investment universe.

“Over the past two decades smaller global firms have had higher risk-adjusted returns than larger stocks on average and as such we think an allocation to GSMIDs is beneficial to total portfolio outcomes. We also believe current valuations make it an opportune time to invest in this exciting space.”