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DNR Capital Australian Emerging Companies Fund upgraded to ‘Highly Recommended’ by Zenith

14 Mar 2023
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Leading investment research house Zenith Investment Partners has assigned a ‘Highly Recommended’ rating to DNR Capital’s Australian Emerging Companies Fund, describing it as a “highly attractive investment option within the Australian smaller companies peer group.”

Zenith says DNR Capital has a “robust investment process” based on the premise that markets are inefficient and short-term in focus, giving rise to opportunities to outperform over the medium to long term. “Since DNR Capital’s investment philosophy and process have been applied to the smaller companies segment of the market, impressive results have been delivered.”

The Fund offers investors a relatively concentrated exposure to Australian smaller companies, with 20 to 45 stocks. DNR Capital aims to hold a portfolio of attractively priced companies that exhibit high quality characteristics, such as earnings strength, superior industry position, sound balance sheet, strong management and low ESG risk.

The Fund[1] has posted returns of 13.32%p.a.[2] since its inception in August 2018, outperforming the S&P/ASX Small Ordinaries Total Return Index by 9.93%p.a.

Over the 12 months to the end of January 2023, the Fund returned 5.65%2, compared with a 4.44% fall in the benchmark.

DNR Capital Portfolio Manager, Sam Twidale says “Although the short-term outlook remains uncertain as central banks hike interest rates, we believe that more attractive opportunities are starting to emerge in Australian small caps.

“Valuations have adjusted significantly lower over the past year, providing a more compelling entry point for investors. Earnings forecasts are also being revised to more realistic levels, with profitability under pressure from lower revenue and higher costs.

“For long-term focused investors, we believe this presents the opportunity to start buying high quality business models on rebased valuations and earnings. Our focus has been on companies which have the resilience to get through a weaker period for the economy, and where the long-term outlook remains very promising”.

———-

[1] DNR Capital Australian Emerging Companies Fund, ARSN 627 783 957. APIR PIM4357AU
[2] Performance is net of fees as of 31 January 2023. Past performance is not indicative of future performance.

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