This strong performance places the fund amongst the top quartile of its peers.

Luke Laretive, Seneca Founder and Portfolio Manager, is setting a powerful precedent in the financial services industry. His innovative approach serves as a blueprint for financial planners aiming to bring fresh, personalised strategies to their clients.

Two years ago, Laretive faced a growing challenge. As his high-net-worth client base expanded, it became increasingly difficult to efficiently allocate small-cap stock recommendations across all clients at comparable prices.

Recognising the need for a more scalable solution, he established the Australian Small Companies Fund to streamline the investment process and ensure consistent opportunities for their clients.

Laretive’s success is a testament to this emerging trend in the industry. His fund not only challenges the status quo by offering a fee structure with zero management costs, but also reflects a personalised approach to portfolio construction, tailored to the values and expectations of individual investors.

This model places client outcomes at the centre, ensuring that both risks and rewards are fairly shared between managers and investors.

The fund’s success has been driven by broad-based gains across several sectors. Key contributors include:

• The highly cash-generative fund manager GQG Partners (GQG)
• A takeover of MRM Offshore (MRM) by Cyan Renewables,
• The asset realisations at data centre manager Global Data Centre Group (GDC), specifically the sale of its ~1% stake in Airtrunk and
• A US-based silver exploration play, Sun Silver (SS1), in which the fund participated in the IPO.

Seneca’s zero-management fee structure sets it apart, charging only a 20% performance fee on returns above the RBA cash rate (with a high watermark).

Luke Laretive, Seneca Founder and Portfolio Manager said: “We can run the fund for a 0.00% p.a. management fee because we have an existing profitable advice business.

“This point of difference allows us to align fully with our investors, as our success is directly tied to theirs.”

Laretive emphasised the fund’s focus on long-term strategy, saying: “I think many fund managers lack alignment with their product returns. They can be too focused on short-term results and struggle to act like true owners with a long-term strategy.

“At Seneca, we’re different—we see the fund as the best, purest expression of our stock-picking ability. Our investment process and philosophy are consistent with our 4-year-old large-cap SMA, just adapted for the small companies’ universe.”

Looking ahead, co-Portfolio Manager Ben Richards also expressed confidence in the fund’s future: “While we’re proud of what we’ve achieved in the first year, the highest return opportunities are still ahead. Companies like RPM Global (RUL) and Catapult (CAT) have significant potential for further growth.”

Both portfolio managers are personally invested in the fund, and shareholders in the Seneca business, reinforcing their alignment with investors.

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