The Fund is managed by Avoca Investment Management (Avoca), headed-up by portfolio managers, John Campbell and Jeremy Bendeich.The team’s disciplined research process, wide-spread analyst coverage and highly experienced co-portfolio managers are amongst the Fund’s key competitive strengths. 

Quality people and boutique environment
Prior to establishing Avoca in 2011, in partnership with Bennelong Funds Management (Bennelong), John Campbell worked with Jeremy Bendeich at UBS Global Asset Management as small-caps portfolio managers.

At the time of departure from UBS in April 2011, the Small Companies Fund was ranked first over seven years and third over five years in the Morningstar Performance Survey. 

The investment team holds equity stakes in Avoca, and purely focuses on investment duties and establishing a high quality funds management business. Bennelong provides financial, operational and marketing support. 

Strong investment process and portfolio management
Avoca’s active, bottom-up, fundamental investment process focuses on longer-term sustainable cash flows, whilst exploiting short-term market inefficiencies. The Fund typically holds 35 stocks from the S&P/ASX Small Ordinaries and S&P/ASX Mid-Cap 50 Indices. 

“Many investors chase earnings momentum,” said John Campbell. “By following the crowd, they focus on trends and miss inflection points in the equity markets. The Avoca team, however, seeks to identify and benefit from these turning points. We aren’t tempted to follow others’ investment decisions because we have absolute faith in our research and analytic methodology.”

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The Fund is managed by Bennelong’s small caps team, Avoca Investment Management, which is headed-up by experienced investment professionals, John Campbell and Jeremy Bendeich. 

Robust research and portfolio construction process
Avoca’s investment process was of particular note in Lonsec’s report, highlighting that Avoca “employs a well structured, robust and repeatable investment process. Whilst the firm was only founded in 2011… Avoca’s investment process is very similar to that used during the investment team’s previous tenure at UBS and therefore can be considered to have been tested through a full market cycle.” 

The team’s five stage investment process “promotes a high level of transparency and leads to a high level of consistency in output,” the report noted. “Avoca have introduced some subtle process enhancements with the inclusion of ESG analysis as part of the fundamental research effort and a more refined financial modelling and valuation framework, tailored specifically for the Australian equity small cap market.” 

Quality people and resources
Lonsec viewed the pairing of Campbell and Bendeich in the portfolio management role as highly favourable, noting that the two were “seasoned investment professionals and pleasingly, a pairing that have developed a reasonably long working relationship together whilst at UBS.”

In summary, Lonsec concluded that “the Campbell and Bendeich portfolio management pairing, significant FUM capacity and highly accountable boutique investment structure form the key attractions of this product.” 

Managing Director of Avoca Investment Management and Portfolio Manager of the Fund, John Campbell, said he was thrilled with Lonsec’s rating, in particular their acknowledgement of Avoca’s robust research and portfolio construction process.

“Jeremy and I believe there is only one way to invest in shares and that’s to do a deep qualitative review of the company in question and its industry, model the long-term maintainable cash flows, and value those cash flows on a DCF basis. This is the process we’ve been operating under for the past eight years and is the heart of Avoca. Lonsec’s acknowledgement of our process and people is a positive affirmation for our business,” John said.

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