Damon Hambly

IML’s two flagship funds, the Australian Share Fund and Australian Smaller Companies Fund, this month celebrate a 25-year track-record of delivering better returns than their benchmarks, with better downside protection and lower volatility^[1].

The funds launched on June 30, 1998, in the same year Anton Tagliaferro founded IML, with a singleminded focus on providing attractive long-term returns for clients, with lower volatility than the sharemarket. IML has achieved this by consistently investing in high-quality businesses that are undervalued by the market.

The Australian Share Fund has returned 9.8% per annum since 1998, after fees, 1.3% above its benchmark while, on average, falling 35% less than the market on months when it falls. $10,000 invested with the fund in 1998 would now be worth $103,757 after fees, $26,783 more than its benchmark^[2].

The Australian Smaller Companies Fund has returned 12.3% per annum since 1998, 6.7% above its benchmark while, on average, falling 54% less than the market on months when it falls. $10,000 invested with the fund in 1998 would now be worth $179,779 after fees, $140,960 more than its benchmark^[3].

IML Chief Executive Damon Hambly, says that IML’s investment philosophy is just as relevant today as it was in IML’s early days: “IML’s style of investing is particularly well suited to periods of higher sharemarket volatility and economic uncertainty, like we are experiencing right now. We have a strong track record of both protecting clients’ capital during market declines and delivering returns with lower volatility. We are also proud of our history of active ownership – of standing up for shareholders, and challenging boards and senior management when we believe shareholders’ best interests are not being served.”

Back in 1998 Google was founded, the ‘Tech Boom’ was in full swing and unprofitable dot.com stocks were becoming all the rage. It was a tough time to attract investors to a value and quality fund. It wasn’t until the ‘Tech Wreck’ started in March 2000, and share markets plunged around the world, that many investors started returning to investment fundamentals. In 2002, as the fallout from the Tech Wreck continued, the ASX 300 fell 8.64%, while IML’s Australian Share Fund was up 4.25%.

Simon Conn is Senior Portfolio Manager for the Australian Smaller Companies Fund. He has been at IML since the company launched, working with Anton to put in place the investment processes and frameworks that continue to this day. Speaking about the fund’s 25th anniversary, he said: “New funds are launched all the time, so to have achieved such a great track record of returns over 25 years is a real vindication of our investment style. What is more satisfying to me than the numbers though, is the way these returns have been delivered.

There are a lot of low-quality companies in the smaller end of the market, so our disciplined focus on quality companies with a strong competitive advantage, recurring earnings and capable management which are trading at reasonable prices has helped us grow capital over time, while protecting our clients’ capital during more difficult times.

Another pleasing outcome of the fund has come from our focus on profitable companies that pay dividends, this has allowed the fund to continually generate income from its underlying investments and enabled us to pay a distribution every six months since 1998.

I’d like to thank all of our clients who have trusted us with their hard-earned savings for so many years, we hope you will continue to trust us for many years to come.”

Daniel Moore and Hugh Giddy are the portfolio managers for IML’s Australian Share Fund, both joining the firm in 2010. Commenting on the fund’s anniversary Hugh said: “It’s a responsibility that Daniel and I take very seriously, managing a fund with such a long, proud history that has played a key role in many of our clients’ investment portfolios.

I think the key to our success over so many years has been sticking to the investment philosophy that we know works – our relentless focus on both quality and value – while at the same time continuing to improve our investment processes.”

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Notes:
[1] Benchmark for the Australian Share Fund is the ASX 300 Accumulation Index and benchmark for the Australian Smaller Companies Fund is the ASX Small Ordinaries Index, excluding property trusts. Stats are from 1 July, 1998 to 1 July, 2023. Sources: Morningstar Direct, IML. Past performance is not a reliable indicator of future performance.
[2] Ibid.
[3] Ibid.

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