“The manager’s track record has delivered impressive relative performance outcomes since the Fund’s inception [in August 2018] along with the portfolio management team’s co-tenure and stability has led to increased conviction in the capability,” Lonsec said in its report.

The Fund is managed by Portfolio Managers Sam Twidale and Mark Sedawie, and in its report, Lonsec said the pair are dedicated to small cap research and contribute their insights to the broader investment team.

“We are extremely pleased to receive this upgrade. Lonsec has recognised the skills of our team and our bottom-up stock selection process which focusses on quality companies at attractive valuations,” Portfolio Manager, Sam Twidale said.

Lonsec listed the Fund’s high-conviction, concentrated approach (the Fund invests in 20 to 45 companies) as one of its key strengths, along with a boutique investment culture and a highly regarded and well-structured investment process.

“The manager demonstrated a strong engagement program and a structured approach. Engagements are tracked clearly with clear objectives set and outcomes tracked,” the Lonsec report found.

The DNR Capital Australian Emerging Companies Fund is also the recipient of a ‘Highly Recommended’ rating by Zenith.

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The Fund, managed by DNR Capital offers investors a relatively concentrated, exposure to quality Australian smaller companies. It has posted an annualised return of 11.23% since its inception in August 2018, outperforming the S&P/ASX Small Ordinaries Total Return Index by 8.08%^[2].

This rating also reflects Zenith’s “high regard for DNR Capital’s robust investment process, which aims to identify high-quality companies trading at attractive valuations.”

Furthermore, Zenith believes the Fund is a highly attractive investment option within the Australian smaller companies peer group and believes the Fund is well placed to deliver upon its investment objectives.

The report highlights the robust security selection process adopted by DNR Capital and says “Zenith seeks to identify Funds that can outperform in over 50% of months in all market conditions, as we believe this represents consistency of manager skill. In addition, we view a strategy’s ability to produce stronger upside capture ratios relative to downside capture ratios as an attractive feature.

“The Fund has achieved both outcomes since inception. It has displayed greater consistency of outperformance in rising markets relative to declining markets. The Fund’s tracking error has remained significantly higher than its peers, which is consistent with DNR Capital’s concentrated and benchmark-unaware approach.”

Zenith acknowledges that both Sam Twidale and Mark Sedawie, who have joint responsibility for the Fund, are capable investors with complementary backgrounds and skill sets.

DNR Capital Australian Emerging Companies Fund Portfolio Manager, Sam Twidale says “We are pleased to retain this high rating from Zenith.

“We continue to focus on positioning the portfolio in quality businesses with attractive valuation upside. Key overweight positions are across the Consumer Discretionary, Technology and Financials sectors. Of particular focus are management teams reinvesting cash flows at high returns on incremental capital, and where the runway for organic growth remains substantial.

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Notes:
[1] DNR Capital Australian Emerging Companies Fund, ARSN 627 783 957. APIR PIM4357AU
[2] Performance is net of fees as of 31 January 2024. Past performance is not indicative of future performance.

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