Michael Malseed: Investors Mutual Future Leaders is a capable strategy focused on investing in Australian companies outside of the largest 50 stocks in the ASX 300 Index. The manager has a value and quality discipline focusing predominantly on companies with conservative balance sheets and sustainable earnings. It's a process, we think, is suited to small and mid-cap investing in the Australian market and given the experience of the team, the stability of Investors Mutual Group, it earns a Morningstar medalist rating of Bronze.

Senior portfolio manager Simon Conn has managed the IML Future Leaders Fund since May 2002. He is a highly-experienced investment professional with a solid track record, delivering total returns in excess of the small companies benchmark and the category average of peers over his 15-year tenure as manager of the fund.

The team was bolstered in August 2016 with the addition of assistant portfolio manager Marc Whittaker. He previously spent six years as a portfolio manager at Milford Asset Management and seven years as an analyst at Lazard Asset Management. Simon also draws on the experience of Investors Mutual founder, Anton Tagliaferro, as well as senior portfolio manager Hugh Giddy in addition to the well-resourced broader analyst team.

The portfolio typically comprises 40 to 70 stocks with a fair degree of conviction at the top end with the top 10 stocks currently accounting for around 30 per cent of the portfolio. The cash stake may build up to 20 per cent when the manager doesn't see value in the market. The cash balance sits at around 12 per cent as at the end of March 2017.

The value and quality-driven process leads to a bias towards industrials, generally shying away from the more volatile resources sector. Historically, infrastructure, financials and consumer stocks have been the favorite hunting ground given the managers' preference for earnings visibility.

The base fee on the fund is competitive at 0.99 per cent, although there's a performance fee of 15.4 per cent on benchmark-beating performance. Overall, the Investors Mutual Futures Leaders Fund is a solid offering in the small and mid-cap space, with an experienced team implementing a sensible and disciplined investment process which should help deliver solid risk-adjusted returns over the long term.