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Best performing growth funds of 2017

Glenn Freeman  |  13 Feb 2018Text size  Decrease  Increase  |  
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Australian equity funds delivered an average return of 12.9 per cent in calendar 2017, while the S&P/ASX 300 index returned 11.9 per cent over the year, according to the Morningstar Australian Institutional Sector Survey.

Global share strategies performed slightly better, with returns of 15.6 per cent versus a 13.4 per cent return from MSCI World Ex-Australia over the same period.

Among locally-domiciled funds, some of the star performers over the year were Platypus Australian Equities [14368], SGH20 and Bennelong Concentrated--which delivered returns of 24.2 per cent, 22.9 per cent, and 30.8 per cent respectively in 2017.

The team at Platypus applies quantitative screens and fundamentals as the main drivers of its strategy, which results in "a punchy portfolio of 20-40 stocks," says Morningstar manager research analyst, Anshula Venkataraman.

"The growth-oriented process is disciplined and aims to invest in high-quality companies that can generate sustainable earnings growth," she says.

While Venkataraman notes the fund's high turnover is a drawback, this is offset by its retaining of some core holdings, which has enabled it to capitalise on their earnings growth.

She highlights the manager's growth-focused approach, targeting companies with strong, sustainable earnings growth using a cominbation of "top-down thematics with bottom-up stock selection".

In terms of cost, Venkataraman says its overall fee structure is higher than most, given the potential performance fee. "With a wholesale base fee of 96 basis points, there is also a 15.3 per cent performance fee on gross returns above the S&P/ASX 300 Accumulation Index plus 1 per cent."

International funds

Among global share strategies, top-performing funds over the year were Platinum Unhedged [15362], Johnston, and Hyperion Global Growth Companies, which returned 33 per cent, 28 per cent, and 27 per cent, respectively.

Holding a Silver- edal from Morningstar, Platinum Unhedged is a simpler and more concentrated version of the manager's Gold-medal-rated Platinum International fund.

"All positions are the output of rigorous analysis, during which the group's highly-rated investment team looks for growth prospects not currently appreciated by the market," says Michael Malseed, senior manager research analyst, Morningstar.

"Platinum's ideas also have a thematic bent, as investors aim to look beyond the numbers to identify emerging trends. We see a lot to like here ... and continue to view Platinum Unhedged as an excellent option for concentrated global equities," he says.

The fund has an annual management fee of 1.5 per cent, with no performance fee, "which is competitive when compared with other retail options," says Malseed, though he notes there is no wholesale-priced version offered through wrap platforms, making it relatively expensive in this channel.

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Glenn Freeman is a senior editor at Morningstar.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

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