# 9 ASX-focused funds with a better batting average than Don Bradman

These are the Australian small and large-cap funds that have outperformed the market over the long term, according to Morningstar.
Ally Selby

Livewire Markets

In cricket, baseball and softball, there is a statistical tool that is used to measure a player's success on the plate: batting average.

By calculating a player's batting average, fans can decipher which batsman can consistently score runs. A higher average indicates that a batsman is more successful, while a lower average indicates the opposite. It can be used to compare the skills of different players or compare a batsman's progress over time.

Obviously, there's more to a player than their batting average, and this tool should be considered in context with playing conditions and other statistics, but it is useful nonetheless.

I can hear you moan as I write this... "Ally, this sounds like a swing and a miss! This is Livewire Markets... What does this have to do with investing!?!"

I hear you. Stay with me...

Recently, I had somewhat of an epiphany. Every day, I interview some of the smartest minds in Australian funds management and am bowled over by their insights. And yet, SPIVA data shows that only 21.78% of funds outperformed the S&P/ASX 200 over the past decade. Over 15 years, this drops to 16.43%.

So what if you could calculate a fund manager's batting average?

Thanks to our friends at Morningstar, we've done just that.

By dividing the number of rolling periods in which a manager beat or matched an index by the total number of rolling periods within 15 years, for example, Morningstar has been able to measure a manager's ability to consistently beat the market.

For example, a manager who meets or outperforms the market in every rolling period during a given time frame would have a batting average of 100. A manager who beats the market in half of these rolling periods would have a batting average of 50.

As with the baseball/cricket/softball analogy, this data should not be used as the "be-all and end-all" for assessing fund managers. The market's playing conditions (read: macro environment) and other factors (if there have been portfolio manager changes recently, for example) should also be taken into consideration.

And so, without further ado, here are the top three Australian equity managers with the best batting averages across the industry. You're welcome.

Note: Please hover your cursor over the tables below and scroll across to see the entire table.

## Australian Equity Large Blend

 Fund Inception Date Total Return 1 Yr (Mo-End) AUD Total Return Annlzd 3 Yr (Mo-End) AUD Total Return Annlzd 5 Yr (Mo-End) AUD Total Return Annlzd 10 Yr (Mo-End) AUD Total Return Annlzd 15 Yr (Mo-End) AUD 15 Yr Batting Average*(% of rolling 5-yr returns in excess of benchmark**) Std Dev 15 Yr (Mo-End) AUD CI Brunswick Fund 1/7/2004 2.65 13.62 9.48 11.34 10.21 100.00 12.19 Pendal Australian Long/Short Fund 30/11/2007 2.07 14.35 8.39 8.54 7.75 95.04 14.14 Alphinity Concentrated Australian Share Fund 1/11/2004 3.01 13.90 8.08 8.88 6.00 93.39 15.57

## Australian Equity Large Growth

 Fund Inception Date Total Return 1 Yr (Mo-End) AUD Total Return Annlzd 3 Yr (Mo-End) AUD Total Return Annlzd 5 Yr (Mo-End) AUD Total Return Annlzd 10 Yr (Mo-End) AUD Total Return Annlzd 15 Yr (Mo-End) AUD 15 Yr Batting Average*(% of rolling 5-yr returns in excess of benchmark**) Std Dev 15 Yr (Mo-End) AUD Hyperion Australian Growth Companies Fund 31/1/1994 3.35 10.65 10.83 10.18 9.53 100.00 17.48 Greencape Broadcap Fund 11/9/2006 3.85 12.82 8.87 9.50 8.51 100.00 14.24 Greencape High Conviction Fund 11/9/2006 4.10 13.11 9.00 9.26 7.93 99.17 14.36

## Australian Equity Large Value

 Fund Inception Date Total Return 1 Yr (Mo-End) AUD Total Return Annlzd 3 Yr (Mo-End) AUD Total Return Annlzd 5 Yr (Mo-End) AUD Total Return Annlzd 10 Yr (Mo-End) AUD Total Return Annlzd 15 Yr (Mo-End) AUD 15 Yr Batting Average*(% of rolling 5-yr returns in excess of benchmark**) Std Dev 15 Yr (Mo-End) AUD Allan Gray Australia Equity Fund 4/5/2006 2.58 18.56 6.99 9.58 8.13 76.03 18.52 Martin Currie Select Opportunities Fund 30/11/2006 1.24 17.14 7.09 9.26 8.14 73.55 18.84 Perpetual SHARE-PLUS Long-Short Fund 14/3/2003 4.40 17.67 8.99 9.57 8.94 71.07 13.79

## Australian Equity Mid/Small Blend

 Fund Inception Date Total Return 1 Yr (Mo-End) AUD Total Return Annlzd 3 Yr (Mo-End) AUD Total Return Annlzd 5 Yr (Mo-End) AUD Total Return Annlzd 10 Yr (Mo-End) AUD Total Return Annlzd 15 Yr (Mo-End) AUD 15 Yr Batting Average*(% of rolling 5-yr returns in excess of benchmark**) Std Dev 15 Yr (Mo-End) AUD OC Micro-Cap Fund 30/11/2003 -12.88 9.16 7.86 14.36 13.41 100.00 20.64 OC Dynamic Equity Fund 20/12/2000 3.75 16.66 6.79 11.41 9.92 100.00 20.01 FSI Wholesale Australian Small Companies Fund 31/12/1993 -3.26 14.98 10.26 12.20 9.19 100.00 17.13

## Australian Equity Mid/Small Growth

 Fund Inception Date Total Return 1 Yr (Mo-End) AUD Total Return Annlzd 3 Yr (Mo-End) AUD Total Return Annlzd 5 Yr (Mo-End) AUD Total Return Annlzd 10 Yr (Mo-End) AUD Total Return Annlzd 15 Yr (Mo-End) AUD 15 Yr Batting Average*(% of rolling 5-yr returns in excess of benchmark**) Std Dev 15 Yr (Mo-End) AUD Hyperion Small Growth Companies Fund 1/1/1995 13.23 11.27 12.03 11.02 12.95 100.00 19.36 Macquarie Australian Small Companies Fund 7/6/2006 -1.56 15.61 9.52 14.40 9.05 100.00 20.50 FirstChoice WS Aus Small Companies Fund 28/2/2003 -6.56 14.81 7.83 9.36 6.77 100.00 17.47

## Australian Equity Mid/Small Value

 Fund Inception Date Total Return 1 Yr (Mo-End) AUD Total Return Annlzd 3 Yr (Mo-End) AUD Total Return Annlzd 5 Yr (Mo-End) AUD Total Return Annlzd 10 Yr (Mo-End) AUD Total Return Annlzd 15 Yr (Mo-End) AUD 15 Yr Batting Average*(% of rolling 5-yr returns in excess of benchmark**) Std Dev 15 Yr (Mo-End) AUD Perennial Value Smaller Companies Trust 7/3/2002 -24.03 8.24 2.34 6.16 5.32 91.74 19.90 Ganes Focused Value Fund 14/10/2002 8.39 19.50 10.55 9.43 8.86 81.82 14.86 Investors Mutual Small Cap Fund 1/2/2007 -9.95 11.45 3.53 8.67 8.71 66.94 15.06

## Some observations

As you may have noticed, there are nine funds out of the 18 mentioned above that have a perfect batting average of 100. Many of these funds, like Hyperion, for example, are Growth-focused equity managers.

Without stating the obvious, Growth investing has been in favour over the majority of the last 15 years - which is the timeframe for this dataset. While many Growth managers have struggled in recent times thanks to rising interest rates, they've been able to compound very strong returns during the three-year, five-year, 10-year and 15-year timeframes.

Over the past year, many Value managers have been able to make up lost ground, like Lazard's Select Australian Equity Fund, for instance, which delivered investors a return of more than 26% (net of fees) in 2022.

As Michael Malseed, director of manager research at Morningstar explained, it's difficult to time both markets and style.

"There's no guarantee of future returns based on past performance, but performance can give you some guidance as to how a process will perform in different environments," he explained.

"The caveat to that is environments are never the same in markets and that's why it's very difficult to predict future returns. So, what we look for is process consistency and whether the performance outcome is consistent with what the process is designed to do."

Rather than sticking to one particular style, like Growth, for instance, Morningstar is a big believer in spreading your eggs into multiple baskets.

"We advocate for style diversification, which ensures that you are not bearing the risk of style timing and cycle timing - which would have put you in good stead over the last 12 months as you would have had Value exposure - which would have softened the impact of Growth declines," he said.

"You may give up some upside in strong style-driven markets, but diversification is going to give you a smoother ride."

That said, it's not all down to style - it really depends on a manager's ability to generate alpha.

"There's a spectrum of performance that Growth managers would have delivered in the last 12 to 18 months, just as there are Value managers who would have done better than others in the previous cycle," Malseed said.
"So it's not all down to style. Stock selection is fundamentally what fund managers are trying to do. Style is just the bounds of their process. Fund managers should be targeting alpha regardless of the cycle."
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Content Editor
Livewire Markets

Ally Selby is a content editor at Livewire Markets, joining the team at the end of 2020. She loves all things investing, financial literacy and content creation, having previously worked for the likes of Financial Standard, Pedestrian Group, Your...

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