Glenmore Asset Management’s Australian Equities Fund has come out on top to deliver the highest return in the financial year 2023–24, according to Mercer’s latest investment survey.
The fund returned 31 per cent before fees in the 12 months to June 2024, outperforming the 12.5 per cent return from its benchmark S&P/ASX All Ordinaries Accumulation Index.
The fund also took the pole position over a three-year period, as per Mercer’s analysis, with a return of 17.2 per cent per annum.
Meanwhile, ECP Asset Management’s All Cap Australian Equities Fund took the second spot in FY23–24 with a return of 29.1 per cent over the year, followed by Smallco’s Broadcap Fund (26.2 per cent) and Selector Funds Management’s High Conviction Equity Fund (20.5 per cent).
The rest of the top 10 performing funds were:
- Forager Australian Value (19.9 per cent)
- Hyperion Australian Growth (19.5 per cent)
- Auscap Long Short Australian Equities (19.3 per cent)
- Platypus Australian Equities (19.3 per cent)
- Tribeca Alpha Plus Fund (19 per cent)
- Acadian Australian Long Short Equity (18.7 per cent)
Reflecting on the results, Shannon Reilly, Mercer head of equities, Pacific, observed Australian indices declined modestly in the last quarter following two consecutive quarters of gains; however, June marked the end of a “solid” FY23–24.
“Consistent with the trend over the full financial year, the bulk of returns for the quarter were generated through multiple expansion,” he said.
“Long-short strategies performed well over the June quarter, holding several spots among the top 10 managers within Mercer’s Australian shares investment manager universe. A theme among the group was the meaningful contribution that came from short exposures.”
For Australian fund managers, Reilly highlighted that security selection and valuation discipline supported the performance of a number of higher conviction value-oriented strategies, compared with the “AI euphoria” that drove the US market higher through the June quarter.
“This came despite the continued strength of the big four banks which have been causing headaches for many active managers that have been underweight this cohort due to share prices,” Reilly said.
“Over the full financial year, more than half the market gains were driven by the big four banks, which have benefited from the surprising resilience of the Australian economy to date.”
By the end of June, Commonwealth Bank had taken over Citigroup and Mitsubishi UFG to become the 13th largest bank globally, he noted.
Still, global optimism around AI did have knock-on effects locally, with the information technology sector outperforming the broad market by more than 20 per cent.
“The demand for data centre development [provided] a tailwind for the likes of Goodman Group and Next DC. Goodman’s size in the benchmark and its almost 75 per cent return for the year meant it was the strongest driver of total market returns outside the big four banks,” Reilly said.
Additionally, Goodman was also a key contributor for strategies that were early identifiers of the company’s foothold in the demand for data centres, he elaborated.
