The top-ranked Hyperion Australian Growth Companies fund, which delivered a return of 33 per cent in 2020, has beaten its benchmark by 450 basis points or more every year for the past 15 years.
The fund’s annual return was 19 per cent for the past three years, 14.5 per cent for the past five years, 13.5 per cent for the past seven years, 13 per cent for the past 10 years, and 11.3 per cent for the past 15 years.
The Morningstar data for 2020 is to the end of December, but the longer-term numbers in this column are up until the end of November.
Hyperion’s investment philosophy is summed up in the belief that “proven quality businesses with the strongest competitive advantages and organic growth opportunities produce superior shareholder returns over the long term”.
Companies in its portfolio have predictable earnings, low debt, high interest cover, sustainable competitive advantages, high return on capital, strong free cash flow, organic growth options and experienced and proven management.
Its top five holdings at the end of November included two of the best-performing tech stocks listed on the ASX: Afterpay, WiseTech Global, Xero, Fisher & Paykel, and CSL.
There is a similar story of performance consistency for the Prime Value Emerging Opportunities Fund, which was ranked second in 2020 with a return of 23.4 per cent.
The fund’s returns over three years and five years were 16 per cent per annum and 13 per cent per annum, respectively. The power of compounding is clear from the fact that someone who invests in the fund five years ago would have doubled their money.
The third-ranked fund, First Sentier Wholesale Concentrated Australian Share Fund, invests in about 15 to 30 securities with strong balance sheets and strong earnings.
Its top five stocks in November were Afterpay, BHP Group, Commonwealth Bank of Australia, CSL and National Australia Bank.
Investors in the fund over the long term have enjoyed the following annual returns: three years (15.6 per cent), five years (12.1 per cent), seven years (9.9 per cent) and 10 years (9.6 per cent).
The Bennelong Australian Equities Fund delivered the following medium- to long-term returns: three years (16.5 per cent per annum), five years (14.6 per cent per annum) and 10 years (12.76 per cent per annum).
The Katana Australian Equity Fund had a return a 12.4 per cent a year over the past three years and 11 per cent a year for the past five years. Sterling Equity’s annualised performance since inception in 2007 is 16 per cent.