Sydney, 19 February 2019: Firetrail Investments Pty Limited (Firetrail) today announced that its Firetrail Absolute Return Fund has received the coveted “Highly Recommended” rating from Zenith Investment Partners (Zenith). Highly Recommended is the highest possible Zenith rating.
Patrick Hodgens, Managing Director at Firetrail, said the “Highly Recommended” rating from Zenith shows their high regard for Firetrail’s experienced team and deep fundamental research approach.
In its report, Zenith mentions it holds the investment team in high regard and are comforted by the strong growth of the business, which has provided an increasingly stable environment for the team. Zenith remarks that the investment team’s fundamental approach to shorting, based on earnings risk and catalysts, rather than valuation, is intuitive and prudent, as stocks perceived to be “expensive” can continue to rise, driven by market sentiment.
“Share prices follow earnings. The key to identifying candidates for our short portfolio is to focus on earnings and identify opportunities where a company is at risk of missing market expectations. There are over 150 earnings downgrades per year in the Australian market, so the opportunity to add value from shorting is material” Hodgens explains.
Zenith notes Firetrail’s market-neutral investment style is well-suited to investors who are looking for an alternative source of returns, independent of movements in the underlying share market.
“The portfolio is constructed to ensure it is market-neutral. That is, the returns are uncorrelated to the performance of the share market. We are looking to deliver returns in excess of the RBA Cash Rate over the medium to long-term, irrespective of the performance of equity markets”, Hodgens said.
The Firetrail Absolute Return Fund employs the same investment approach as the Macquarie Pure Alpha Fund which was managed by the same investment team until October 2017 and which returned 20.4% above the RBA Cash Rate since strategy inception in July 2015 (after fees).
The Zenith Investment Partners (“Zenith”) Australian Financial Services License No. 226872 rating (WHT5134AU assigned February 2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at https://www.zenithpartners.com.au/regulatory-guidelines-funds-research