Loftus Peak featured in the AFR: How top fundies beat the virus


The below is an extract from Tony Boyd’s article ‘How top fundies beat the virus’ which was originally published to the Australian Financial Review on 15/07/20. For the full article, please click here.

The coronavirus posed unique challenges for active managers of global equities because the benchmark index returns were driven by a concentrated group of technology companies.

Funds that owned beaten-down cyclicals such as oil and gas, banks, airlines and hotels were nowhere to be seen in the list of top performers.

In fact, about two-thirds of the global funds available in Australia and tracked by Morningstar failed to beat the MSCI All Country World Index, which was up 4.1 per cent in Australian dollars.

The performance league table for the top 20 global fund managers in the year to June 30, 2020, prepared for Chanticleer by research house Morningstar, shows the power of investing in new economy stocks.

Hole in the business model

Alex Pollak, the chief investment officer at Loftus Peak, says he wished the human tragedy caused by COVID-19 had not happened, but these were the cards dealt and it suited his fund’s portfolio.

‘‘COVID has exposed everybody’s high-cost supply chain and customer chain model,’’ he says.

‘‘You don’t need to send stuff from the manufacturer to warehouses and then from warehouses to Woolworths. You can cut all of that stuff out. That’s just in retail, but it actually applies to everything.

‘‘To do your job, you don’t need to physically get on a bus and go into work. You can just do your job. To go to the doctor, you don’t have to make an appointment and sit in the queue. You can just go to the doctor remotely by video.

‘‘COVID found out the hole in everybody else’s business model and delivered us up a portfolio that was not reliant upon things needlessly moving around in order for people to buy things, sell things, do things, get better and be entertained.’’

It is clear from the winners in global funds management in 2020 that COVID-19 has accelerated the existing trends towards a digital economy.

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