Financial Standard.

The Ophir Opportunities Fund has outperformed every rival in its category, topping the Australian small-cap fund rankings across all timeframes, according to the latest Mercer investment survey.

The fund has returned 39.6% over one year besting the median fund’s 3.5% return and S&P/ASX Small Ordinaries benchmark’s -1.33%.

Over three years, it’s returned 25% per annum, well ahead of the median fund’s 4.3% return and S&P/ASX Small Ordinaries benchmark’s -0.8%.

Over five years, it’s generated a 30.8% return, outpacing the median fund’s 16% return and S&P/ASX Small Ordinaries benchmark’s 10.2% return.

Over seven years, it’s posted a 22.1% return per annum, eclipsing the median fund’s 8.6% return and S&P/ASX Small Ordinaries benchmark’s 4.5% return.

And across 10 years, it’s returned 23.5% per annum, compared with the median fund’s 9.4% return and benchmark’s 6.3% return.

Since inception in August 2012, the fund has also led the field, delivering an annualised return of 28.7%.

Ophir founder and portfolio manager Andrew Mitchell told Financial Standard that what sets the fund apart isn’t just long-term performance, but the rare ability to also outperform in the short term – something few peers manage.

Mitchell credited Ophir’s consistency to a process that repeatedly identified standout companies early and holding them with conviction.

He said over each two-to-three-year period, the portfolio has featured major winners, including Life360 and Generation Life last year, to Afterpay, a2 Milk, and Magellan in previous cycles.

“The key thing is, we’ve been able to invest in all of them, and got on to them early,” he said.

Though generating strong returns isn’t about just picking the right stocks – it’s about backing them with conviction, he said.

He said that means making them significant positions in the portfolio and staying invested even when sentiment turns. In Australia’s small-cap market, he noted, tall poppy syndrome is alive and well; when a company performs strongly, it often attracts scepticism from investors, short sellers, and those who missed out.

To hold on through that, you need to have done the work and trust your process, he said.

That said, he acknowledged the team isn’t infallible and is constantly learning, adding that it continues to evolve its process.

“We’ve got some fantastic analysts here, and I really make sure that they’re running at the right pace. They’ve got a cadence in a process – they’re looking at a company, building a model, speaking to suppliers, competitors, and customers. They write up a stock thesis, they present it to myself and [Ophir co-founder] Stephen [Ng], we discuss it, and then work out the weight. It’s just rinse and repeat, rinse and repeat – at a good cadence,” he said.

To view full article: The top Australian small-cap fund, year after year | Financial Standard

By Andrew McKean

The Australian Financial Review.

Ophir Asset Management has emerged as the best ASX small cap investor over the past decade after its flagship fund toppled rivals in Mercer’s latest investment survey.

The Opportunities fund, managed by Ophir founders Andrew Mitchell and Steven Ng, returned 39.6 per cent before fees in the 12 months through March, thrashing the S&P/ASX Small Ordinaries Index, which fell 1.3 per cent. It also ranked first over two, three, five, seven and 10-year horizons, returning 23.5 per cent each year over the past decade.

Mitchell attributed the rare feat to nailing the size of the fund’s individual holdings – allocating more weight to high conviction calls and less to riskier stocks.

Early bets in Afterpay and A2 Milk rocketed the fund’s longer-term returns, while more recently the fund’s largest positions in 2024 including Life360, Generational Development, Bravura and Superloop all doubled in value in 12 months.

And while the smaller end of sharemarket has been hit particularly hard by US President Donald Trump’s trade war – the S&P/ASX Small Ordinaries Index plunged 15.5 per cent from peak to trough – Mitchell has used the turbulence to snap up and add to high-quality stocks that had been dumped by rivals.

“We welcome market volatility because in small-cap land where there’s less liquidity, that’s when people panic and sell, and you can pick up a great business at a very discounted price,” he told The Australian Financial Review.

Ophir has topped up its positions in Life360 and Bravura, and added AMA Group to the portfolio.

Mercer’s small-cap survey includes funds that invest in companies listed on the S&P/ASX 300, but excludes the sharemarket’s 100 biggest stocks.

Podium finish

The results show the best performing small cap strategies posted stronger returns than their large cap rivals. Forager’s Australian Shares Fund won Mercer’s main survey by a huge margin, returning 21.7 per cent in the 12 months to March 31. The second-ranked Chester Opportunities Fund rose 13 per cent.

Firetrail’s Small Companies Fund was ranked second in Mercer’s small-cap survey over the past year, returning 22.1 per cent and achieved a podium position across the two and five-year horizons.

The fund benefited from co-portfolio manager Matthew Fist’s background as a mining engineer and has risen the record rally in gold prices through Genesis Minerals and Greatland Gold. Long-term positions in Generational Development, Regis Healthcare and Life360 also boosted performance.

Firetrail’s co-portfolio manager Eleanor Swanson has positioned the portfolio more defensively by allocating more money to real estate stocks such as Aspen, which is now in its top three holdings alongside the gold producers.

She has also lifted the fund’s exposure to healthcare and bought more shares in A2 Milk.

“We’ve taken the view that while it’s pretty amazing that markets have held up so well, the uncertainty created by Trump’s tariffs means we’re expecting more volatility,” Swanson told the Financial Review.

Fist and Swanson have also injected more liquidity into the fund by trimming holdings in its smallest companies and putting more money into larger-capped stocks.

Bronze medal

Ausbil’s Australian Small Cap Fund, which was launched during the pandemic in April 2020, came in third with a one-year return of 18 per cent. It finished in the same position across a two- and three-year timeframe.

Performance was boosted by a strong March quarter as portfolio managers Arden Jennings and Andrew Peros limited exposure to Trump’s trade war. That made sure that less than 20 per cent of the portfolio was directly exposed to US dollar-denominated revenue, and under 10 per cent relied on imports to America.

Like Firetrail, Ausbil benefited from the record rally in gold prices thanks to positions in Genesis Minerals, which surged 50.2 per cent in the first quarter, and Ora Banda Mining, which rallied 67.8 per cent. The fund owns Generation Development Group, which jumped 40.2 per cent.

Jennings and Peros also took advantage of the sell-off in consumer-facing stocks in March and the subsequent rotation into defensive and resource stocks.

“We have been using this as an opportunity to ‘high-grade’ the fund by adding to conviction names such as Light & Wonder, Life360, Codan, and Tuas,” the pair wrote in a quarterly update to clients.

The fund’s top five holdings at the end of March were Aussie Broadband, Codan, Generation Development, Genesis Minerals and Life360.

To view full article: ASX small caps: Ophir dominates small cap rivals to win Mercer’s investment survey

Alex Gluyas is deputy markets editor based in the Melbourne newsroom. Email Alex at alex.gluyas@afr.com

Morningstar.

Andrew Mitchell of Ophir Asset Management on the key rules of investing, some of the fund’s winners and losers, and where he’s finding value now.

To view full article: Lessons from running a fund for 10 years

James Gruber is an assistant editor at Firstlinks and Morningstar.com.au