Assurance Capital
1st July 2021 commenced joint investment made from Simon Evans and Steve Green and collaboration of investment decision making.
Performance returns are shown as the movement in the after-tax NTA value along with the dividends received. The after-tax NTA value is after tax that would be payable if all investments were immediately sold. Therefore performance may be understated somewhat compared to other managers who quote pre-tax figures.
In FY22, the first year of joint investment and collaboration between the team, the fund achieved a positive after-tax return of 11.8%. Note that the ASX200 Accumulation Index returned negative 6.5% in FY22.
In FY23, the fund made another positive after-tax return of 17.9%, again better than the ASX200 Accumulation Index.
The performance returns mentioned above were after all fees / costs. There is no specific investment management base or performance fee charged for Assurance Capital Pty Ltd shareholders.
As of June 2023, the fund size of Assurance Capital Pty Ltd in terms of total assets is almost $3 million. Note this is a separate investment vehicle from our SMSFs that we referred to elsewhere on this site. The SMSF performance figures we highlight because they have longer histories and are externally audited.
Tactical Opportunities Fund
In late 2022, we have collaborated with an AFSL holder with the aim of effectively giving new outside investors a product to be exposed to the type of ideas we would consider for our own portfolios and Assurance Capital. Such ideas are prioritised in favour of this Tactical Opportunities Fund. Subsequently a new managed investment scheme was established in October. This was mostly invested into the market in November 2022, and at the time of writing is worth almost $5 million. The management fee is a performance incentive of 20% of the return over and above a 5% p.a. hurdle rate, with a high watermark. There is no fixed management fee, so we will earn zero if this product doesn’t exceed the hurdle rate. The end investors in this fund generally come under the sophisticated investor definition in Australia and have contributed at least $100,000 into the fund.
The Tactical Opportunities Fund made a pre tax return of 1.94% for the 8 months to 30th June 2023.
This was a solid return given the XEC small cap emerging companies index fell 1.5% in a difficult period for small caps.
The fund has been invested cautiously given the backdrop of an inverted yield curve but also with a view to participating in the opportunities for high returns provided by small caps.
There is a large investment in the gold sector which has been struggling to get much attention from the market. Two stocks in particular De Grey mining (DEG) and Bellevue Gold (BGL) are well placed with very high resources in the ground which will be attractive to major players.
There has also been investments in the Coal sector which is so out of favour that stocks have been trading on PE ratios of circa 2.
MGF ASX, TGF ASX, VG1 ASX LIC WIND UP OPPORTUNITES
Other investments include ASX listed Lic’s trading at 16-25% discounts to NTA (MGF,TGF,VG1), a potential copper producer located near Adelaide (HGO) and three small companies showing good growth in sales and approaching cash flow breakeven (DEM,DRO&MSV).
Cash was 18% at financial year end.
It was pleasing to also generate a hidden asset not included in the 1.94% returns. This is in the form of franking credits equal to 2% of the fund. It is likely that this will enable payment of a fully franked dividend in late October/ early November.
Assurance Capital Pty Ltd 