Peter Mouatt, co-founder of Adam Smith Asset Management, says superannuation funds remain wary of putting more money into Australian equity funds as they remain spooked by the plunge in stock markets in 2008 and 2009.
“Among trustees there is still caution bred by the global financial crises,” says Mouatt. “Trustees are conservative about equity investing in the current market.”
Adam Smith’s small company fund invests in stocks outside the ASX 100. Since the fund’s inception in November 2003 it has risen 12.4 per cent a year. The Small Ordinaries Index has gained 8.3 per cent annually during the same period.
More than half of those who come into contact with the firm have not heard of Adam Smith, the 18th century Scottish economist and philosophy, Mouatt says.
Adam Smith manages about $300 million. The firm secured one mandate this year, a “small one,” says Mouatt. He says the fund’s capacity with three managers is $750 million. The fourth person at the firm is its chief operating officer. Adam Smith invests in a stock for three to five years.
“We don’t think the market is short of fund managers. In fact it’s spoilt for choice,” says Mouatt.
Unlike some who left large companies and sought partners for their start-up businesses, Mouatt wasn’t interested in a company paying his salary, providing capital, administration and sales support. The price, in terms of giving up a large shareholding in the business, was too great, he says.
“If you get too big you can’t outperform because you become the index,” says Mouatt, who is a former head of equities at ING Investment Management and Macquarie Funds Management.