When Heath Behncke was at the Australian Institute of Sport’s water-polo program, he learned about hard work and tough decisions.
Behncke hoped to make it to the Olympics as a member of the Australian water polo team. But the Tamworth native thought he was outside the 13-man group that would be picked for the Olympics despite swimming three kilometres almost every morning, playing water polo for an hour and a half in the afternoons and lifting weights three times a week.
“I have an appreciation of hard work,” says Behncke. “Team work is what I enjoyed. Over time the best results are with a champion team.”
The Australian men’s water polo team did not qualify for the 1996 Atlanta games. Instead of water polo, Behncke ended up finishing an economics degree at the Australian National University. He began working in asset management, first at AMP, then Perennial and Credit Suisse Asset Management.
In August 2009 Behncke and five others founded Sigma Funds Management with their own money. Three years later Behncke proudly proclaims the business is profitable and from July will be able to pay a regular salary.
Sydney-based Sigma won’t disclose how much it has in assets under management after this month announcing it had won a mandate from a superannuation fund in excess of $100 million.
The firm’s confidence in its future is reflected in the hiring of Sanjay Kumar as its equities dealer for three funds. He will be rewarded, like the founders, with short-term as well as long-term incentives based on out-performance and funds under management.
“One of the key issues in this industry is turnover,” says Behncke, 39.
He does not want Sigma’s three funds to collectively manage more than $7.5 billion or 0.75 per cent of the ASX market value. Assets under management greater than that would constrain the ability of Sigma to move in and out of stocks efficiently, the firm’s founders believe.
The company’s fund that is designed to appeal to superannuation funds seeks to outperform the S&P/ASX 200 Index by 3 per cent a year over a three to five-year period. Its fund that seeks to appeal to individual investors has a goal of beating the S&P/ASX 300 Index by 5 per cent annually over a three to five-year period.
Sigma’s third fund seeks to beat the All Ordinaries Index by 5 per cent a year over three to five years.
Pinnacle Investment Management, which has a 20-per-cent stake in Sigma, is responsible for sales and support services.
Behncke likes dealing with brokers and believes paying their fees helps give Sigma access to valuable analysis. His wife is an analyst at Deutsche Bank.
Sigma’s six portfolio managers are responsible for building their own models of the companies they cover as well as critiquing each other’s work.