Menu
Close
Menu
Close
We invest in a portfolio of global small and mid cap international companies.
Taking a bottom-up approach to investing we undertake deep fundamental research of both the quantitative and qualitative aspects of investee companies.
Our strategy is benchmark unaware because we believe this unconstrained approach allows maximum flexibility to pursue attractive risk-adjusted investments.
Our intention is to hold high-quality businesses that generate attractive returns on capital employed through a full market cycle, with low levels of debt, managed by highly competent and aligned executive teams.
We aim to achieve annualised returns, in excess of the MSCI World SMID Index (after all fees and expenses) measured over a market cycle, which we consider to be seven years.
Number of Stocks
30–40
Market Capitalisation
US$500m – $40bn
Style
Long-only quality
Objective
Benchmark +3% (estimated 8–12% p.a. through the cycle)
Benchmark
MSCI World SMID AUD (Net)
Responsible Entity
The Trust Company (RE Services) Limited part of the Perpetual Group
Administrator
Apex Fund Services
Auditor
Ernst & Young
Fairlight’s investment strategy is executed with an ethical mindset.
We use hard exclusion screens to eliminate harmful industries, such as tobacco, armaments, gambling, alcohol and mining.
Each of the companies we research is also scored across a range of environmental, social and governance (ESG) metrics. These generate a cost of capital charge that is an input into a company’s valuation. Companies with relatively poor ESG practices incur a larger discount rate than those that are best practice.
We practice active ownership by engaging with companies on ESG issues (including disclosure) and voting our proxy rights.
Annual Reviews
The Fund underperformed its benchmark during 2024, delivering investors a 13% return, 7 percentage points less than the MSCI World SMID Index. Since inception in 2018 the Fund has now delivered investors a 13% p.a. return and 3% p.a. outperformance which is in line with Fairlight’s long-term objective.
Investment Philosophy
We explore the critical connection between executive compensation structures and the creation of sustainable shareholder value. The piece emphasises that effective equity-based compensation plans can align the interests of executives with those of shareholders, motivating leaders to prioritise long-term performance over short-term gains.
Stock Profiles
Often when investors think about smaller companies, they conjure thoughts of IPOs or speculative assets that may lack the operational history required to make a long term assessment of a business’s resilience. What Australian investors often miss is that a mid-cap company in the US has a market value up to US$40bn and have storied histories.