Hyperion hopes that you and your families are safe and healthy during this challenging period.
In early April, as a result of the COVID-19 crisis, Hyperion’s Executive Committee decided that all employees would work remotely from their homes and cease all interstate and international travel. As all Hyperion employees work via cloud environments that can be accessed securely from anywhere in the world the business has operated as normal. Hyperion also tests its Business Continuity Plan (BCP) at least annually. In addition, its reliability and consistency has been tested regularly as staff would often travel and require remote access to their work environments to perform their normal daily duties.
From a financial perspective, the firm holds significant cash reserves and is highly profitable. Our financial position has also allowed us to opportunistically hire a 13th investment team member who is expected to start mid-April. At the portfolio level, given the nature of our investment strategy, Hyperion does not have any material credit or counterparty risk within its portfolios. The liquidity and risks of the portfolios are monitored daily, with risk adjustments embedded into our portfolio construction process.
Hyperion’s investment style performs best in a low growth or slowing economic environment. Our portfolios tend to perform well in difficult and decelerating economic environments because the businesses in our portfolios tend to have strong value propositions, robust business models and growing market shares. This means the long-term underlying intrinsic value of the portfolios tends to be more stable than the overall market during economic and market downturns. In addition, through the heightened short-term market volatility associated with market corrections our disciplined portfolio construction process allows Hyperion to “top and tail” the positions within our strategies in order to enhance the long-term returns that can be achieved over the long-term. The defensive nature of our portfolios was illustrated during the Global Financial Crisis (GCF), and the subsequent post-GFC low growth economic environment. During this time, our Hyperion Australian Growth Companies Fund (HYAGCF) returned -1.28% in AUD and net of fees versus the S&P/ASX 300 Accumulation Index (XKOAI) return of -20.3% in FY09. The graph below illustrates the AUD dollar growth net of fees our investment process achieved for our HYAGCF clients relative to the XKOAI.