In a world where the companies that are winning are increasingly taking everything, and leaving the losers (and the average) with less and less, the importance of consistently identifying winners is central to long-term performance.
Exchange Traded Funds, commonly called ETFs, have continued to grow in popularity among Australian investors and for good reason.
In 2020, the total market capitalisation of all funds within the Exchange Traded Product market reached a record $95.2 billion as investors continue to look for new opportunities to grow and diversify their portfolios.
There are various benefits to investing in an ETF including:
- Lower costs
- Automatic portfolio diversification
- Gaining exposure to a specific sector, market, or theme
- The ability to access certain investment strategies offered by fund managers via an exchange
However, identifying and choosing the right ETF to invest into can be a daunting task – there are over 255 Exchange Traded Products listed on Australian exchanges – many of which passively track an index.
Beware the index
Hyperion Asset Management is a growth-style investment manager, and our mission is to protect and grow clients’ capital sustainability over the long term. We believe the best way to do this is to invest into a concentrated portfolio of high quality and disruptive new-world stocks.
In other words, to achieve above average returns, investors need to carefully select and invest into structural growth leaders and avoid old-world stocks which make up a significant portion of most indices and benchmarks.
We have been successfully investing in global equities since June 2014 through our Hyperion Global Growth Companies Fund (Managed Fund) which has achieved 23.5 per cent in annual returns each year after fees – much higher than the industry benchmark of 5.7 per cent.
In February 2020, Bloomberg called it the “Top 1% fund because “Hyperion Asset Management Ltd…Global Growth Companies Fund has returned 28% over the last three years and beat 99% of peers…”.
Consider, if you had invested $10,000 at inception in June 2014, your holding would be worth $40,268^^ as at the end of February 2021, almost double the value of the same investment in the index^.