Antares Equities Elite Opportunities Fund Portfolio Manager, Nick Pashias talks about how the fund is positioned and opportunities for beating the market by taking concentrated positions.
Jessica Amir: Hi, Jessica Amir here for the Finance News Network, with Antares Equities, Elite Opportunities Fund portfolio manager, Nick Pashias. Hi Nick, how are you going?
Nick Pashias: Very well, thank you.
Jessica Amir: So, first off, for new investors, just give us an introduction to the fund.
Nick Pashias: The Elite Opportunities Fund is a concentrated offering, so it owns no more than thirty companies. And, within that, we have two buckets. 80 cents of every dollar goes into what we call ‘core stocks’. These are companies that we are happy to own over the long-term. The other 20 cents is invested in what we call ‘trading opportunities’. These might be short-term-oriented positions that we take, but they help the overall performance of the fund. So, that's how the portfolio comes together.
Jessica Amir: So, how has the fund performed, and where have most of the gains been made?
Nick Pashias: The portfolio's performed pretty well over the long term, and over the short term pleasingly. We've generated returns above the index, and also after our fees, so that's positive.
Over the last 12 months, a lot of the performance has come from big positioning Rio Tinto (ASX:RIO). So, that's generated a lot of performance. Also, our positioning in Qantas (ASX:QAN) has helped. Not owning companies like Telstra (ASX:TLS) has also helped the performance of the fund.
Jessica Amir: And, Nick, you've just returned from a fact-finding mission in China. What did you learn?
Nick Pashias: I just got back a few weeks ago. It was a really good trip this time, so we got to meet members of the IMF. We got to meet members of the RBA. We got to meet some of the trade delegates that are negotiating the trade deal with the US. and China, at the moment. So, a very interesting trip.
I guess a couple of things came out of it. The first thing is that some of the things that we've seen over the last few years are certainly continuing. So, China has a strong focus on improving its environment. And also, on deleveraging. And, those things came across.
But, some of the new information that we gathered was that, it seems to be an increased influence of the party, the central government into the deliberations and into the business decisions of corporates. We got that throughout the spectrum. We got that from the very small corporates that we spoke to, all the way to the big ones.
The other development was that wages seem to be increasing in China, so the gap between the highest earners and the lowest earners is reducing, because they're paying their workers more. And, those are interesting things over the long-term to watch, because they could impact inflation over the long-term. China's cost of doing business seems to be increasing, and, as investors, we need to be aware of that over the long-term.
Jessica Amir: And, lastly Nick, what's your outlook for the fund, and tell us why you think investors should be adding this fund to their portfolio?
Nick Pashias: The fund, as it's positioned today, is we're overweight, some of the cyclical companies and we've been overweight some of those for some time, which has done well for us. We're also very underweight some of the stocks that are adversely impacted by higher interest rates. So, what I mean by that is, as interest rates rise, these stocks should come under pressure, in terms of their share prices. These are companies like the real estate companies, the infrastructure companies, some of the telcos. We're very underweight that part of the market.
Conversely, we're overweight stocks that should benefit with interest rates increasing. Companies like Computershare (ASX:CPU) and QBE (ASX:QBE). In addition to that, we've got a big overweight position to consumer-facing companies. So, companies like Tabcorp (ASX:TAH) and the Star Group (ASX:SGR), which we're overweight, and Qantas, which I mentioned earlier.
So, that's how the portfolio is positioned, but I guess the reason why I think investors should invest in the fund, is because of the long-term track record of the fund, the sustainability of the team, we've been together for a long period of time, we're well resourced, we're experienced, and hopefully we'll be able to generate those types of returns that we have done so in the past, in the future.
Jessica Amir: Wonderful. Nick Pashias, thank you so much for the update.
Nick Pashias: Thank you. I appreciate the opportunity.