Standard & Poor's has given the Pengana Australian Equities Core fund a ‘three stars' rating.

The fund's strategy is active long-only that uses fundamental stock selection to construct a high conviction portfolio.

The portfolio aims to generate absolute return target of 12 to 15 per cent per year in the medium term.

Rhett Kessler manages the fund and has more than 17 years experience. He previously worked as head of research at IAG Asset Management where he ran similar absolute return strategies.

He is supported by Anton du Preez, who joined Pengana in February last year after working at the Rand Merchant Bank in Australia and South Africa.

Sheela Veerappan, analyst at S&P Fund Services, said the fund is not suitable for all investors and may appeal to high net worth section of the market.

"The has a strong emphasis on capital preservation and does not aim to be fully invested at all times. We consider the fund to be in the unconstrained equity space, as it may invest up to 100 per cent in cash," said Veerappan.