Australian equity fund manager in a league of its own: Mercer survey

An Australian equity fund manager has run circles around its rivals over the year to March, according to Mercer's most recent investment survey.

The Forager Funds Management Australian Shares Fund returned 21.7% before fees, outperforming all 123 investment products in Mercer's Australian shares category, and crushing the S&P/ASX 200 2.8% return over the same period.

Notably, even the modest index return surpassed the median fund manager in the survey, which returned 2.5%.

Forager's Australian Shares Fund has also delivered strong results over the longer term, returning 26.5% per annum over five years - the second highest among its peer group.

By comparison, the median return over the same period was 14.5% per annum.

In its March 2025 quarterly report, Forager said around 60% of the fund's holdings were in companies with recurring and sticky revenue. Conversely, its "light on" cyclical companies, those more subject to "the vagaries of the economic environment."

The report also noted several exits in recent months, including the conclusion of the long and winding story of "problematic" software business Bigtincan, along with more successful investments in terminal owner Dalrymple Bay and trustee Equity Trustees.

New positions, meanwhile, have mostly come from the ranks of "larger, higher quality" companies, including "former market darling" Nanosonics.

Forager portfolio manager Alex Shevelev told Financial Standard that firm is pleased with the performance of its Australian Shares Fund for the year.

"The drivers of absolute return continued to be from large investments in three technology businesses: sports technology company Catapult, financial software business Bravura, and mining software provider RPMGlobal," Shevelev said.

Shevelev also said that through the first three months of this calendar year the fund has also outperformed the falling large and small cap indices.

"The volatility of the last few weeks has given us more opportunities to deploy capital, as stocks previously on our watchlist have come much closer to prices we'd be willing to pay," Shevelev added.

Following Forager, the next highest-ranked funds (pre-fees) over the year to March, were the Chester Opportunities Fund, which returned 13%, and the Acadian Australian Long Short Equity Fund, which returned 11%.

The Acadian fund also demonstrated consistency over longer periods, ranking second over three years and eighth over five within Mercer's Australian shares category.

Next in the rankings was the Pendal Horizon Sustainable Australian Shares Fund, which returned 9.4%, followed by the Chester High Conviction Fund, with a 7.6% return.

The latter fund marked Chester's second entry among the year's best performers, it also ranked in the top 10 over both three- and five-year periods.

The remaining funds at the top of the table were the Paradice Australian Equites Fund (7.4%) and the Pendal Sustainable Australian Share Fund (7.1%). They were followed by the Alphinity Concentrated Australian Shares Fund (7.1%), QVG Long Short Fund (7%), and the Ausbil Active Sustainable Equities Fund (7%).