Meet the Sydney boutique beating Magellan's returns

A Sydney boutique started by a former Evans and Partners investor outperformed all its peers last year and it's not afraid of disclosing its stock picks.

Aoris Investment Management was set up in 2017 by Stephen Arnold and runs just one fund, which delivered 31.1% in the year to October end.

This puts its one-year performance ahead of global equities competitors Hyperion Asset Management which tops three and five-year returns, and Magellan, which holds the top spot for 10-year returns, according to the Morningstar Institutional Sector Survey.

Arnold was previously the head of international equities at Evans and Partners, where the initially created the strategy and grew it to a billion-dollar fund, which still runs. He is supported by two analysts, including former CSLA analyst Swati Reddy.

His team stays away from banks, insurers, miners, utility companies and companies subject to government regulation.

He holds a portfolio of about 15 companies, a list of which he's more than happy to hand over to his investors.

"If you are only sharing your top 10 stocks, it gets a bit weird when you are talking about number six or number seven. Sometime you will see managers, when they are talking about their best performing stocks, they will have to put 'anonymous' and they can't tell you what it was that was in the best performing stocks," Arnold said.

"We would rather disclose it. For people that say, great I can see what Aoris owns, I am going to go on CommSec and acquire the whole portfolio, it will actually cost them more than having their money with us and paying the management fees. But if they are going to do it like that, they are never going to be our customer anyway."

Most of the names in Aoris's portfolio are ones you wouldn't recognize.

There is Amphenol, the NYSE-listed manufacturer of connectors used by mobile devices, data centers, automotive and aerospace industries among others.

It also invests in CDW, an American IT reseller that works with small-to-medium-sized businesses and government organisation.

However, there are some recognisable names: there is Nike, cosmetics company L'Oreal and luxury good company LVMH.

The fund grew from $89 million to about $250 million during last year, owing both to the investment team's performance and the fundraising.

The latter is overseen by another Evans and Partners alumni, Daniel Micallef who is a co-founder and a business development manager at Aoris.

On the way, it hit profitability.

However, the boutique still has to win an institutional client. It is also just starting to get onto platforms after earning an "approved" rating from Zenith last year.

Arnold is expecting to add another analyst in the coming weeks, but says has no plans to do another global equities strategy.

Read more: Stephen ArnoldSwati Reddy
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