Lonsec endorsed OC Funds Management's micro-cap fund, awarding it a 'Recommended' rating on debut.
In its report, the ratings house noted the strength of OC's investment process, available capacity and alignment of interest with investors. It also acknowledged the fund's ability to take advantage of low funds under management to increase alpha potential compared to some of its larger peers.
"Lonsec regards this fund as a differentiated product in the micro-cap universe that allows investors some exposure to the higher risk/return segment of the micro-cap market in a risk-controlled manner," the report stated.
As at 31 March 2017, the fund had returned 21.9%, 15%, and 11.5% per annum over one, three and five year periods respectively.
OC's head of investments Robert Frost said the rating highlighted the team's proven process and entrenched risk-management focus.
"We are pleased the fund has received such strong endorsement on debut. Investors are seeking alpha which can be difficult to achieve among larger stocks, particularly in a low-growth environment," Frost said.
"We believe micro-cap companies offer investors exposure to some compelling investment opportunities and real long-term capital growth potential."
Chief executive of parent company Copia Investment Partners, Sam Baillieu, added: "This is obviously a pleasing result for OC and one that recognises the team's efforts as dedicated smaller companies investors."
The fund invests in Australian and New Zealand stocks with a market cap of less than $350 million at the time of purchase and is available on BT Wrap and Macquarie Wrap or via direct investment.