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We invest in a portfolio of global small and mid cap international companies.
Taking a bottom-up approach to investing we undertake deep fundamental research of both the quantitative and qualitative aspects of investee companies.
Our strategy is benchmark unaware because we believe this unconstrained approach allows maximum flexibility to pursue attractive risk-adjusted investments.
Our intention is to hold high-quality businesses that generate attractive returns on capital employed through a full market cycle, with low levels of debt, managed by highly competent and aligned executive teams.
We aim to achieve annualised returns, in excess of the MSCI World SMID Index (after all fees and expenses) measured over a market cycle, which we consider to be seven years.
Number of Stocks
30–40
Market Capitalisation
US$500m – $30bn
Style
Long-only quality
Objective
Benchmark +3% (estimated 8–12% p.a. through the cycle)
Benchmark
MSCI World SMID AUD (Net)
Responsible Entity
The Trust Company (RE Services) Limited part of the Perpetual Group
Administrator
Apex Fund Services
Auditor
Ernst & Young
Fairlight’s investment strategy is executed with an ethical mindset.
We use hard exclusion screens to eliminate harmful industries, such as tobacco, armaments, gambling, alcohol and mining.
Each of the companies we research is also scored across a range of environmental, social and governance (ESG) metrics. These generate a cost of capital charge that is an input into a company’s valuation. Companies with relatively poor ESG practices incur a larger discount rate than those that are best practice.
We practice active ownership by engaging with companies on ESG issues (including disclosure) and voting our proxy rights.
Investment Philosophy
Artificial intelligence (AI), in its more modern ’generative’ form (GenAI), is the latest example of a new technology that has the potential to fuel a new wave of competitors eager to disintermediate the current market leaders. We have thus spent significant research time to understand the potential threats and opportunities for our companies.
Investment Philosophy
The recent excitement surrounding ChatGPT and OpenAI has catapulted Artificial Intelligence (AI) into the public spotlight. Within this update, we will discuss the evolution of AI and its core concepts and will follow up next month with a broad discussion of Fairlight’s exposure to the technology.
Media
Over the past five years, the Fairlight team has focused on capturing alpha in the small and mid cap market and navigating around a number of the commonly held beliefs regarding active investing in the sector. Portfolio Managers Nick Cregan and Will Dowd use these and other specific business examples to debunk several common myths around SMID.