With Q1 FY21 in the books, Mercer has released its quarterly performance update for the best (and worst) Australian fund managers.

In what was a strong quarter for global equity markets, Mercer said the median manager “generated higher returns than the S&P/ASX 300 Index”.

Extended out over 12 months (which includes the March 2020 COVID-19 selloff), the top quartile of investment managers beat the market index by 25 per cent.

Mercer’s head of portfolio management, Ronan McCabe, said funds with stronger allocations to tech and healthcare had outperformed the market in the post-Covid world.

“In what has been a turbulent nine months, long-term secular trends that had been expected to play out over the next number of years — such as such as e-commerce, remote working and data warehouses — have been accelerated since COVID-19,” McCabe said.

Here are the five “upper quartile” funds across all investment styles, for the 12 months ended September 30:

Fund Style Contributors to outperformance 1Y % RETURN
Bennelong Concentrated Equities Quality/Growth Consumer Discretionary, Health Care 13.4
Bennelong Core Equities Quality/Growth Consumer Discretionary, Health Care 14.3
ECP Asset Management All Cap Quality/Growth Information Technology, Consumer Discretionary 15.5
Hyperion Australian Growth Quality/Growth Health Care, Information Technology 23.3
Platypus Australian Equities Quality/Growth Health Care, Information Technology 16.7
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Mercer said the post-Covid market continued to be one defined by the outperformance of growth over value.

And a key feature of the September quarter was also the relative strength of the ASX Small Ords compared to the big end of town.

Mercer said the discrepancy reflects “positively on investor risk appetite – especially for stocks perceived to be supported by underlying growth”.

“The outperformance in mid and small cap stocks this quarter was driven by the likes of NextDC (ASX:NXT) (data centres), Pointsbet (ASX:PBH), (online bookmaker) and ARB Corporation (ASX:ARB) (truck accessories),” Mercer said.

Looking ahead, Mercer said last week’s federal budget has had a positive impact on local markets, with the Morrison government’s commitment to support jobs growth and business investment.

However, “the outcome of the upcoming US elections in November and the timing of a vaccine for COVID-19 remain sources of uncertainty”.

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