Mark East's big bets at Bennelong include Sukin Skincare and Spruson & Ferguson

Mark East's big bets at Bennelong include Sukin Skincare and Spruson & Ferguson

Bennelong Australian Equity Partners head stockpicker Mark East racked up a windfall of 33.9 per cent for investors in his domestic share strategy last year, smashing the broader market return of just 2.13 per cent.

Steering completely clear of resource stocks, a relatively small exposure to bank stocks, favouring the healthcare sector, and a handful of big bets on smaller companies with savvy management teams were the main drivers of Bennelong's success in 2015.

Bennelong Equity Partners chief investment officer Mark East at Currumbin Beach, Queensland.

Bennelong Equity Partners chief investment officer Mark East at Currumbin Beach, Queensland.

Photo: Chris Hyde

"We have no miners or energy stocks in the portfolio and are underweight the banking sector with relatively small positions in only two of the big four banks," the Bennelong Australian Equity Partners co-founder and chief investment officer told Fairfax Media from the Gold Coast where he was holidaying on Monday.

"Significant exposure to the healthcare sector through Ramsay Health Care, CSL, and Fisher & Paykel Healthcare were all big contributors to returns over the past year."

Mr East is the lead portfolio manager on the Bennelong Concentrated Equities fund which ranked as the top-performing long only Australian share fund in 2015, returning 33.9 per cent, according to the latest Mercer survey of major institutional fund managers released on Monday.


One of the biggest bets Mr East has taken in recent months was to buy into the initial public offer of BWX Ltd, a $294.7 million holding company that owns the Sukin Skincare brand, which is up 118 per cent since listing in November.

"BWX Ltd was an attractively priced IPO backed by a good brand and strong management in a fragmented industry meaning there may be acquisition opportunities," he said.

"So far it seems to be performing well, but we will know more in a couple of weeks when the company reports."

Bennelong is the largest shareholder with a 13.59 per cent stake.

Another stock he is keeping a close eye on is IPH Ltd, the holding company for intellectual property firm Spruson & Ferguson, which is up 322.3 per cent since Bennelong bought into the IPO in November 2014.

"IPH Ltd was a great contributor to our fund's returns in 2015 and I think the company will continue to perform well," Mr East said.

"The management team is doing a great job of implementing both the local and Asian expansion strategy, while they are also getting a nice tailwind from a lower Aussie dollar."

Net return 28.82 per cent

Mercer's quarterly investment survey includes most of the major fund managers who offer products to local institutional investors and is closely watched by industry insiders as a comparative measure of the stockpicking skills of individual fund managers and their teams.

All percentage returns quoted are based on investment performance before accounting for fees and other administrative costs.

For investors, net returns after fees, or what winds up in their pocket, are a more relevant measure.

After fees the net return for investors in the Bennelong Concentrated Australian Equity fund in 2015 was 28.82 per cent.

The $74 million fund is open to institutional and sophisticated retail investors. The minimum initial investment is $50,000.

Bennelong Concentrated Equities fund is now ranked second by Mercer over the past three and five-year periods.

Smallco Broadcap fund ranks second

Smallco Broadcap fund was the number two local long only fund for the 2015 calendar year, with a gross return of 25.4 per cent.

Macquarie High Conviction ranked third with an annual return of 24.9 per cent, followed by Selector High Conviction Equity Fund in fourth place with 21.4 per cent and Platypus Australian Equities in fifth spot, with 20.5 per cent.

Rounding out the top 10 was Hyperion Australian Growth at 18.8 per cent, Bennelong Core Equities at 15.4 per cent, Wavestone Wholesale Australian Share at 14.9 per cent, CBG Australian Equities at 14.4 per cent and Fidelity Australian Opportunities Fund at 14.2 per cent.

The Macquarie Alpha Opportunities matched Bennelong Concentrated Equities' return of 33.9 per cent to garner top spot among local long-short funds, which can also take short positions to profit when stocks go down in price.

The benchmark S&P/ASX 200 Index edged up just 2.13 per cent over the 12 month period as the local market was battered by turmoil in China, slumping commodity prices and global unease at how the world economy will cope as the United States Federal Reserves lifts interest rates. Worries that continue to mount with the local market down 8.27 per cent year-to-date and widely tipped to enter a bear market.


Mercer research manager Clare Armstrong said it was a good market for stockpickers.

"Several of the better performers had a significant investment in smaller companies which drove their returns. When names like Blackmores and Bellamy's are up 500 per cent or 700 per cent, even small positions can influence returns relative to portfolios that are more limited in their mandates," she said.

Sally Rose

Sally is a Sydney-based reporter, who covers business, personal finance and superannuation.

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