Top performing funds: The Aussie equities manager that delivered 38.45% in FY24

Turn down the noise and focus on long-term objectives.

That's one of the key pieces of advice from Datt Capital's Emanuel Datt, who delivered a stellar 38.45% in FY24, making him one of the best-performing managers in the country. 

He adds that there was persistent negative sentiment surrounding equity markets last year, despite benign economic conditions, but it didn't stop stocks from rallying. 

"Today the Australian equity indexes (XJO) sit at all-time highs, so it’s always important to act with composure and focus on long-term investment objectives," he says.

While the last 12 months have been solid for Datt, the performance is no flash in the pan. The Datt Capital Absolute Return Fund has delivered 22.45% p.a. over the last five years, and 19.03% p.a. since inception. 

In the following Rapid Fire, I quizzed Datt on his best and worst calls of FY24, his outlook for equities over the next 12 months, and what he has been recently adding to the portfolio. 

What was the biggest decision or call that you made in FY24 that drove performance?

The biggest decision that we made that helped drive and differentiate our performance was to invest aggressively in Jupiter Mines (ASX: JMS) immediately post Cyclone Megan, around 18 March. 

We noted media reports that the cyclone had materially damaged S32’s GEMCO operations in Northern Queensland and knew the importance of this asset to global manganese supply. 

Jupiter holds the majority stake in a production Tier-1 manganese mine and would immediately benefit from what we anticipated would be a material shortage of high-quality manganese ores and consequently higher prices for an extended period.

What was your best trade from the last 12 months?

Our best investment over the past 12 months has been to hold and add to our existing holdings in WA1 Resources (ASX: WA1). 

The company’s stock price in FY24 rose 330%, on the back of outstanding drilling and metallurgical results, confirming a world-class niobium deposit in the world’s best mining jurisdiction, Western Australia. 

We remain enthused by the company’s potential and expect the project to progress through the commercialisation process rapidly.

If you could do one thing differently from FY24, what would it be?

We bought a position in Clarity Pharmaceuticals (ASX: CU6) in December and took part in the recent capital raise. 

The company’s stock performed superbly in FY24, rising around 750%, but we were slightly delayed in recognising the value potential. 

Whilst we captured a large part of this performance, we are always looking to improve and in retrospect should have taken a more aggressive position earlier.

What is your outlook on Australian equities over the next 12 months?

We expect Australian equities to remain resilient over the next 12 months. 

Equities represent one of the few ways to build wealth over time without needing to borrow and remain a liquid, flexible asset class that all investors can utilise at their convenience. 

These are underappreciated aspects of the equity markets, and we expect to see a shift away from more illiquid asset classes into liquid asset classes such as equities.

What is one thing investors will need to get right to be successful over the next year?

One evergreen principle that investors should utilise is to ignore the short-term noise and fear-mongering around equity markets. 

For instance, last year there was persistent negative sentiment surrounding equity markets despite benign economic conditions. 

Today the Australian equity index (XJO) sits at an all-time high, so it’s always important to act with composure and focus on long-term investment objectives.

Which high-conviction positions do you think will keep your performance humming over the next 12 months, and are you adding anything new?

We hold high conviction in the three stocks we discussed for FY25; WA1, CU6 and JMS. The three companies hold positive exposure to a range of macroeconomic trends and individual factors that presently exist, and we expect to persist over the financial year. 

We have recently been adding energy exposures to the portfolio; and believe the sector remains attractive given producing assets are highly cash-generative and valued relatively cheaply relative to other market sectors with less favourable outlooks.

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Datt Capital Absolute Return Fund

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