Top performing fund manager Selector Funds Management only has a few stocks in its High Conviction Fund, so they have to count. Its latest pick is a biomedical company.
The Selector High Conviction Equity Fund produced a return of 17.3 per cent (14.7 per cent net of fees) over the 12 months to September, compared with the 12.1 per cent return of its benchmark, the All Ordinaries Accumulation Index, over the same period.
Over the past three years the fund has produced an average return of 16.9 per cent a year, compared with the index return of 11.7 per cent a year. And over the past five years the fund has returned an average of 17.5 per cent a year, compared with 9.7 per cent a year for the index.
The fund has been one of the star performers in the Mercer Investment Performance Survey for Australian Shares for some years. In the long-only category, which includes 90 managed funds, the Selector High Conviction Equity Fund is ranked one or two over all periods from one to five years in the latest survey.
The fund typically holds 15 to 30 stocks. Currently, its big holdings are Aristocrat Leisure, online lottery business Jumbo Interactive, printed circuit board designer Altium, Flight Centre, Seek, James Hardie Industries, sleep disorder care company ResMed, Infomedia, Nonosonics and Cochlear.
Some of the contributors to positive performance in the September quarter were James Hardie, Jumbo, Infomedia, Flight Centre and IOOF.
A recent addition to the portfolio is PolyNovo, a business involved in the design and synthesis of polymers for biomedical applications.
The company was formed in 2004, when the CSIRO spun off some of its developments in polymers into a new corporate entity, PolyNovo Biomaterials. In 2008 its flagship product NovoSorb was granted an Australian patent.
NovoSorb is a wound dressing designed to aid human tissue regeneration. It is approved for the treatment of chronic wounds, such as burns. But the company says it has wider applications.
It is approved for use in Australia and the US and is awaiting approval in Europe. The first product sales were in 2016.
Selector says the company began recording revenue in excess of $1 million per month in the second half of the 2018/19 financial year. IT believes it is on track to break even financial status and is in a position to expand more aggressively.
Selector says the global wound care market has an “addressable opportunity” of $1.2 billion.
It says: “PolyNovo has taken significant steps over the past five years. With its unique patented polymer technology and a growing regulatory healthcare approval rating in multiple jurisdictions, the company’s lead product is enjoying increasing adoption among surgeons operating in wound care.
“With very few alternative offerings, the business is well placed to offer a compelling, cost effective solution to a global market. The executive skillset within the company is growing, as is the manufacturing capability.
“Our site visit and subsequent meetings with both the board and management not only highlighted the opportunity available in the acute care market but the longer-term indications for the use of NovoSorb.”