The academic basis of our successful investment approach

"Our findings suggest that while the typical manager has a small number of good investment ideas that provide positive alpha in expectation, the remaining ideas in the typical managed portfolio add no alpha at all."

"While a manager gains from diversifying the portfolio, it is likely that the typical investor is worse off. We suggest that investors who put only a modest fraction of their assets into each managed fund can have substantial gains if the managers choose less diversified portfolios."

Best Ideas, March 2009
Randy Cohen
Harvard Business School

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Overview

The Mathews Capital Velocity Fund, established in July 2006, is a successful Australian based absolute return fund managed by Velocity Management Pty Limited. The Manager is jointly owned by Mathews Capital Partners Pty Limited (60% ownership) and the Fund’s Chief Investment Officer, Ben Henri (40% ownership). Philip Mathews established Mathews Capital Partners Pty Limited in March 2001.  The group is widely recognised as one of Australia’s leading absolute return managers.

The Manager of the Velocity Fund employs a long/short strategy investing primarily in Australian listed equities, commodities and derivatives. The hallmark of the Manager’s success continues to be a high conviction investment approach based on the firm’s original, focused and detailed research effort. Following a disciplined and committed investment process the Fund’s portfolio is dynamically managed with the portfolio concentrated into the Manager’s best investment ideas.

Performance

When compared to the broader equity market the Velocity Fund continues to deliver positive returns through a wide variety of economic and financial market conditions supporting the Manager’s established investment strategy and processes. For the calendar year to 31 December 2010 the Fund has produced a net return to Unit holders of 38.00% (v’s the S&P ASX 300 Accumulation Index return of 1.90%).

Since inception in July 2006, the Fund has delivered to 31 January 2012 an annualised return of 32.65% with a total return of  384.11%, net of all fees (v’s the S&P ASX 300 Accumulation Index return of 6.56%) over the same period.

Published surveys continue to rank the Velocity Fund as one of Australia’s leading absolute return funds.

Based on annualised returns since fund inception net of all fees the Triple A Partners (tripleapartners.net.au), June 2011 Hedge Fund Performance Rankings placed the Velocity Fund as one of the best performing fund across all strategies over a 5 year reporting period.

From data as at 30 April 2011 from Australian Fund Monitors (www.fundmonitors.com) showing annualised returns after fees since fund inception, the Velocity Fund ranked first out of  the 96 equity based mangers with a track record more than 2 years.

From data provided by global alternative investment database provider BarclayHedge (www.BarclayHedge.com), the Velocity Fund ranked first of the 249 long-bias equity funds surveyed for the 5 year reporting period to 30 June 2011

* Current estimates