The 2016 financial year was a disaster for returns from Australian equities.
The ASX 200 index fell 4.1% in the 12 months to June 2016 and, including dividends, the total return was up a mere 0.6%.
However, the active, high-conviction share fund managers did well in the tough market of 2015-16, according to analysts at Mercer.
Today, ASX-listed investment company WAM Capital announced an 85.7% increase in operating profit before tax to $132.3 million.
The record was driven by a 21.6% increase in its investment portfolio in the year to June 30. The company reported an 81.5% rise in operating profit after tax to $98 million.
Chairman Geoff Wilson says the company’s stock selection outperformed the S&P/ASX All Ordinaries Accumulation Index by 19.6%.
WAM Capital found value in subdued market conditions through exposure to undervalued growth companies in the vehicle leasing, retail and health product sectors.
The top performing stocks were salary packaging group Smartgroup Corporation, the infant formula maker A2 Milk Company, intellectual property services company IPH Limited, biotech Mayne Pharma Group and vitamin powerhouse Blackmores Limited.
“The investment portfolio’s outperformance in the 2016 financial year demonstrates the strength of our investment process, which has provided shareholders with sound risk-adjusted returns since inception in 1999,” he says.
The investment performance of 21.6% was achieved while holding an average cash weighting of 35%.
The performance in detail:
The company is paying a fully franked final dividend of 7.25 cents a share, bringing the full year fully franked dividend to 14.5 cents.
Wilson Asset Management CEO Kate Thorley says WAM Capital delivered a total shareholder return of 24.5% for the year to 20,000 retail shareholders, the majority of which have self-managed superannuation funds.