Investors in the Acorn Capital NextGen Resources Fund (the Fund) receive the following:
A diversified portfolio of Resources & Energy companies:
Acorn Capital (Acorn) will construct a portfolio of companies that are exposed to growth commodities in the Resources & Energy sectors. These companies will also cover the full range of development stages (i.e., explorers to producers) and include both listed and unlisted (e.g., pre-IPO) opportunities.
Investment management by Australia’s most experienced fund manager of microcap and emerging-growth companies in the Resources & Energy sectors:
Acorn is the pioneer of microcap and emerging-growth investing, and has maintained a specialist investment team for the Resources & Energy sectors since its inception in 2002. Investors in the Fund will benefit from nearly 20 years of institutional memory and sector learnings.
Strong fee alignment and capacity management:
A performance fee will only be paid if the Fund’s returns are above both the benchmark and 0%. In addition, Acorn will hard close the Fund at $100m, thereby preserving and optimizing return potential for existing investors
Unit Price (Entry)
July 31 2022
Unit Price (Exit)
July 31 2022
AN INVESTMENT STRATEGY DESIGNED TO CAPTURE THE INVESTMENT RETURNS ASSOCIATED WITH INVESTING IN RESOURCES AND ENERGY COMPANIES
WHY INVEST IN THE RESOURCES & ENERGY SECTORS NOW?
The global shift to low-carbon economies is reshaping the demand for the commodities used in energy storage, energy generation and the production of electric vehicles. Also, as the world emerges from COVID-19 lockdowns, major stimulus programs and ballooning government debt are impacting the price of commodities such as gold and silver. At Acorn, we believe the confluence of these factors, together with China’s transition from urban growth to urban consolidation, are creating the ideal conditions for a new Resources Supercycle.
WHY THE NEXTGEN RESOURCES FUND?
The fund aims to:
- Provide a diversified portfolio of micro-, small- and mid-cap companies that are exposed to growth commodities in the Resources & Energy sectors
- Outperform the S&P/ASX Small Resources Accumulation Index (the benchmark) over rolling 3-year periods
Initial desktop reviews use Acorn’s proprietary database to screen more than 1,300 companies, which collectively hold more than 6,700 underlying resources and energy projects. These results will be used to identify an initial group of attractive investment opportunities according to commodity type and stage of development (i.e., production, development or exploration).
The qualitative assessment of companies and their projects is the next important step in the investment process. This involves understanding a range of characteristics of the deposit(s) that may affect their suitability for economic development. Part of this review includes site visits and meetings with senior technical staff to investigate details behind resource estimations, mine plans, processing designs and issues related to environmental and government licensing, where applicable. Other factors considered are sustainability, competitive advantage (inclusive of ESG factors), industry position, capital needs, management, financial metrics and valuations.
The final step involves selection of the most-attractive investment opportunities. Portfolio construction and risk management will have regard to the exposure to individual commodities and the stage of development (i.e. Lassonde Curve) of the underlying companies.
Once invested, the Fund will contain an attractive mix of assets sourced from the entire investment universe yet will be diversified by commodity type and stage of development.
- Capital growth through a diversified exposure to the Resources & Energy sectors
- An active investment approach
- A long term (5+ year) investment
*As defined by the Corporations Act
FOR FURTHER INFORMATION
KEY FUND TERMS
Type Unregistered Unit Trust.
Objectives Exceed the returns of the benchmark over rolling 3 years periods.
Benchmark S&P/ASX Small Resources Accumulation Index (XSRAI).
Investment Universe Australian Equities1,2 up to 100%, Global Equities3 0-25%, Unlisted Investments4,5 0-15%, Cash 0-20%.
Stocks # 25-40.
Investment timeframe 3-5 years.
Capacity $75m (soft)
Minimum Investment $50,000
Management fee6 1.10%
Performance fee 20% of returns in excess of the benchmark.7,8,9
Market capitalisation Minimum market capitalisation of $10m at the time of purchase.
Lifecycle stage risk guidelines Seed/startup 0-10%, Early 1st stage 10-40%, Early 2nd and 3rd stage 10-20%, Expansion and Mature 1st stage 30-70%, Mature 2nd stage 0%.
Borrowing The fund is permitted to borrow up to 5% of NAV to apply to redemptions. Borrowings may not be used to leverage or gear the fund.
Shorting The fund is permitted to borrow up to 5% of NAV to apply to redemptions. Borrowings may not be used to leverage or gear the fund.The fund is long only. The fund is not permitted to short sell securities.
Trustee Acorn Capital Limited.
APIR Code ACQ3509AU.
Platforms Hub 24, Netwealth, Ausmaq.
1. Outside the ASX100 at the time of purchase.
2. NO further purchases can be made in any company that exceeds 10% of the Fund’s net assets.
3. Global equities will only be included where gaps occur in the Australian market (e.g., quality silver
producers & explorers). Focus will be on TSX-listed stocks.
4. Positions will only be taken in Australian unlisted companies where a liquidity event (e.g., IPO or
trade sale) is likely within 6-12 months.
5. Unlisted securities may include equity and convertible notes.
6. Exclusive of expense recoveries of 15bp (excludes deal related legal fees and deal transaction costs).
7. Subject to prior High Water Mark (HWM) being exceeded (no HWM resets allowed).
8. Subject to the Fund’s return also exceeding 0%.
9. Calculated after management costs and expense recoverables have been deducted.
The rating issued 02/2022 is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings
information and to access the full report. © 2022 Lonsec. All rights reserved.
ACORN CAPITAL’S TRACK RECORD OF SUCCESS AND INVESTMENT EDGE
The Fund’s strategy will allow it to access differentiated investment opportunities as compared to the S&P/ASX Small Resources Accumulation Index.
Acorn has significant experience investing in emerging growth companies.
ABOUT ACORN CAPITAL
DIVERSE DEAL FLOW
Powerful networks, industry access, team experience and limited competition.
Acorn Capital was established in 1998 as a specialist investment manager in emerging Australian companies. Acorn Capital distinguishes itself through its relatively large research and investment team with expertise across all industries, as well as its provision of expansion capital to developing companies.
Acorn employs the largest microcap / emerging companies investment team in Australia. The team comprises 10 investment management professionals with combined industry experience of 160 years.
CORE INVESTMENT TEAM
- Rick Squire 25 yrs Experience
Rick is a Geologist with 25+ years of experience in the resources industry. He joined Acorn Capital in 2016 as Portfolio Manager for Resources & Energy. He previously held positions at Deutsche Bank, TrailStone Group, The University of Melbourne, Monash University and Acacia Resources (now AngloGold Ashanti).
- Karina Bader 19 yrs Experience
Karina is a Geologist with 19+ years of experience in the resources industry. She joined Acorn Capital in 2009 as Analyst for Resources & Energy sectors. She previously held positions with Great Central Mines & Plutonic Resources.