July 2008: Optimal Fund Management Australia granted its Australian Financial Services Licence.
September 2008: Optimal Australia Absolute Trust launched. (Long/short Australian equities strategy).
George Colman and Peter Whiting confirm full and joint ownership of Optimal Fund Management Australia (initially formed in partnership with Optimal Fund Management Asia).
July 2016: Optimal Benchmark Independent Fund launched (long-only Australian equities strategy) following considerable market feedback and seeded by one of Australia’s largest superannuation funds.
June 2017, confirmed a strategic relationship with the Burnham Group, (a long-standing family office and private investment company), which included a minority equity interest in the firm, plus a significant investment in the long/short strategy.
July 2017. Rebranded from Optimal to ARCO Investment Management.
November 2017: Launched the ARCO Absolute Return Fund.
ARCO Investment Management has a fundamental research approach to stock selection for clients, constructing and actively managing portfolios of listed equity securities that we believe are priced at levels that do not adequately reflect their underlying value.
We are fundamentally driven investors, and believe that alpha-generation is hard work, requiring a deep insight into industry sectors and underlying companies, a willingness to assume out-of-consensus risk based on that work, and a flexible mind-set.
We view the equity market in Australia as highly efficient. As such, we believe that most high-liquidity, large-capitalisation stocks have an identifiable ‘fair value’ range, based on their comparative advantage to peers, growth rate, capital structure and allied fundamental considerations.
Our process is to combine intensive fundamental research with active consideration of non-fundamental factors, and is particularly interested in stock price variances from our calculated fair value range, whether below our fair value range for a stock or above it. We make it our business to find out why such variances are occurring, at both the fundamental (e.g. earnings, industry, or peer valuation dynamics) and market (typically liquidity or sponsorship changes) levels
Across our investment strategies, ARCO employs and strictly adheres to clear risk parameters that consider among other things, the following:
The ARCO Absolute Return Fund and Optimal Australia Absolute Trust may also use Index Futures contracts (derivatives) to hedge market risk, if ARCO consider it appropriate, to protect investors from the possibility of stock price declines.
Further, the fund’s level of net equity risk exposure (defined as long market value less short market value) is governed by its assessment of market and macroeconomic risks, and systemic shock factors. Under its Trust Deed, the fund has the capacity to have 60% of net assets invested net long or net short, if ARCO believes that market conditions warrant such a strategy. In practice, since inception, the fund has ranged from net asset exposure of between -20% to +30%, with an average of +7%.
The Benchmark Independent Fund may increase the cash weighting in the portfolio to no more than 20% of the Net Asset Value, if the Portfolio Managers consider it appropriate, to protect investors from the possibility of stock price declines.
Further details regarding the risk management approach used by ARCO to deliver on its investment objectives for investors can be reviewed in the offer documentation for ARCO’s investment strategies.