The team at Rask Australia recently asked Matt Joass, CFA, the Chief Investment Officer and Founder of Maven Funds Management about the launch of Maven’s Smaller Companies Fund. Matt’s pretty excited.
Why did you start Maven Funds Management?
As I prepared to leave my prior role as Portfolio Manager of Motley Fool Pro I expected to only manage investments on behalf of my family and close friends. Perhaps over time, I would advise a few private clients.
When I officially announced my departure from Pro that plan began to change. I was blown away by all the messages of support and thanks. Many of our former clients wrote in to share how much they’d developed as investors, and how their family’s financial well-being had improved. Several people emailed personally to share how their investment portfolio had allowed them to give back to their community, including some incredibly generous gifts to charity. It is a privilege to know that our investment advice contributed to that in some small way.
I was honoured and deeply humbled to receive those messages of support, which were easily the highlight of my professional investment career. Since then we’ve received hundreds more notes from folks that are excited about what we’re building and can’t wait to join on Day 1. These messages planted the seed for the Maven Smaller Companies Fund.
Will you be investing in the Maven Smaller Companies Fund at launch too?
The Maven Smaller Companies Fund is what we consider to be our ideal investment vehicle for long-term investing. We took the time to build the fund for two reasons. First, because it is important to get the right structure for our clients. But also because I knew I would be investing my family’s wealth into the fund too, and that I would plan to operate it for many years, ideally decades, to come.
It is crazy to me how few fund managers invest in their own funds. In my opinion, it causes all sorts of misalignments and creates bad incentives. Maven is different. My family and I are incredibly excited to be joining as co-investors on Day 1. We will be investing in the Maven Smaller Companies Fund at launch, right alongside our clients.
Will there be any limit on the future size of the fund?
Yes – we constantly monitor our capacity and will not hesitate to limit total assets under management in future months to safeguard the future performance of the Fund if we deem it to be in our investors’ best interests.
What qualities do you look for in potential investments?
The fund exists as a vehicle for our co-investors to grow their wealth alongside us. Our target is to identify tomorrow’s big dominant businesses and invest in them while they are still early in their growth journeys.
We have a very high bar for what enters our portfolio. The investments that we make will typically have some, and ideally many, of the following attributes:
- Competent and aligned management team (ideally Founder-led).
- Capital-light, with high returns on incremental invested capital.
- Attractive unit economics such as a low cost to acquire customers or high customer retention rates.
- First-mover and/or dominant competitor in an emerging and important industry.
- High-quality earnings.
- Demand and supply-side competitive advantages such as high switching costs, network effects, unique intangible assets.
- Strong balance sheet.
- Unknown or misunderstood by the market.
- Tipping past a fundamental inflection point.
Lastly, but most importantly for every investment, the business’s shares must be trading at an attractive price at time of purchase.
Along with investing in Australian and New Zealand listed companies we also can hold up to 10% of our capital in unlisted securities that are expected to proceed to initial public offering (IPO) within 18 months. And of course, as a fund we will have the ability to take part in discounted institutional capital raisings. We’re excited to offer our investors access to these investments that they normally miss out on.
What types of investors should not invest in the fund?
We’d encourage everybody to read the Product Disclosure Statement (PDS). Deciding to invest in the fund is a personal choice and the best people to make that decision are you and your financial advisor.
I can talk about our preferred investor, though. We believe that our greatest structural competitive advantage is our clients. We are creating a group of long-term investors to build wealth with us by aligning their portfolios with high-quality growing businesses.
Our preferred co-investor is someone that shares our long-term focus. Like us, they believe that a repeatable investment process is more important than short-term fads. Like us, they also have a meaningful stake in the fund and an ‘ownership’ mindset.
Short-term traders are always tripping over themselves trying to jump in and out of ‘hot stocks’. This is not the place for them. But, if you are like us, interested in identifying outstanding businesses early, we want you with us on this journey.
Information warning: this article is published by The Rask Group Pty Ltd and contains general financial advice only. It should not be relied upon as a substitute for personal financial advice because it does NOT take into account your needs, goals or objectives. Always consult a licensed financial adviser before acting on this information and consider the Product Disclosure Statement (PDS) of any ETF before buying or selling.