‘Still ahead of the index’: AFIC’s Mirrabooka hit hard by market turbulence

The head of small-cap fund manager Mirrabooka Investments says the upcoming reporting season will provide a critical insight into how companies are handling the weakening economy, and defended the fund’s performance after it shed 20.9 per cent last financial year.

Mirrabooka – an arm of the Australian Foundation Investment Company (AFIC) – had previously grown 11 per cent over the first six months of the financial year, but fell to finish 7.4 per cent lower than its benchmark S&P/ASX Small and Mid Cap 50, which declined by 13.5 per cent.

AFIC managing director Mark Freeman said Mirrabooka held a long-term view and there was “no surprise” returns were lower after the sharemarket hit record highs last year, with its stocks “much closer to a fairer value”.

“We underperformed by 7 per cent, but last year we outperformed by 15 per cent. So if you net those two years, we are still comfortably ahead of the index,” Freeman said.

“Could’ve there been some things we did better in the last year? Absolutely. But in the three to five year view, which is more our timeframe, I’m very happy with our performance.”

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Over ten years, Mirrabooka maintains a higher return than the index, growing by an average of 12.7 per cent each year compared to the index’s average of 9.8 per cent growth.

Mirrabooka said price corrections in “higher-growth investments” hurt its performance in the last 12 months, with its traditional focus on industrial companies meaning it missed out on stronger resource and energy stocks.

The ASX energy sector has moved 17 per cent higher over the past year after Russia’s invasion of Ukraine and subsequent sanctions drove commodity prices upwards.