Sydney-based Quest Asset Partners, which oversees approximately $920 million in Australian equities, has outperformed its benchmark since inception but recently experienced a period of lagging performance. Portfolio Manager Swapan Pandya attributes this to a tough environment for active managers focusing on quality growth, noting a market shift towards higher volatility and thematic trading, driven by the rise of passive and quant funds. Despite these changes, Quest has maintained its core investment process, evolving its risk management strategies. The firm’s two-decade track record saw a rebound in April and May, recouping much of the March quarter’s losses, with recent additions proving strong contributors.
Strategic additions include Macquarie Group, purchased in April during a sell-off over private credit concerns. Pandya praised Macquarie’s prudent capital allocation and resilient annuity-style earnings, favouring its position over major banks. Conversely, National Australia Bank was exited due to a challenged banking sector facing slowing credit growth, rising bad debts, heightened competition, and elevated valuations. Quest also holds Core Lithium, an emerging hard-rock lithium project near Darwin, anticipating profitability from strong energy storage demand.
Further opportunities were identified in the software sector, with the addition of Siteminder, an ASX-listed hotel software provider. Pandya sees Siteminder as undervalued post-sell-off and an AI beneficiary, drawing parallels to networking platform Megaport, an April addition that has since more than doubled. Quest’s investment philosophy prioritises quality; Pandya advises selling companies immediately if their quality deteriorates, emphasising loss minimisation over creating new theses or rationalising “too cheap” valuations.
