Talaria Capital, a Melbourne-headquartered firm managing $2.85 billion in assets, employs a benchmark unaware strategy. According to Hugh Selby-Smith, co-chief investment officer, this approach allows them to maintain a risk profile distinct from the broader market. Talaria Capital combines the equity risk premium and the volatility risk premium, offering multiple levers of return and a lower-risk approach, although this may mean underperformance in strong bull markets.
Despite currency headwinds from a surging Australian dollar, the fund returned 3.93 per cent over the past 12 months to January; the hedged version returned 9.13 per cent. The fund has strategically adjusted its holdings, reducing its weighting in the healthcare sector after strong performance, including exiting its position in Johnson & Johnson based on valuation. Talaria still holds several healthcare stocks, believing current share prices undervalue future research and development.
One lesser-known stock in their portfolio is Everest Group, a major reinsurance company with a US$13 billion market cap. Reinsurers derive income from premiums and investments, with premiums being largely independent of the economic cycle. Talaria finds Exor, a holding company controlled by the Agnelli family with stakes in Ferrari, CNH, Stellantis and Philips, significantly undervalued, citing a 50 per cent discount to net asset value and a recent share buyback. Talaria Capital is a fund management firm that manages investments and oversees assets, aiming to deliver long-term value for its clients. They employ a unique investment strategy to manage risk and generate returns.
According to Selby-Smith, a fund manager’s primary role is to manage risk effectively, ensuring gains are retained and compounded for long-term returns.
