A sense of irony for the greater opportunity

Yasmine Raso

Senior Journalist, Financial Newswire

10 August 2023

Dion Hershan, lead Portfolio Manager of the UBS Australian Share Fund, credits his Financial Newswire/SQM Research 2023 Star Managers recognition to the team effort in “dialling down the noise” currently infiltrating financial markets.

Also the Executive Chairman of Yarra Capital Management, whom UBS Asset Management appointed to take responsibility of the fund in 2018 to leverage the “in-location” capabilities of a local fund manager, Hershan has contributed over 20 years of global investment experience to a tight-knit team nurturing a “consistent philosophy, process and approach that has delivered strong returns to our investors over time”.

“We’re genuinely a long-term investor and we think the biggest opportunities come from discipline and patience. We recognise that the best opportunities often take time to unearth, and they certainly take time to play out in capital markets,” he told Financial Newswire.

“What we are willing to do as a team is dial down the noise associated with financial markets – the volatility and the short-termism which is so pervasive – and make considered long-term calls on behalf of our clients.

“We’re a fundamental investor and we want to analyse businesses, industries and management teams and take considered views rather than short-term views. We’re a balanced investor – we’re not growth or value and we’re just trying to find the best opportunities at any point in time. We focus on portfolio construction and risk, which is critical to what we’re trying to achieve on behalf of our clients.”

Hershan manages the fund seeking to outperform the ASX300 by investing in 30 to 70 listed Australian equities securities, utilising a large and diverse team that prioritises strong research and new insight to develop a “competitive advantage”.

Alison Telfer, Head of UBS Asset Management Australia, said the decision to outsource management for the fund to Hershan and his team at Yarra was a “serious fiduciary task” that has proven to best serve investors.

“We had to find someone we thought would serve our investors and perform well,” she told Financial Newswire.

“To sit here today and see this recognition in this award and the consistent performance since we made that decision is very validating.

“We have seen Dion and Yarra Capital Management grow enormously since 2018 when we first partnered. It’s also good that we’ve been able to preserve our relationship for our investors through that period of change for them.”

The Star Managers recognition comes during a time that Hershan and the wider team have had to persist through ongoing market volatility, during which portfolio managers “have to work harder, tilt more often, be more rigorous and vigilant, and implement organisational discipline” according to Telfer. Taking changing investor perceptions in their stride, they have come out the other end with all credits due to an almost “ironic” strategy.

“The way we think about it is with a sense of irony – the more short-term people become and the more focused they become on volatility, the greater the opportunity is for a patient investor,” he said.

“Everyone is looking five seconds ahead; but if you’re looking five years ahead, you’ll find some fantastic opportunities. The opportunities broaden as more people become short-term, but it can take longer and there can be greater periods of dislocation.”

Hershan said he feels a “great sense of responsibility” in looking after investors’ long-term savings to genuinely and positively impact their lives and their futures. But he also can admit with certainty that sometimes getting things wrong is part of being a portfolio manager, and a necessary ingredient for successful long-term fund performance.

“You are constantly learning – markets are extraordinarily dynamic and if you’re surrounded by a smart, driven group of people collectively you can achieve much greater things,” he said.

“You must be analytical, driven and disciplined. Success requires the ability to think and act differently. You own the benchmark. The market is crowded and there is a proliferation of products. You must distinguish yourself on multiple dimensions including performance.”

Celebrate the achievements of the 2023 Star Managers and broader Fund Manager of the Year awards finalists with us at our gala dinner on Thursday 14 September from 6pm at the Four Seasons Hotel, Sydney. Tickets are on sale now and you can find more information about the awards and event here.