High quality companies that can compound for many years acquired at a significant discount to our assessment of their intrinsic value
Returns are reported net of all fees. We believe transparency and context matter as much as the numbers themselves.
Quality businesses have experienced one of their most challenging periods in recent market history. The rolling 12-month relative return for quality compounders has fallen into the bottom 1% of observations since 1995, driven primarily by capital flowing aggressively toward AI-exposed narratives and away from steady, cash-generative businesses.
This is not the first time quality has been out of favor. Microsoft fell ~50% during the dot-com bubble despite growing earnings. Visa dropped ~45% during the GFC before returning over 800% in the following decade. Intuit fell ~45% in 2022's rate shock and recovered to new highs by mid-2024. In each case, fundamentals remained intact while sentiment deteriorated.
We believe today's environment follows a similar pattern. The businesses we own continue to report growing revenues, expanding margins, and strong customer engagement. What has changed is the price the market is temporarily willing to pay for those characteristics. We are invested alongside you, and we have personally added to our holdings during this period.
Performance track record versus 8% annualised hurdle rate
Portfolio companies continue to report growing revenues, expanding margins, and strong customer retention.
Our disciplined approach to identifying monopolistic businesses with durable moats remains unchanged.
We are personally invested alongside clients and have added to our holdings during this period.
We continue to prioritize compounding capital over 5–10 years rather than quarterly performance.
Sharp de-ratings in high-quality businesses have historically created attractive long-term entry points. Each time, fundamentals remained intact while sentiment temporarily deteriorated.
| Period & Narrative | Example Business | Drawdown | Subsequent Outcome |
|---|---|---|---|
| 1999–2000: Dot-com mania | Microsoft | ~50% | Compounded >15% p.a. over following 20 years |
| 2007–2009: GFC | Visa | ~45% | Returned >800% in the decade following |
| 2015–2016: UK housing downturn | Rightmove | ~30% | Doubled within 3 years as UK housing normalised |
| 2022: Rate shock | Intuit | ~45% | Recovered fully and hit new highs by mid-2024 |
| Period | Unit Price | Quarter | Financial Year | Since Inception (Ann.) |
|---|
Past performance is not indicative of future results. Returns are net of all fees including management fees and performance fees. This information is for illustrative purposes only and does not constitute financial advice. The 5AM Capital Global Equity Fund is only available to wholesale investors.
Finalist – Best Fund Manager (Equities)
Australian Wealth Management Awards 2025
