Lowell Resources Fund
One of the very few long term investment funds that offers exposure to the junior resources sector in both minerals and energy across Australia and global stock exchanges in unlisted and listed companies.
Management Fees* - 2.1645% p.a. of Gross Investments up to $50m and 1.642% p.a. of Gross Investments exceeding $50m.
Performance Fees** - 17.9375% of outperformance of the beginning NAV per unit of the Fund plus 5% over a six month period, subject to a high watermark
Lowell Resources Fund ("the Fund") is a unit trust that is focused on investing in shares and other financial products issued by resources companies listed on Australia and overseas stock exchanges.
The Fund is a specialist Managed Investment Fund that focuses its stock selection on junior resource companies that:
- have achieved significant exploration success;
- have established a potentially commercial resource base; and
- are considered to have a good probability of building on that initial success and moving into production.
Highly selective investment in the junior resource sector requires patient and informed research. In general this focus on small, emerging companies may involve higher risk and longer time frame than investing in the major resource companies, but may produce superior returns over the longer term if stock selection proves to be favourable.
The Investment Manager has engaged a group of resources industry professionals with the requisite experience and knowledge to guide the Fund in the implementation of its investment strategy.
The Fund provides an opportunity to invest in an ASX listed investment Fund which aims to provide investors with:
• Exposure to a high-quality portfolio of small capitalisation resources companies;
• Access to the investment experience and expertise of Investment Manager;
• Transparency in relation to the value of the Fund and the Portfolio.
Characteristics of the Lowell Resources Fund
The Fund’s investment objective is to maximise absolute returns to its Unitholders over the medium to longer term, along with annual distribution payments contingent on taxable profits generated over the term. Because the Fund’s primary objective is capital growth from investment in a select group of junior mining and energy companies, performance cannot readily be referenced to a widely available benchmark or market index.
However, the Fund reports performance against the ASX Resources 300 Index, the ASX 200 Index and the ASX Junior Resources Index (XSRD). The junior resources sector tends to be highly volatile, which from time to time enables the Investment Manager to sell down overpriced stocks to lock in capital gains, with distributions to be made in accordance with the Fund’s Distribution Policy.
The Investment Manager employs a top-down investment strategy, but the ultimate focus is on optimising the stock selection process to achieve maximum performance.
The macroeconomic “big picture” entails the stage and likely duration of the economic cycle as it relates to specific commodities or subsectors, as well as overall market conditions internationally. Commodity weighting is an important process, whereby bullish commodity sectors are identified and ranked, while the less promising sectors are downgraded.
The Investment Manager then considers the individual stocks within those weighted sectors, based on their fundamentals, chart patterns and pricing, and identifies entry positions and potential exit strategies for each stock. This requires a combination of economic and technical analysis, along with continued monitoring of investor sentiment.
Risk management and preservation of capital is always an important consideration. The Fund’s Portfolio will, due to the nature of the junior resources sector, be strongly biased towards the high-risk end of the spectrum, while reducing exposure to the most speculative blue-sky exploration companies. The Investment Manager has adopted a strategy of minimising downside risk through early identification and disposal of potential loss-makers, while maintaining or adding to companies which meet their milestones. The Investment Manager aims to increase cash holdings during uncertain times of impending market weakness to reduce portfolio volatility.
Depending on market conditions, the Portfolio comprises around 50-60 junior mining & energy companies that are actively exploring for, developing, and/or producing specific commodities (e.g. gold, oil, copper) that have strong fundamentals and are expected to outperform, whilst maintaining a modest exposure to a more diverse range of minerals at lower points in the commodity price cycle.
Commodity price trends are not always clear-cut, therefore sector weightings are subject to adjustment by the Investment Manager. Companies in the Fund Portfolio provide a mix of Australian and international resource projects in Africa, the Americas, Europe and Asia, but most are listed on the ASX.
The Lowell Resources Fund is a unique investment opportunity
Fund focus
- One of the very few long term investment funds that offers exposure to the junior resources sector in both minerals and energy across Australia and global stock exchanges in unlisted and listed companies
Successful track record since 2004
- Superior performance over the short, medium and long term
Experienced management
- Deep technical, financial and commercial expertise and networks with experience through multiple cycles
Unique network - not easily replicated
- Access to deal flow in public and private markets
- Proven ability to generate returns throughout the cycle
- Potential for structured investment opportunities through consultant relationships
Characteristics of the Fund
| Nature of fund: | Long only, absolute return fund |
| Investee companies: | Junior resource companies, including gold, base and specialty metals, and energy |
| Investment type: | Focus on global listed and unlisted resource equities |
| Distribution policy: | 100% of taxable profits distributed annually |
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Cremorne Capital Limited (ACN 006 844 588, AFSL No: 241175) is the responsible entity of the Lowell Resources Fund (ARSN 093 363 896) ASX:LRT. You should obtain and consider a copy of the product disclosure statement relating to the Lowell Resources Fund before acquiring the financial product. You may obtain a product disclosure statement from Cremorne Capital Limited at www.cremornecapital.com/lrf-pds/. To the extent permitted by law, Cremorne Capital Limited and Lowell Resources Funds Management (ACN 006 769 982, AFSL No: 345674), its employees, consultants, advisers, officers and authorised representatives are not liable for any loss or damage arising as a result of reliance placed on the contents of this document. Past performance is not a reliable indicator of future performance. The investment objective is not a forecast and returns are not guaranteed.
Lowell Resources Funds Management Ltd ("LRFM" or "The Manager") manages the Lowell Resources Fund ("LRF") Portfolio, where it has had a successful track record for 19 years.
The Manager operates through an Investment Committee which incorporates the experience and knowledge of individuals who have direct working experience in the minerals and energy industries, geosciences, broking, banking, and funds management.
LRF unitholders are provided with broad exposure to the junior mining and energy sectors in a Portfolio that is actively managed by the Manager in accordance with its investment philosophy and stock-selection criteria.
The fund's objective is to take profits when available and will realise investments once targets are reached or can no longer be achieved.
Mr Mitchell is Chairman of Lowell Resources Funds management Pty Ltd and a member of the Investment Committee.
He has a Bachelor of Arts from Monash University and a Masters Degree in International Economics and Foreign Policy from John Hopkins University in Washington DC.
After graduating he spent 10 years as a natural resources specialist at investment banks and advisory firms in the US and Australia. From 1999-2011 Stephen was Managing Director of Molopo Energy Ltd, an ASX-listed oil and gas company that held assets in Australia, Canada, USA, China, India and South Africa. Under his stewardship, Molopo generated a 10 fold increase shareholder value and expanded its market capitalisation from less than one million dollars into an ASX 200 company.
Stephen is currently Chairman of ASX listed Hydrocarbon Dynamics Limited, Afton Energy, the Lowell Group and is a founder of Mitchell Peterson Capital Partners, a Melbourne based corporate advisory firm.
Qualifications: BA, MA
Richard has more than 30 years' experience as a share broker in Melbourne and in London, with a particular interest in the resources space. He is a senior adviser with E.L.&C. Baillieu, part of the Ord Minnett Group. Richard is Chairman of the Melbourne Mining Club, Australia’s foremost networking organisation for the Australian resources sector.
Richard is non-executive director of Queensland-focused critical minerals group, EQ Resources (ASX:EQR). He is a Fellow of the AusIMM and an honorary member of the AusIMM investment advisory committee.
Mr. Stuart Baker joined the IC in July 2018. He brings a wide experience in valuation and analysis of energy companies.
He has a strong local and international reputation for oil and gas E&P company coverage as a senior investment analyst, including 14 years with Morgan Stanley.
In a career spanning more than 30 years, Mr Baker has also worked in senior research roles with BT Equities and Macquarie Equities.
He crossed over to researching listed companies after gaining industry experience with international oilfield services group, Schlumberger.
Qualifications: BE(Elec), MBA
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Cremorne Capital Limited (Australian Financial Services Licence No. 241175) is the responsible entity of Lowell Resources Fund (LRT). A responsible entity effectively holds the role of trustee and manager of a registered managed investment scheme such as the Lowell Resources Fund. The responsible entity is responsible for the compliance and management of LRT but is able to outsource various functions to other parties under its monitoring and supervision. Cremorne Capital has contracted the investment management of LRT to Lowell Resources Funds Management Ltd, custody to Equity Trustees Limited and registry services to Automic Pty Ltd.
LRT is a trust and not a company. A trust is controlled by a trustee that may take various forms (including individuals and corporates). Therefore, as a trust, LRT is controlled by a corporate trustee board (being the responsible entity).
LRT is a registered managed investment scheme. Therefore, in accordance with the Corporations Act, the trust must be registered with ASIC and be subject to additional compliance requirements such as:
- Preparation of a Compliance Plan outlining adequate measures that the responsible entity will apply when operating the registered scheme to ensure compliance with the Corporations Act and the scheme’s constitution;
- Annual audit of the Compliance Plan
- A Constitution (as distinct from a trust deed) that contains additional compliance requirements as prescribed in Chapter 5C of the Corporations Act;
- Preparation of a product disclosure statement that contains information about a financial product including any significant benefits and risks, the cost of the financial product, and the fees and charges that the financial product issuer may receive.
- A compliance committee, where more than half of the members of the committee must be considered “external members”.
- The responsible entity of the scheme must be a public company.
Whilst borrowing and gearing is permissible for LRT, as at 30 June 2022 no borrowing is undertaken for the trust. That said, should such a strategy be considered by the Investment Manager and Responsible Entity to be beneficial to unitholders of LRT, such a strategy may be implemented.
The Responsible Entity for LRT (Cremorne Capital Limited) is not permitted to be invested in derivatives as its Australian Financial Services Licence does not authorise this type of investment. Whilst not all hedges involve derivatives, LRT does not currently (nor intend to) undertake hedging transactions.
A share or stock is part of an individual company. Unit (Trusts) are a collection of different (and usually related) shares.
For example, if you are investing in LRT, this is known as a Unit Trust (despite it trading on the ASX). Within LRT, your investment is made up of different company shares.
Another key difference is that a trust must distribute all of its assessable income (or be taxed at the top marginal tax rate) to its members as a distribution of assessable income (this income retains the same nature as that received by the trust and is included in the recipients’ own assessable income in the same manner), whereas a company has the discretion to distribute any amount of its profit as a dividend to its members (and the company is responsible for initially meeting the tax liability on profits distributed).
LRT must distribute as income to its unitholders the total assessable taxable income of the trust for each year ending 30 June. This differs from “profit”, because assessable taxable income includes only “realised” income and expenses of the trust. For LRT, its realised income is predominantly gained from profits on the disposal of the shares held by the trust (less any losses generated on disposals). LRT may hold significant assets which have yet to be disposed of and the movement of value in those holdings are considered “unrealised” income or losses to the trust. These unrealised amounts will vary the overall profit of the trust but are not included in taxable assessable income.
The Fund is, and aims to be, largely invested in ASX or Toronto Stock Exchange listed companies, which are subject to leading regulations in the areas of Environmental, Social and Governance (“ESG”) and Anti-Bribery & Corruption (“ABC”). In addition, the Fund is, and aims to be, dominantly invested in lower-risk jurisdictions such as Australia, Canada and USA. When considering investing in unlisted companies or companies doing business in developing countries, the Investment Manager will always first consider ESG, ABC, modern slavery and child labour issues and strive to ensure that it selects only investee companies which hold themselves to high ethical standards.
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The issuer of this product is identified at the top of this page. The PDS and target market determination for the product are available in the Documents section of this listing. Prospective investors should consider the PDS before deciding to acquire the product. This product listing was vetted by and approved by the product issuer identified above before publishing. Investment Markets (Aust) Pty Ltd AFSL 527875 (IM) is not the issuer of the product.
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