Tectonic Opportunities Fund

Growth-focused absolute-return hedge fund

Fund characteristics

Name
Tectonic Opportunities Fund, an Australian unit trust

Inception Date
6th July 2020

APIR Code
BQC0787AU

Objective
Double-digit net returns over the medium to long-term

Investment allocation
 50-100% publicly listed equities; 0-50% unlisted investments

Holdings
20 - 40 investments

Distribution frequency
Annually (unless reinvested)

Applications
Quarterly

Liquidity
Annually

Management fee
0% p.a. (Tectonic does not charge management fees)

Performance fee
25% of the quarterly Unit Return subject to High-Water-Mark

Admin & Trustee
Boutique Capital Pty Ltd

Investor eligibility / Minimum investment size
Wholesale investors only / $100,000 minimum

Fund Overview

Net return on $100,000 invested at INCEPTION

Fund Return Metrics

*Fund established 6th July 2020, performance from that date.
• Performance Summary net of fees.
• Past performance is not indicative of future performance. Specific risks of the Fund may impact on the possibility of such a return _ in future.

 

Quarterly report

Access and download PDF report below.

Please note the following information has been prepared for use by Wholesale and Professional Investors only. By clicking Agree to download the fund update, fact sheet or submit an application form below, you are confirming you are an Australia Wholesale Investor as defined by section 761G of the Corporations Act 2001.

Please enter your email address and confirm that you are a Wholesale or Professional Investor:

Subscribe for insights and updates

 

Investment approach

Small cap focus

We focus on the small-cap space where the potential for mispricing is the greatest. Small-cap companies typically have greater growth potential, more opportunities for valuation-arbitrage as they grow, less analyst-coverage and better access to management.

Swim with the current, not against it

We invest around long-term themes that provide structural tailwinds/headwinds to particular sectors. In these sectors we then target fast-growing companies that have significant future growth potential ahead of them. We invest in opportunities that are already heading the right direction rather than trying to pick turning-points.

Invest for the long-term

We believe compounding the winners over the long-term will drive the Fund’s outperformance. We take a ‘business-owner mindset’ that allows us to position for the long-term rather than managing to short-term performance outcomes.

Incentives equals outcomes

We believe an appreciation of incentive structures is critical for successful investing. We look for proven, high-quality management (preferably founders) who we can engage with and who have significant ‘skin-in-the-game’. This alignment of interests is replicated at the Fund-level with Tectonic’s unique fee structure and significant team investment.

‘All-seasons’ strategy

We strive to build a portfolio that can navigate both strong and weak market conditions. Our portfolio construction parameters limit concentration and liquidity risk. Our focus on non-cyclical/lowly-geared companies and shorting strategies equip the Fund to ride out down-markets.

Combining top-down thematics with bottom-up selection

 

Portfolio construction

Tectonic Compounders

10-20 positions (40 -100% allocation)

High-quality small or mid-cap businesses with:

  • Proven track record of strong revenue growth; enough ‘white-space’ ahead of it to become a 3x over a 3-5 year period.

  • Sustainable competitive advantages; operating in a growing sector with structural tailwinds.

  • High returns on incremental invested capital; and a strong balance sheet with typically low or no debt.

  • Competent, aligned management (hopefully founders) who we respect and can engage with.

Tectonic Inflectors

10-20 positions (20-100% allocation)

Underappreciated high quality small or mid-cap businesses with: 

  • A significant transition underway (e.g. business turnaround, significant capex projects) where the value-creation will be delivered over a longer time period, typically 12-24 months.

  • Early signs that the transition and value-creation is progressing as planned, i.e. it is at an inflection-point.

  • Competent, aligned management who we respect and can engage with!

Tectonic Decliners

0-15 positions (0-50% allocation)

Short-selling medium to large-cap businesses with some or all of the following characteristics: 

  • Business model in long-term structural decline.

  • Poor market position facing competitive threats / oversupplied market.

  • Poor quality, underperforming management.

  • Declining revenue and earnings as well as a weak balance sheet position.

 
 

Our partner

Boutique Capital is the trustee and licensee of the Fund and has appointed Tectonic Investment Management as the Fund’s investment manager. Boutique Capital provides all back office, administration and distribution services.

 


Other service providers

 
 

How to invest

Available for Wholesale or Professional Investors only. The Fund is only available to investors based in Australia, New Zealand, Europe, United Kingdom and Switzerland. The Fund is not available to US-based investors.

Due to Tectonic’s ‘investor club’ philosophy potential investors are subject to additional screening by the Fund manager post application. This is to ensure alignment of the potential investor with the Fund’s strategy, risk-tolerance and time-horizon.

Accept terms to confirm your status and apply via the button below.

 

Investor Eligibility DefinitionS

Wholesale clients and sophisticated investors:
'Wholesale clients' and 'sophisticated investors' are defined in the Corporations Act 2001 (Cth) and include a person who has a certificate from a qualified accountant (obtained within the last six months), stating that such person has net assets of at least $2.5 million and/or a gross income for the past two financial years of at least $250,000 a year.

Foreign Investors:
If you reside outside of Australia & New Zealand this condition is not applicable to you.