Sydney, 31 May 2023 – Foresight Analytics Reaffirms ‘STRONG’ Investment Rating for Arrow Australian Emerging Opportunities Fund.

Foresight Analytics has completed a ratings assessment of the Arrow Australian Emerging Opportunities Fund. The Fund has been reassigned a STRONG rating and a Foresight Product Complexity Indicator of RELATIVELY SIMPLE. The Arrow Australian Emerging Opportunities Fund believes that the Australian micro-cap investment universe is under-researched due to institutional and regulatory constraints. This inefficiency creates an opportunity for skilled and experienced investors to add value through fundamental company analysis.

The investment rating of STRONG is the third highest rating on the scale used by Foresight Analytics and reflects a strong level of confidence that the Fund can deliver a risk-adjusted return in line with its investment objectives. A Foresight Complexity Indicator of RELATIVELY SIMPLE has been assigned, indicating that the Fund invests predominantly in listed assets and has an absolute return objective.

Arrow is a start-up fund management business. Investing in the Arrow Australian Emerging Opportunities Fund is an opportunity to get in on the ground floor with a proven team. That said, investors need to remember that the business is new and evolving. They will need to weigh the trade-off between the investment potential of the Fund, which we rate Strong, and Arrow’s business and governance processes, which are typical of an early-stage asset management business.

The Fund’s investment strategy is style-agnostic and aims to invest in opportunities across three investment styles: value, growth and quality. The Fund is biased towards quality and micro caps. It seeks to avoid poor companies within the microcap universe as lower levels of liquidity or infrequent trading often results in large and sudden price movements following company news or events.

As an early-stage Fund of Arrow Asset Management, the team have started the strategy as a “minimum viable product” and aim to bootstrap their way to best practice over time. The Fund is likely to outperform its absolute return benchmark over a full investment cycle.

Foresight Analytics’ analyst, Dan Grioli, says “The Fund uses a well-considered investment strategy based on deep knowledge and experience of what works/doesn’t work in the microcap investment universe.” He added, “It is implemented in a disciplined manner by a team of highly experienced investors with an enviable long-term track record of success.”

The full report can be accessed through our F360 platform at www.foresight-analoytics.com

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The full research report is available on the Foresight 360 Digital platform. The platform can be accessed via www.foresight–analytics.com.

About Foresight Analytics’ Investment Due Diligence (IDD) Rating

The objective of Foresight Analytics’ Investment Due Diligence Rating (IDD Rating) is to identify the best funds and opportunities for future investment. We assess the fund’s historical risk-adjusted performance – compared to its peers – to form a holistic view of the manager’s ability to deliver future returns. The IDD rating indicates the quality of the investment option within the context of a diversified portfolio and full investment cycle. Foresight’s analysts use a 5-point scale to determine how the fund will perform against a range of risk factors.

• SUPERIOR indicates the highest level of confidence that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is highly suitable for inclusion on APLs.
• VERY STRONG indicates a very strong conviction that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is suitable for inclusion on most APLs.
• STRONG indicates a strong likelihood that the fund can deliver a risk-adjusted return in line with its investment objectives and that it is suitable for inclusion on most APLs.
• COMPETENT indicates the fund may deliver a risk-adjusted return in line with its relevant benchmark and that it may be suitable for APLs.
• WEAK indicates the fund is unlikely to deliver a risk-adjusted return in line with its investment objective and that it is not suitable for most APLs.

A ‘Hold’ designation is applied to a fund’s rating if a material change impacts the fund manager, and we need to review the rating.  A ‘Sell’ designation indicates the Foresight Investment Ratings Committee considers risk factors to be elevated enough that maintaining an investment in the fund as part of their diversified portfolio is questionable.

Foresight Product Complexity Indicator (PCI)

A Foresight Product Complexity Indicator (PCI) highlights the complexity of an investment product based on a range of indicators. These typically include its terms and conditions, performance-based fees, liquidity structure, financial leverage, use of derivatives, rare and niche asset class/opportunity set, currency exposure and the level of transparency offered for investors. Foresight believes these factors can disproportionately affect risk-adjusted return outcomes for investors even if a manager is very skilled. Investors can use FCI as a guide to portfolio position sizing within a diversified portfolio context.

Media Contact – Foresight Analytics

Dan Grioli, Analyst

Suite 208, 33 Lexington Drive, Bella Vista, 2153, NSW

Telephone: 0435 610 293/ 02 8883 1369

Email: dan@foresight-analytics.com

Web: www.foresight-analytics.com

About Foresight Analytics 

Foresight Analytics, an independent Sydney-based firm, provides investment diligence, data analytics, and advisory solutions to leading investment management companies, superannuation funds and wealth groups across the Asia Pacific. Foresight’s innovative, evidence-based approach blends both human and forensic insights to provide a range of analytical, predictive and market intelligence solutions to investors. Foresight Analytics was founded in 2015 by Jay Kumar, a former executive of Morningstar, Optimix Investment Management, ANZ Wealth & Private Bank and the Reserve Bank of Fiji.

Foresight’s fiduciary solutions include Diligence Services (Investment, Operational, ESG & Risk Diligence), Data Analytics and Asset Consulting. Foresight’s fund strategy solutions include Data Analytics for asset managers, Fund Strategy Benchmarking Solutions and Strategic Research.

For more information on our capabilities, please visit our website at www.foresight-analytics.com and social media platforms via LinkedIn, Facebook, or Twitter. For additional analyst insights, thematic research, and market commentaries, please visit our website at www.foresight-analytics.com and streaming channels YouTube and Podcast.