Ellerston Capital has received a strong endorsement from research house Lonsec, with its newly launched Ellerston Mid Cap Opportunities Fund achieving a “Recommended” rating in its inaugural review.
According to Lonsec, the rating reflects the Fund’s logical and robust investment process and a team with strong alignment of interests alongside investors. “The Fund is a natural extension of the investment team’s small cap strategy that has produced solid performance outcomes,” Lonsec noted.
The Fund is a long-only Australian equities product that primarily invests in small and mid-cap companies, with the flexibility to allocate up to 20% of the portfolio to New Zealand-listed securities. Typically holding between 25 and 40 stocks, the Fund seeks ‘quality’ businesses, those with durable competitive advantages, strong growth prospects and trading at mispriced valuations.
Lonsec highlighted that the Fund’s focus on companies with sound business franchises, attractive earnings profiles, and exposure to growth industries aligns closely with Ellerston’s broader investment philosophy. “The Fund invests in companies that have the potential to deliver significant upside over the medium term and where there is a reasonable margin of safety to mitigate downside risk,” Lonsec said.
The Manager adopts a highly active, benchmark-unaware approach, targeting an internal return objective of 2–4% per annum above the benchmark over five years, Lonsec notes.
The Ellerston Australian Equities Mid/Small/Micro Cap Team comprises six investment professionals, led by David Keelan.
Portfolio Manager Jack Briggs said the Fund offers investors exposure to a compelling and often overlooked segment of the market.
“Mid-cap companies offer attractive risk/reward characteristics,” Briggs said. “With an average portfolio market cap of around AUD$3.5 billion, investors gain access to high-quality growth opportunities that can deliver uncorrelated returns across varying market environments.
“Mid-cap securities also tend to have lower levels of broker coverage compared with their large-cap peers, creating information asymmetry that active managers can exploit through deep fundamental research. Additionally, the segment helps diversify portfolios, as the Australian large-cap market remains heavily concentrated in Financials and Materials.”
Ellerston CIO and Portfolio Manager David Keelan said the Lonsec rating is a strong endorsement of the team’s disciplined investment approach.
“We’re pleased to see Lonsec recognise the strength and consistency of our process,” Keelan said. “The mid-cap segment of the market provides an excellent hunting ground for investors, as these are typically established businesses with proven track records, yet they’re still in a phase of structural growth. Our focus is on identifying companies that combine quality fundamentals with the ability to compound returns over time, while maintaining a strong margin of safety.”
Lonsec also highlighted Ellerston’s standardised and iterative research process, which it said adds value in a part of the market where information asymmetry creates opportunities for active managers.
In addition to the new Fund’s rating, Lonsec reaffirmed “Recommended” ratings for other Ellerston strategies including:
- Ellerston Equity Income KIS Fund
- Ellerston Australian Emerging Leaders Fund
- Ellerston Australian MicroCap Fund
The Ellerston Mid Cap Opportunities Fund is now available on the Praemium platform.
The rating published on 10/2025 for (ECL6330AU/Ellerston Mid Cap Opportunities Fund) is issued by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research). Ratings are general advice only and have been prepared without taking account of investors’ objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec Research assumes no obligation to update. Lonsec Research uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. © 2025 Lonsec. All rights reserved.