Why now could be the time to buy Forager Australian Shares Fund (ASX:FOR)

This could be a good time to buy Forager Australian Shares Fund (ASX:FOR).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Over the short-to-medium-term it's almost impossible to predict what a share price, or indeed the whole market, will do.

You will often see high performance in one year and then perhaps a year of smaller returns whilst the market gets to grips with the new valuation.

It's very hard for a fund manager to be a high performer every single year. The returns speak for themselves over a three, five or ten year period, but a single year alone can show an underperformance.

Over the past year the Forager Australian Shares Fund (ASX: FOR) performance, net of fees, has been 6.5%. However, the ASX/S&P All Ordinaries Accumulation Index has returned 13.73%.

But, over the past three years Forager's portfolio has returned 16.32% per annum net of fees compared to the index's 9.48%. Over the past five years the Forager net return has been 15.78% per annum compared to 10.28% per annum for the index.

Forager is essentially a contrarian investor. Steve Johnson and his team look at deeply unloved stocks that they believe could be turnaround stories. Some of its investments in recent times have been mining services businesses, iSelect Ltd (ASX: ISU) and Thorn Group Ltd (ASX: TGA).

Forager's ideas are not your typical ideas for investing. These picks are 'deep value' which could drop further and can go wrong, just like any fund manager's picks. However, it is clearly possible to outperform with unloved stocks, as Forager has shown.

Foolish takeaway

Not only is a Forager a proven long-term picker, but relative underperformance by 'value stocks' in one year regularly turns into outperformance the next year. Although I don't own shares, I respect the Forager way of doing things and would gladly have it in my portfolio at the current price.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

a man in a business suit points his finger amid a digitised map of the globe suspended in the air in front of him, complete with graphs, digital code and glyphs to indicate digital assets.
Investing Strategies

Future focus: How to diversify your portfolio with ASX AI ETFs

Looking for a simple and effective way to capitalise on the growth of AI technologies across global markets?

Read more »

chart showing an increasing share price
Growth Shares

Buy these excellent ASX growth shares for 15% to 20% returns

Analysts think big returns could be on the cards for owners of these shares.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Growth Shares

These ASX 200 growth shares could rise 12% to 30%

Analysts think big returns could be on offer from these shares.

Read more »

Man in an office celebrates at he crosses a finish line before his colleagues.
Growth Shares

Hoping to beat the ASX 200? I'd consider buying these 3 ASX shares

Analysts think these shares can outperform the market.

Read more »

a happy investor with a wide smile points to a graph that shows an upward trending share price
Growth Shares

5 top ASX growth shares to buy in April

Analysts think growth investors should be buying these shares.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Growth Shares

These mid-cap ASX shares could rise 20% to 50%

Goldman Sachs is tipping these stocks as buys.

Read more »

A happy boy with his dad dabs like a hero while his father checks his phone.
Growth Shares

2 ASX growth shares that could turn $1,000 into $10,000 by 2034

I think these two stocks have a shot at being 10-baggers.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Growth Shares

These top ASX 200 growth shares can rise 10% to 50%

Analysts see major upside ahead for these buy-rated shares.

Read more »