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Top fundie Hyperion to launch new growth ETF

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The ASX is set to welcome a new exchange-traded fund (ETF). Hyperion Asset Management has made a name for itself in recent years with its top-performing managed funds.

Hyperion, which focuses on growth investing as its primary strategy, currently offers 2 managed funds, a “Global Growth Companies fund” and an “Australian Growth Companies Fund”. Both funds have delivered objectively impressive performances.

Hyperion tells us that the Global Growth Fund has returned an average of 23.49% per annum since its inception in 2014 (net of fees). The Australian Growth Companies Fund has delivered 12.75% per annum since its inception in 2002.

Perhaps it’s this success that is sparking some growth plans at Hyperion. According to reporting in the Australian Financial Review (AFR) this week, Hyperion is on the move. The report states the fundie is “readying to launch” an active ETF to “capture growing demand to invest in its top-performing global strategy”.

The Fund Manager reckons the new global growth ETF will hit the ASX boards around late March, and will reportedly have the ticker code HYGG. The AFR reports that the move is coming as Hyperion is experiencing fund inflows of “more than $100 million a month” into the unlisted Global Growth Fund.

The new listed fund will apparently charge the same management fee as its unlisted cousin – a 0.7% per annum management fee as well as a 20% performance fee if the fund exceeds its global benchmark.

Hyperion’s Deputy Chief Investment Officer, Jason Orthman, stated the following on the fee structure: “It’s pretty disruptive when a lot of our larger (peers) are (charging) well over 100 basis points and some of them are double the 70 basis points“.

Going for growth with Tesla

Hyperion attributes much of its Global Growth Fund’s outperformance to a “high-conviction bet” on Tesla Inc (NASDAQ: TSLA). Tesla is the electric car and battery manufacturer headed by the famous Elon Musk. Its share price has exploded in recent years – up more than 654% in the past year alone, and up more than 2,000% since May 2019. Hyperion reports that Tesla still makes up around 12% of its portfolio, and Hyperion isn’t selling yet.

The AFR quotes Hyperion’s Chief Investment Officer, Mark Arnold, on Tesla:

Our view is that it will be the most disruptive business that existed for a long period of time because it is attacking really large addressable markets…Tesla is actually way more innovative than Amazon. That’s bad news for the existing incumbent companies in those industries. They’ve been sort of asleep at the wheel for a long period of time.

Tesla isn’t the only high-octane growth stock that Hyperion loves right now either. According to the report, Mr Arnold is shunning the “old growth favourites” in the FAANG stocks Alphabet Inc (NASDAQ: GOOGL) and Facebook Inc (NASDAQ: FB) for more “controversial” holdings like Square Inc (NASDAQ: SQ) and PayPal Holdings Inc (NASDAQ: PYPL).

“Companies like Square and PayPal, with their electronic wallets, really have the potential to completely flip the whole banking industry on its head,” Mr Arnold told the AFR. “Our view has always been that we’re interested in only investing in the highest quality businesses we can find”.

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Sebastian Bowen owns shares of Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings, Square, and Tesla and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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