Platinum funds group shows it still has mojo Kerr Neilson's Platinum Asset Management has silenced critics with very strong performances in 2013 from across most of its suite of managed funds. The global shares specialist was the subject of speculation it had lost its touch after its flagship International Fund posted returns that were below the returns of the market during 2010 and 2011. The fund manager's quarterly performance report shows the International Fund, which holds almost $10 billion of investors' money, returned 47.2 per cent compared to performance of the MSCI AC World Net Index of 42.5 per cent during 2013. Since the International Fund's inception in late April 1995 it has produced an average annual return of 13.4 per cent compared to the index return of 5.7 per cent. Twenty thousand dollars invested at inception would be worth more than $200,000 now compared to less than $60,000 if the money had been invested in the index. Most of Platinum's other funds, which invest in particular regions, countries or themes, such as its Asia Fund and Japan Fund, have beaten their benchmarks by large margins since their inception. Mr Neilson said in the quarterly report that after the International Fund's returns trailed in 2010 and 2011 the fund's portfolio was tested to make sure that the stocks owned by the fund were consistent with the fund manager's investment philosophy. Mr Neilson said the testing showed not only was the portfolio in keeping with the manager's investment style but that, overall, the quality of the companies held was probably the highest the fund had ever owned. "Quality" companies include those with above-average profitability compared to industry peers and lower than average debt. Platinum is a contrarian investor that buys quality companies cheaply. Its investment style means its funds will hold stocks that differ from the make-up of the market indices against which the funds' relative performances are measured. As a consequence the funds' returns will differ from the market, sometimes for extended periods. The latest bout of underperformance was partly a result of the addition of so-called "cyclical" stocks to the fund. These are stocks whose fortunes are tied to the economic cycle. Mr Neilson said that while the stocks were bought cheaply by the fund, the stocks went on to become cheaper as most investors, amid the gloomy outlook for global economic recovery, continued to hold "defensive" stocks; those whose earnings tend to hold up better in weak economies. Mr Nelson said it was not surprising that when investors turned less fearful that they would rotate to the type of companies held in the fund. "The key was to have faith that the economic system was gradually mending, that cheap money would persist" and that inflation would remain low, he said. The International Fund has had periods of extended underperformance throughout its 20-year history. During the tech boom of the late 1990s, it avoided US tech stocks as their share prices could not be justified and the fund's returns suffered. After the "tech wreck" of 2000 the fund went on to outperform for most of the first half of the 2000s before underperforming again because the fund did not hold the "hot" stocks of the time. Sydney-based Platinum was founded by the South African-born Mr Neilson in 1994 with four of his former Bankers Trust Australia colleagues. The fund management business was partially floated on the Australian sharemarket in 2007 with Mr Neilson the majority owner, making him one of Australia's richest men.