As 30 June approaches, it’s time to hand out the report card.

And once again, the numbers reinforce something we’ve believed for many years at Under the Radar Report: investors who carefully select quality stocks and hold them patiently can outperform the market.

Not by trading every day. Not by chasing momentum. And certainly not by trying to predict next week’s headlines.

Instead, by owning 15 to 20 quality businesses bought at sensible prices and allowing time and compounding to do the heavy lifting.

Fresh Blood Is Driving Returns

Many of our strongest performers over the past two years have been stocks we commenced coverage on within the last 12 to 24 months.

These positions have returned an average of around 70%, including names such as DroneShield (ASX), but also lesser-known companies like water services group Vysarn (ASX) and gold producer Westgold (ASX). 

The key is that we’re looking for value. We are searching for today’s underperformers that can become tomorrow’s winners.

Not next week. Not next month. But over the next one, two and three years.

That’s how wealth is built.

Buy Cheap and Be Patient.

The Numbers Tell The Story

Consider the alternatives:

• A term deposit currently pays around 5.4%.
• Since 2001, the S&P/ASX 200 Index has delivered about 8% per annum.
• A simple portfolio consisting of Commonwealth Bank, BHP and Woolworths would have produced annual returns of more than 12%.

Quality businesses, combined with time, produce powerful results.

Compounding does the heavy lifting.

Our new Small Cap Dividend Portfolio #19
will be released on 2 July. 

What About Small Caps?

Our own long-term numbers continue to demonstrate the power of disciplined stock selection.

Since inception in 2011, Under the Radar’s Small Cap Portfolio has returned close to 10% per annum.

Performance has accelerated in recent years, with returns averaging around 17% annually over the past three years.

Similarly, our three recent Small Cap Dividend Portfolios have returned approximately 17% per annum since late 2023, compared with around 6% for the All Ordinaries Index.

ETFs have their place and provide excellent diversification and deserve a place in many portfolios.

But investors should recognise the trade-off. When you own everything, you inevitably own a lot of average businesses.

Your returns become increasingly dependent on market sentiment rather than the underlying strength of individual companies.

During calm markets, ETFs perform admirably. But periods of volatility often create opportunities for active investors willing to buy quality businesses when they’re temporarily out of favour.

Think Longer Than The Index

Too many investors focus on short-term performance.

But wealth creation isn’t about chasing what’s already inside the index.

It’s about buying the businesses that will be entering the index in the years ahead.

The next Austal.

The next Nick Scali.

The next market leader.

Individual investors possess a significant advantage. They can think long term, ignore quarterly noise and take advantage of Australia’s unique dividend and franking credit system.

Patient Capital Wins

Investing doesn’t have to be complicated.

Find quality companies. Buy them at attractive prices. Diversify. And give your investments time.

Patient capital remains one of the greatest competitive advantages available to individual investors.

Ready To Start?

Our analysts maintain a shortlist of our best ideas across small caps, blue chips and dividend-paying companies.

The sooner you begin, the more time compounding has to work in your favour.

Because successful investing isn’t about chasing the market. It’s about owning tomorrow’s winners today.