Five years is a decent yardstick for any fund, but especially for a concentrated one. The L1 Capital Catalyst Fund has just passed that milestone, returning roughly 79% against 45% for the ASX 200, and, as manager James Hawkins would be the first to admit, the journey included stretches where a ten-stock, high-tracking-error portfolio was decidedly out of favour.

That is rather the point. Catalyst is a value portfolio with a quality gate and a distinctive third filter: every holding must have an identifiable catalyst, strategic, financial, operational or governance-related, that L1 can actively help bring about. Investing alongside L1's long-short fund, the team is typically among the top three shareholders on the register, giving it a genuine voice. Mineral Resources is the obvious example: L1 advocated for board renewal and monetisation of the lithium business to repair the balance sheet, and the share price responded strongly from its lows.

There is art as well as analysis in this. Hawkins is candid that identifying a catalyst is only half the job; the other half is sizing positions according to when it is likely to be enacted. A catalyst two years away can mean treading water, so weightings are dialled up as the event approaches. Our own attribution work bears this out, performance has often come not just from being right, but from being big when it mattered.

None of this happens in a straight line. When Mineral Resources traded at $15, the phones ran hot with people asking what on earth L1 was doing. The honest answer, "we can't guarantee the future, only that we've done the work and can articulate a thesis", is precisely what patient investing sounds like in real time, and precisely what markets that arguably aren't trading on fundamentals make so uncomfortable. Today's polarised market punishes conviction in the short run even as it creates the dislocations that reward it over five years. Consider that the big four banks have delivered around 40% of the market's return since the fund's inception, of which it owned none, a persistent headwind that may yet become a tailwind.

This is where whole-of-portfolio management earns its keep. Stock pickers can only exploit dislocations if someone creates the conditions for them to do so. If every manager is judged on a twelve-month cycle, the rational response is to hug the index, to stop believing the fundamentals because the market tells them to, which is exactly backwards.

Our job as multi-asset investors is to build portfolios where a concentrated, catalyst-driven strategy has the space and the time horizon, five to seven years, to do what it does, without being rolled out at the worst possible moment.

Or, as we like to put it: avoid the bugs looking for a windscreen, and put yourself in the way of good luck. Luck, lucky and unlucky, tends to net out over five years. Patience in difficult times is what eventually compounds.