Investment Methodology

Overall our investment methodology as a firm to achieve investment outperformance for clients is based around the following strategy:

• Buying and holding core portfolio stocks on a medium to long term investment horizon, where the investment thesis for holding a particular stock/sector looks attractive due to relevant fundamentals such as structural changes in supply/demand.

• Maintaining an allocation of the portfolio for an active investment approach in order to enhance overall portfolio returns. This strategy is based on the view that the buy and hold strategy for 100% of the portfolio is too limiting. Given the objective of buying ASX listed equities for the long term is to participate in the long term growth of Australian companies, this means investors must be willing to suffer through periods of volatility when equity markets decline. We believe a more complete approach aimed at enhancing investor returns, incorporates some active portfolio positions, which compliment the buy and hold strategy through professional portfolio management.

As a firm we enact investment decisions across our client base following thorough analysis of our research sources as a group. This centralised evaluation of investment opportunities provides a thorough filtering process and once investment decisions are made with respect to defining the firm’s preferred portfolio for clients, these are communicated to clients in line with their appropriate asset allocations as defined by their investment profiles.

Portfolios are constructed with a focus on asset allocation using a mixture of blue chip stocks, growth stocks and speculative stocks/active positions as defined below:

Blue Chip Stocks: High-quality, well-known companies with extended records of earnings and dividends, well-respected management, and prospects for continued strong performance.

Growth Stocks:  Stock of a company which is growing earnings and/or revenue faster than its industry or the overall market. Such companies usually pay little or no dividends, preferring to use the income instead to finance further expansion. These tend to trade at higher price earnings multiples.

Speculative Stocks:  These companies lack proven records of success, their earnings are uncertain and highly unstable. They are subject to high price swings and usually pay little or no dividends, but offer the potential for significantly higher than market returns.

Active Positions: These positions aim to take advantage of market volatility in order to provide higher than market returns. Key catalysts for expected short term stock movements can be company announcements, corporate actions and relative valuation alignments within sectors.

Typically the percentage weighting of these stock classes within a portfolio will change depending upon the client’s risk profile and how aggressive they wish to be in pursuing capital growth.

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This website should not be used as a substitute for professional advice.