Investment strategy

The Responsible Entity’s objective is to provide investors with capital growth, attractive risk-adjusted returns and stable distributions over the medium to long-term through exposure to quality Australian equities that are well positioned to deliver sustainable earnings growth and returns on capital.

Investment strategy

By applying their knowledge and expertise, the Investment Committee and the Portfolio Consultants have identified, and will continue to monitor for, key investment themes and structural trends that are expected to underpin revenue growth over the medium to long term.

The Portfolio Consultants and Investment Manager then conduct in-depth, bottom-up research and analysis on the identified securities, as well as frequent monitoring of existing securities. This bottom-up research may involve: industry; business quality, operational, and financial analysis; evaluation of management; and valuation.

Securities are assessed against the following key criteria:

  • Sustainable competitive advantage: Evaluation of the industry positioning of the security, its medium to long term opportunities and the sustainability of its competitive advantage. High barriers to entry, a strong track record and robust balance sheet are qualities which are favoured.
  • Attractive risk-adjusted returns; growing dividends: Assessment in detail of the security’s future earnings potential and the risks around it, both upside and down. A key focus is the returns the security is generating on its invested capital and the returns it provides to shareholders.
  • Quality board and management: A heavy emphasis is placed on the strength of the security’s management track record and the experience of the board of the directors.
  • Attractive valuation: A range of valuation methodologies will be employed to determine the relative attractiveness of a security. The aim is to identify where the market has mispriced an element of the security (i.e. earnings growth, future projects, market share gains) and then to take advantage of that opportunity with a view to the long term.

The investment process is conducted by the Investment Manager who coordinates with the Investment Committee and Portfolio Consultants to assist with investment decisions.