Philosophy
We are an active investment manager who seeks to add value over the medium to long term through exploiting market inefficiencies using detailed fundamental stock research.We believe that quality companies are those that reliably grow faster than the economy, and we believe these companies will outperform the market over the medium to longer term. We seek to own quality companies at sensible prices.
Performance and risk objectives
The objectives of the suite of Colonial First State Australian equity funds are to outperform our performance benchmarks. These benchmarks include outperforming:
Quality Assets
We seek to invest in quality companies. We define these as companies with a good track record and a strong balance sheet that can deliver GDP Plus earnings growth:
Track record
A strong track record is a good sign. Factors assessed include management, board, company and industry. If the conditions that gave rise to the good track record of the past are expected to hold in the future, then a good track record gives some comfort that the company will deliver.
Balance sheet
A strong balance sheet enables a company to better withstand cycles within its industry and the wider economy. This increases the reliability of its future earnings.
GDP Plus earnings growth
Real earnings per share growth for companies purchased must average at least 5% annually over a three-year projection. At least one of the following GDP Plus characteristics must be present: cost reduction; favourable demographic trends; industry recovery; increasing market share or opportunities in new markets; building a brand/franchise; and pricing power.
Sensible price
We are happy to hold quality companies at sensible prices. Our strongest investment opportunities arise when the market underestimates a company’s growth, the sustainability of that growth or the appropriate price that should be paid for that growth.
