The Company's investment strategy is to create a Portfolio of investments with potential for providing superior returns to Shareholders, as assessed by the Manager using its high conviction investment approach. The Manager will focus on identifying and capitalising on opportunities which the Manager believes are undervalued and provide significant growth potential. This approach will be supported by detailed analysis using the Manager's conviction matrix.

Investment Strategy

The Company’s investment strategy is to create a Portfolio of investments with potential for providing returns to Shareholders, as assessed by the Manager using its high conviction investment approach. The Manager will focus on identifying and capitalising on opportunities which the Manager believes are undervalued and provide growth potential. This approach will be supported by detailed analysis using the Manager’s conviction matrix. 

The Manager will utilise its experienced investment team to implement this strategy  and will adopt a staged investment process in selecting appropriate investments.

The potential investment universe in which the Manager may identify investment opportunities is broad, and will not be restricted to particular sectors, geographical regions, financial products or benchmarks. Instead, investment decisions will be based on the level of conviction.

As part of its overall investment approach The Manager believes that an effective way to generate returns, remain liquid and protect downside risk is to employ a global macro investment strategy, and to identify imbalances in valuations across domestic and global markets.

Global macro investment strategies utilise fundamental information and economic theory on key inputs including economic growth, inflation, interest rates, currency movements, global imbalances and changes in commodity prices to formulate forecasts and trends for different investment markets. The Manager believes that an effective investment strategy requires a global approach because markets are interdependent with the actions of investors, central bankers, consumers and policy makers in one market having flow on effects, actions and reactions across many markets.

A global macro strategy can be a very effective strategy providing the following benefits:

  • provides a more effective means of identifying both opportunity and risk on a global basis as markets are interrelated with changes often flowing from currency and bond markets to equities and commodities;
  • allows for a fundamental view of a market to be expressed broadly through a range of futures contracts including equity market indices, fixed income, currencies and commodities;
  • allows for speed of action as investments are made in deeply liquid markets. Speed is critical in a volatile market when news is moving swiftly around the globe and sentiment can change quickly;
  • allows the investment strategy to utilise market volatility to attempt to capture greater profits by entering and exiting positions over short time frames as markets move up and down around a trend;
  • enables diversity for investor portfolios largely limited to Australian markets due to difficulty in accessing global markets;
  • seeks to benefit from market inefficiency in investment classes not readily available to Australian investors; and
  • is very scalable and liquid as themes are expressed in deeply liquid markets including equity market indices, fixed income, currencies and commodities

Please Refer to Section 4.2 of the Prospectus lodged with ASIC on the 15th of March 2017 as amended by a Replacement Prospectus dated 29 March 2017 and available through this website for further information


Investment Process

The Manager implements an investment process which is structured to provide a careful, robust and considered analysis and identification of opportunities for investments. The key elements of this process are outlined below:

INVESTMENT PROCESS

Identification of value based upon fundamental analysis

The Manager's fundamental analysis utilizes an assessment of macroeconomic trends covering key economic measures including inflation, economic growth, employment, international money flow, credit spreads and business and consumer sentiment. The fundamental analysis also uses assessment of valuation using comparisons of valuations over similar historical periods including price earnings ratios, price to book ratios, purchasing power parity, inflation adjusted commodity prices and the relationship between bond prices and inflationary expectations.

Identification of existing trends

The Manager identifies trends utilising a technical approach considering key markets to identify where clear bull and bear market trends appear. The Manager then identifies situations where a fundamental under-valuation or over-valuation may exist and where a trend may be favourable.

Identification of prevailing conditions and the actions of policy makers

The Manager considers prevailing conditions including importantly the actions of key policy makers. In recent times the primary influences over prevailing market conditions have been either or both central bank action or government actions or reforms.

Analysis of international money flow

International money flow refers to the movement of funds or capital from one country to another in what are usually short to medium term profit seeking ventures. The flow of funds is usually based upon differentials in exchange and interest rates as well as perceived levels of risk between markets. Quite often these flows can cause instability and have drastic impacts on markets and their underlying values.

Portfolio allocation

Capital will be allocated to assets where the Manager believes there is a clear imbalance between the Manager's underlying valuation of the asset and the current market price. Portfolios will generally be spread across different geographical markets as well as asset types creating diversity and a natural hedge against adverse movements in any particular investment.


Portfolio Management

Once investments are made, the Manager undertakes detailed monitoring of the Company's investments to determine whether to maintain, allocate further capital to or exit the investment. This includes consideration of the following factors:

FACTORS

Assessment of changes in market dynamics

The Company recognises that the investing landscape is changing and will continue to be very different from historical dynamics. The long credit cycle and expanding populations have been replaced with contracting credit and ageing / contractionary demographics in key markets. This has significantly changed the risk reward profile across equities, fixed income, currencies and commodities.

Consideration of key events

Markets are often driven by investor expectations leading into anticipated important events. From monetary policy changes to manufacturing, how markets are positioned before, during and after a key event can result in large moves in all asset classes. By monitoring these events and the markets positioning, investments may be impacted if the markets response differs significantly from the Managers own fundamental view.

Changes in leading indicators

Over time global markets will respond differently and place varying importance on economic releases and other fundamental and technical data. The Manager believes that changes in leading market indicators and the markets weighting of these will provide warning signs of market stress and risk appetite.

Market extremes

During market extremes where high levels of volatility are displayed, the Manager seeks to hedge risk by exiting positions or alternatively hedging core positions.

Please Refer to Section 4.4 of the Prospectus lodged with ASIC on the 15th of March 2017 as amended by a Replacement Prospectus dated 29 March 2017 and available through this website for further information