Funds - Australian equities

Overview Methodology Investment team

Methodology

Investment philosophy

The team believes equity markets are effective but not perfect as behavioural biases can lead to securities being mispriced.

Behavioural biases can take many forms, but are generally the result of investment sentiment characterised by over-confidence or under-appreciation of a particular investment opportunity. Market behavioural anomalies can occur as a result of investor sentiment being dominated by emotional biases, misinformation and portfolio constraints.

BAEP believes that stock prices are driven by earnings. We also believe that high quality companies deliver superior earnings and returns to shareholders. The corollary of these beliefs is that stock prices are ultimately driven by the quality and magnitude of earnings growth.

Investment style

BAEP's investment style can be described as 'core' with an aversion to earnings risk and a bias towards the following attributes:

  • strong franchises run by quality management;
  • strong and reliable earnings growth;
  • strong/improving capital return efficiencies; and
  • stocks which are under-appreciated by the market.

Investment process

The investment process follows four key stages:

  1. Investment Universe Filter - stocks must satisfy certain liquidity and earnings hurdles;
  2. Idea Generation - stocks are prioritised as buy/sell candidates;
  3. Stock Analysis - stocks are rigorously researched and rated; and
  4. Portfolio Construction & Maintenance - portfolio strategy reflects risk/reward combination appropriate for market conditions.

Australian equities investment process

(Click on the image above for a larger view.)

The investment process combines rigorous fundamental bottom-up analysis with insightful proprietary quantitative tools. In addition, BAEP invests heavily in direct company contact in order to assess the quality of management and franchises as well as enabling our team to make first-hand assessments about the quality and magnitude of earnings being generated. 

Environmental, Social and Governance (ESG) Policy

BFM is a signatory to the United Nations Principles for Responsible Investment (UNPRI) and as such, BAEP adhere to BFM's ESG Policy.

Proxy voting

If you would like to view our proxy voting summary or Proxy Voting Policy, please contact client services.