Managed funds - Australian large caps

Overview Ratings Methodology Investment team

Methodology

Investment philosophy

BAEP believes equity markets are naturally imperfect. Investor sentiment can lead to mispriced investment opportunities which can be exploited by active portfolio management. While stock prices are ultimately driven by earnings performance, investor sentiment can often deviate from fundamentals.

Rather than focusing purely on ‘value' or ‘growth' attributes, BAEP believes it is far more prudent to focus on the quality of an investment opportunity to help build insights into the potential for the stock to deliver an earnings surprise.

Investment style

BAEP's investment style can be described as core ‘quality'. Our investment style favours companies that are under-appreciated and exhibit an attractive trade-off between quality, growth and value. The types of stocks we tend to invest in invariably display the following characteristics:

  • 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 overriding objective is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings surprise, while satisfying our stringent quality criteria.

BAEP's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The investment team manages an extensive company/industry contact program which helps identify and verify various investment opportunities.

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.

BAEP investment diagram

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.

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