Investment Process :: Equity, Fixed Income, Overseas, Portfolio Construction
In addition to in-house research, the entire investment process is complemented with research from major brokerage houses. We also conduct regular meetings with the senior fund managers. Relative to equity selection factors, earnings growth and corporate management rank high in the decision process. Specifically, our portfolios are designed to exhibit low relative earnings volatility, low Price/Earnings multiples, positive price and earnings momentum and high Return on Equity. We monitor our portfolios regularly and routinely screen the universe for stocks that exhibit these characteristics.
Equity Focus
Accrue takes a two-pronged approach when analysing stocks. Firstly, stocks in our portfolios must meet our very high standards for fundamental attributes. When evaluating a company we look for:
- Operationally and strategically focused management whose reward is tied to the firm's prosperity.
- A competitive advantage and significant market share.
- The ability of the company to develop new products and markets.
- A secular growth trend not overly sensitive to economic activity.
- Prudent financial leverage and the ability to generate cash in order to fund future expansion.
- Reasonable stock price valuations relative to other companies in the same industry.
Secondly, we make our decisions relative to the unique needs of your portfolio. Each stock must contribute to the desired portfolio characteristics established with your investment manager. Both the stocks and your overall portfolio are then closely monitored over time.
Fixed Income Focus
The fixed income investment philosophy of Accrue is based on the primary goal of preserving capital. A conservative and disciplined investment process should result in stable superior rates of return with reduced volatility.
Overseas Focus
To achieve the desired degree of geographic diversity we utilise unit trusts and OEICs to gain exposure to overseas stockmarkets, focussing on America, Europe, Japan and the Pacific Basin.
Constructing Your Portfolio
Having established our own model for investment, the next step is to apply this model in the way that best meets your own particular requirements. This is the specific responsibility of your investment manager, based on everything you have told him. If there is any need for clarification, or it becomes apparent that it might be better to amend the guidelines you have given him, your investment manager will discuss this with you.
The benefit of this investment approach is that it places you in a position to meet your pre-determined goals from the start. Through asset allocation and security diversification, we can help reduce the risk profile of your portfolio while optimising its potential for return.