EQUITIES

Management of client equity portfolios can often be highly individual due to historical shareholdings, investor preferences, tax, or other personal reasons. We are able to help clients manage equity portfolios with a tactical focus including the use of margin and options. We can also assist when a more passive approach is appropriate.

We manage direct equity model portfolios using both domestic and international equities and utilise external managers for specialised allocations – such small/micro-cap exposure and emerging markets. This may be through managed funds, listed investment companies (LICs) or Exchange Traded funds (ETFs).

Tailored Equity Portfolio

The KPW direct equity portfolios are tailored to the individual client risk/return profile, typically consisting of 15-20 companies. We believe our approach on focusing on quality businesses is conservative and repeatable and will deliver superior, long-term outcomes to clients.

Asset Allocation is widely accepted as the dominant driver of investors long term returns. It is critical that the underlying portfolio is populated in a manner consistent with asset allocation decision. The portfolios must also be constructed to be consistent with risk/return profile of the investor. For example, a conservative asset allocation that holds high growth, low yield companies in the equity portfolio would be counterproductive and not reflect the client profile.

Why Direct Large Cap Equities

We believe clients will be rewarded over the long term by having a core direct equity holdings as part of their portfolio construction. This is particularly relevant when considering the large cap allocation in a client’s portfolio.

This provides:

Flexibility
direct investments allow investors to buy, sell, add or trim to specific investment as needs or opportunities arise, much faster than structures and in smaller or larger units to meet liquidity requirements. It provides client control and management of their financial situation – with respect to franking credits, discounted capital gains and offsetting realised losses and gains.

Risk Management
having direct line of sight of the company you are invested in rather than an opaque structure allows the adviser and investor to assess risk quickly. In times of market volatility, a portfolio risk and return profile can be materially amended to the investment conditions.

 

Stock Selection Process

The stock selection process is driven by the desire to invest in quality businesses, in good industries, strong management, companies with robust balance sheets at attractive valuations.

Research Access

We have access to high quality research from a range of providers – domestic and international across all asset classes. This access to research allows us to have a clear understanding of market expectations and where the risks are in company earnings and strategy execution by management.

Business Quality

A high-quality business has an identifiable and understandable ‘moat’ or set of competitive advantages. These competitive strengths can include superior product or service quality; an esteemed brand and reputation; a corporate culture that attracts and retains the best people; scale; distribution strength or proprietary technology.

Valuation

Valuation method can vary depending on the company industry sector and key attributes. Typically, a starting point based on standard valuation methods such as Discounted Cash Flow (DCF) and Sum of the Parts (SOPT).

Strong Management

Management experience, trustworthiness and competence are key. Management perform critical roles as custodians of the company franchise, culture and capital. We look at the longevity and turnover of key management positions; the track record of clear and transparent communication with the market and ensuring management are driving positive corporate culture.

Momentum

An anomaly of financial markets and companies is they tend to display momentum, positively and negatively. There are several reasons for this anomaly – but a key one is that humans tend to over extrapolate the current conditions – one year believing the bad times will last forever, and next the bull market will never end!

Stock Selection Process

The stock selection process driven by the desire to invest in quality businesses, in good industries, strong management, with robust balance sheets, at attractive valuations.

Research Access

We have access to high quality research from a range of providers – domestic and international across asset classes. The access to research allows us to have a clear understanding of market expectations and where the risks are in earnings and strategy execution by management. Research that is overtly bullish or bearish will reviewed in detail to identify outlying opportunities or risks the market possibly is not valuing accurately.

Business Quality

A high-quality business has an identifiable and understandable ‘moat’ or set of competitive advantages. These competitive strengths can include superior product or service quality; an esteemed brand and reputation; a corporate culture that attracts and retains the best people; scale; distribution strength or proprietary technology.

We also look for businesses that are resilient such that they remain profitable during periods of economic stress. Businesses that lose money in economic downturns are often forced to sell assets or raise equity in order to survive.

GOT QUESTIONS?
GET IN TOUCH HERE.

Thank you for your message. It has been sent.
There was an error trying to send your message. Please try again later.

“The Bullmarket never ends, it just changes asset class”

OUR MISSION

Our DNA and culture is committed to our investment capabilities and client service.
We strive to:

  • provide superior financial asset management services so clients achieve their long-term financial goals
  • deliver independent, objective, tailored and creative investment strategies
  • build, preserve and transfer wealth whilst fostering an “investment community environment” delivering both better outcomes and access to opportunities otherwise not available

So our clients enjoy more capital growth and income with less volatility.

OUR VALUES

Respect for the Individual
Integrity
Accountability
Community
Social responsibility