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Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.

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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

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Leader in systematic equities across market cap weighted indices, smart beta and active quantitative strategies

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Australian Equities Growth

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Strategy Overview

Key Facts

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Source: First Sentier Investors 2020

Performance returns are calculated gross of management fees and net of transaction costs. Performance returns for periods greater than one year are annualised. Past performance is not a reliable indicator of future performance.

Latest First Sentier Investors Fund Distributions

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Our distinct blend of growth and quality has delivered outperformance through market cycles

Successfully uncovering Australian companies that are growing revenue and earnings strongly over time enables us to outperform during rising markets. Our added focus on quality companies that generate superior returns on capital and are improving their management of ESG risks also gives our portfolios additional ballast during falling markets.

We know what drives superior returns over the long term – rigorous stock research and understanding industry dynamics

20 years' experience

We have the resources to perform detailed and bespoke research across a large universe of stocks, undertaken by 10 investors with an average of 20 years’ investment experience.

1000+ meetings*

We meet with over 1000 CEO's, Boards, suppliers, clients, listed and unlisted competitors annually to uncover companies most likely to grow earnings and enjoy high or rising returns on invested capital.

*Over the 12 months to 30 June 2019

Deep industry analysis

We believe our research gives us a unique perspective into the key drivers of a company’s earnings and return on invested capital.

Why invest in Australian Equities Growth?

Investing in a blend of growth and quality stocks, we create portfolios designed to outperform through market cycles. Beyond investing for growth, our focus on companies with great risk management and stable earnings has provided a ballast for our portfolios in falling markets.

  • We have one of the largest, most experienced teams in Australia actively covering a broad universe of 300 Australian stocks in depth. Having a well-resourced team means we can explore ideas our competitors don't have the time to investigate.

  • We look for growing companies that generate consistent returns and can reinvest above their cost of capital to grow their business. Our high conviction investment ideas come from active investment research into industry dynamics, stock scrutiny and valuation modelling.

  • We set a disciplined target price for each investment. We trim our exposure to stocks we believe have peaked, and use those proceeds to build positions in stocks we believe have more room to grow.

  • High quality companies have quality earnings streams, and tend to manage their risks well, including environmental, social and governance risks. We actively engage with businesses on these risks as part of our commitment to responsible investment.

How we build conviction in investment ideas

A comprehensive company visitation and engagement program supports the team’s assessment of environmental, social and governance (ESG) risks. We believe ownership and engagement for improvement, rather than negative screens, will drive ongoing benefits in responsible investing across both our strategies and the broader market.

Our process is driven by our investment philosophy and supported through in-depth industry analysis and rigorous stock research.

What we look for in Australian companies

Growing companies that generate consistent returns and can reinvest above their cost of capital to provide the greatest shareholder value

Changes to company returns on invested capital has high explanatory power for stock outperformance

Analysing industry drivers is critical to understanding what drives stock performance and informed our discounted cash flow (DCF) valuation methodology

Explore our strategies

We provide exposure to growing companies - including those in emerging industries that other managers are often unable or unwilling to devote resources to exploring.

Our open-minded and investigative approach identifies companies that we believe can consistently grow sales, cash flows and earnings over time. We have the experience and dedication to analyse under-researched stocks outside the ASX 100, without taking short cuts. 

CFS Wholesale Australian Share Fund

Invests in broad range of companies aiming to generate both growing and high quality earnings. Together with a valuation discipline, this blend of growth and quality enables this strategy to generate outperformance through the cycle for investors.

CFS Wholesale Imputation Fund

Specifically targets quality growth companies paying higher franking credits to deliver enhanced after tax income. Focuses on growing companies that can reinvest earnings at high returns on capital and pay higher franked dividends, delivering strong, sustainable, franked dividend growth.

CFS Wholesale Concentrated Australian Share Fund

Invests in the highest conviction quality growth stocks that we believe will generate superior returns for our investors over time. That conviction is enhanced through our dedication to a comprehensive company visitation and engagement program, which also supports our assessment of ESG risks.

CFS Wholesale Geared Share Fund

Borrows from a broad range of quality institutions, at attractive rates of interest, to magnify an investor’s long-term returns from capital growth and franking credits. We are also mindful of the strategy’s potential to magnify market losses over the short term and manage portfolio and liquidity risks accordingly.

First Sentier Ex-20 Australian Share Fund

Diversifies away from large financials and resources stocks dominating the “top” 20; and extends down to smaller, under-researched stocks outside the ASX 100.

Separately Managed Accounts

Provides investors with a customisable share portfolio where assets are selected by our expert investment team but owned directly by the investor.

Explore how we invest in Australian shares

Case study

Why we blend growth and quality

Through our investment process, we blend the characteristics of companies with strong sales/cash flow/profit growth and earnings quality. Along with our preference for quality management running companies with lower environmental, social and governance risks, our Australian equities portfolios tend to generate outperformance through the cycle for our investors.

Our exposure to growing companies in strong industries, such as Australia’s technology sector, tend to result in attractive growth attributes that see our portfolios typically grow faster when the broader market is rising. Looking across the months that the market has risen in any three-year period since its inception in January 1994, our Australian Shares Fund has risen faster than the market in over 55% of those three-year periods (rolling monthly).

Combined with the defensive characteristics of our quality focus discussed in the prior section, the Australian Share Fund has:

•   risen 1.7%pa faster (net of fees) than the market during all the up months of the S&P/ASX 300 since January 1994: and

•   fallen more slowly than the market by a similar 1.7%pa (net of fees) during all the down months over the same period.

Our blend of growth and quality consistently generates value across market cycles

Source: Upside and downside market returns since the inception of the Wholesale Australian Share Fund in January 1994 calculated by First Sentier Investors using consistent methodology adopted by eVestment. Value added is relative to the S&P/ASX 300, which is the benchmark for the Wholesale Australian Share Fund strategy. The S&P/ASX 300 Index was launched on 3 April 2000. Index performance data before 3 April 2000 is a synthetic benchmark sourced from a variety of providers maintained in the First Sentier Investors performance database. It is provided purely for information and should not either be considered as fully replicating ASX 300 constituents, or relied on for the purpose of investment analysis outside of the context of this material.

Our risk management and strong valuation discipline also ensure that we retain a balanced exposure to growth and quality attributes over time. Our investors then continue to benefit over the longer term from this balanced approach that adds value evenly across up and down markets.

The advantage of blending growth and quality

Source: Upside and downside market returns since the inception of the Wholesale Australian Share Fund in January 1994 calculated by First Sentier Investors using consistent methodology adopted by eVestment. Value added is relative to the S&P/ASX 300, which is the benchmark for the Wholesale Australian Share Fund strategy. The S&P/ASX 300 Index was launched on 3 April 2000. Index performance data before 3 April 2000 is a synthetic benchmark sourced from a variety of providers maintained in the First Sentier Investors performance database. It is provided purely for information and should not either be considered as fully replicating ASX 300 constituents, or relied on for the purpose of investment analysis outside of the context of this material.

Questions about investing in Australian equities growth

What are stock market sectors?

The 2,000+ companies listed on the Australian Securities Exchange can be divided into categories defined by the Global Industry Classification Standard (GICS). There are 11 sectors in the first level of the GICS hierarchy, these are; Communication Services, Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Utilities and Real Estate. Each company is assigned to the GICS sector that best defines its business. 

What is an investment style?

Like the GICS sectors, companies can be categorised into different “style” buckets using a variety of metrics, such as earnings growth, price-to-earnings multiple and dividend yield.

Investors may include a style bias in their security selection process, choosing companies with particular qualities they believe will prove more attractive over time. Major investment styles include growth, value, quality, momentum and income.

What is a growth investment style?

In short, growth investors focus on capital appreciation and attempt to identify companies that will grow their earnings over time and at a faster rate than their peers or the overall economy.

Growth companies typically have a differentiated product or service that can disrupt their respective industry. These companies generally exhibit high returns on capital that is above their cost of capital. This fosters a preference to reinvest firm earnings into additional growth opportunities, rather than pay dividends to shareholders, which in turn drives share price appreciation. 

How do you identify growth companies?

We employ a fundamental, bottom-up analytical framework to assess the investment universe. To identify growth companies, we seek to determine which companies are currently earning a higher return on invested capital (ROIC) than the industry median or, if they are under-earning, have the potential to increase their ROIC.

We believe that industry dynamics are one of the major determinants of company profitability and ROIC. Through in-depth stock research and hands-on engagement, we seek to identify a company’s competitive position within their industry with respect to cost leadership, product differentiation, and qualitative analysis of company specific factors, such as management and strategy.

This industry analysis enables us to understand how a company is able to generate returns on investment capital above their industry median and if it is sustainable.

Meet the Australian equities team

Dushko Bajic

Head of Australian Equities, Growth

David Wilson

Deputy Head of Australian Equities, Growth

Christian Guerra

Head of Research

Meet Dushko

Dushko Bajic takes us for a run through the factors that help him uncover growth opportunities across Australia.

With one of Australia’s largest and most experienced investment teams, we analyse and uncover Australian companies that are growing strongly and generating superior returns on invested capital.

Want to know more?

Contact your Key Account Manager