At AlbaCore, we focus on the long-term. As one of Europe’s leading alternative credit specialists, we invest in private capital solutions, opportunistic and dislocated credit, and structured products.
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Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.
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Our philosophy is very simple. We are constantly searching for high quality businesses and when we acquire them, we will work relentlessly with them to create long-term sustainable value through innovation, ESG-led and proactive asset management.
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formerly Realindex Investments
Leader in active quantitative equities across Australian equities, global equities, emerging markets and global small companies.
Backed by a unique blend of research, portfolio construction and risk management, focused on uncovering original insights and translating them into investment strategies that are active and systematic, aiming to generate alpha.
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At Stewart Investors, we believe in putting people first. Our investment world-view is of a series of partnerships – with each other, with our clients, with the companies we invest in, the people who buy their goods and services, and with the wider society in which we all live and work.
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Beauty is in the eye of the beholder, or so the saying goes.
This saying rings true when applied to valuations in financial markets, given the role subjectivity can play in the pricing of companies.
While the quality of a company can be quantitatively assessed using a variety of measures, a composite or holistic measure of outright quality (or beauty) is not really available.
In this research series we aim to determine which proportion of stocks which are good/bad value and good/bad quality. We do this by assessing the underlying characteristics of these, comparing the return characteristics of good quality/good value stocks with those for cheap ‘junk’.
Some of our findings from the research papers include:
- There are plenty of good value stocks that are also good quality
- There are also good value stocks that are better termed “cheap for a reason”, as their quality is poor
- There is a positive relationship between quality and growth – better quality names have usually had stronger earnings growth. These stocks can still be good value as well.
- The lowest quality ‘cheap’ names have low-growth but are also higher risk and have worse market sentiment. High quality good value names tend to have somewhat more positive sentiment as well.
- Good quality value stocks tend to outperform poor quality value (cheap for a reason) stocks through our 20 year sample, although not over the last decade as we know.
- Expensive does not necessarily mean high growth – many stocks trade at high price multiples but have no historical or forecast growth.
- More importantly for us, expensive does not necessarily mean high quality – many low quality stocks can be expensive.
- However, high quality usually means higher growth – few stocks are high quality but have low growth.
- Expensive low quality stocks have greater risk, lower growth and lower sentiment than higher quality expensive stocks.
- Value outperforms growth overall, but recently, stocks which are expensive tend to outperform good value stocks. This is especially true if they are higher quality as well.
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This material is directed at persons who are 'wholesale clients' (as defined under the Corporations Act 2001 (Cth) (Corporations Act)) and has not been prepared for and is not intended for persons who are 'retail clients' (as defined under the Corporations Act). This material contains general information only. It is not intended to provide you with financial product advice and does not take into account your objectives, financial situation or needs. Before making an investment decision you should consider, with a financial advisor, whether this information is appropriate in light of your investment needs, objectives and financial situation.
Any opinions expressed in this material are the opinions of the individual author at the time of publication only and are subject to change without notice. Such opinions: (i) are not a recommendation to hold, purchase or sell a particular financial product; (ii) may not include all of the information needed to make an investment decision in relation to such a financial product; and (iii) may substantially differ from other individual authors within First Sentier Investors.
To the extent permitted by law, no liability is accepted by MUFG, Realindex nor their affiliates for any loss or damage as a result of any reliance on this material. This material contains, or is based upon, information that Realindex believes to be accurate and reliable, however neither MUFG, Realindex nor their respective affiliates offer any warranty that it contains no factual errors. No part of this material may be reproduced or transmitted in any form or by any means without the prior written consent of Realindex.
Any performance information is gross performance and does not take into account any ongoing fees. No allowance has been made for taxation. Past performance is not indicative of future performance.
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