Investment capability
and principles

 

Investment capability

Unit trusts

Separately Managed Accounts (SMA’s)

Investment principles

Process

Our investment process combines financial maths with qualitative assessment and quantitative analysis, with a robust valuation technique at its core.

Valuations

We believe robust valuation techniques can help to forecast stock returns. We don’t invest on gut feel or shortcuts. We have developed our own robust stock valuation models that are used consistently across all our holdings. Superior valuation helps to identify undervalued stocks, which drives outperformance over the long-term. Our team of analysts forecast company financials for the next decade, and we use the outcome in our valuation process to drive our positions.

Risk

We believe you can forecast risk more accurately than return. This informs the likely risk of your fund. Our Portfolio Managers work to ensure risk levels are appropriate for clients and they communicate their target risk. We monitor risk levels of our funds against a risk target. Through the cycle, we aim to be 90 per cent of market risk in the Orca Global Fund and Orca Asia Fund.

Alpha

Alpha is an investment term that refers to outperformance adjusted for risk and is the key measure in the industry to measure manager skill. Alpha won’t reward managers that take excess risks with client money, as a higher risk position raises the benchmark. We target long-term risk below the market to recognise the risk appetite of our clients, protect the value of capital in a downturn, and because we believe a risk discipline results in optimal alpha generation. If we can match market performance at a lower volatility level, we will have generated positive alpha ― which we consider a success.

Analysts

Analysts predominantly work on bottom-up analysis of company financials and business models to provide inputs for the model. Our analysts monitor any market news relating to our holdings each day. We have fewer analysts, of a higher standard, who have a bigger impact on fund positioning. The priority is a process that is efficient, repeatable, and conceptually robust.

Managers

The Portfolio Manager monitors and adjusts the fund daily to ensure the appropriate risk controls, and exposure to investment themes, industries, and geographies.

Integrity

We maintain a client-first environment and collaborate to find innovative and meaningful ways to ultimately deliver exceptional outcomes.

Quality

Quality is a fundamental tenet of our investment philosophy. That is, we look to invest in businesses with quality leadership, operate a quality business and have a quality sustainable competitive advantage.

Innovation

Innovation is a driver of growth. As industries and economies deal with disruption that impacts how the world operates and changes the way we live, we believe that those companies that adapt and embrace innovation, will be successful in the long term.

Long-term

We take a long-term view across our portfolios as the changing markets and business models take years to play out. And our focus on the long-term fundamentals allows us to take advantage of short-term sentiment shifts.