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Disclaimer This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.
McPhail HLG Financial Planning Pty Ltd 38 Ellingworth Parade, Box Hill VIC 3128 PO Box 93, Box Hill VIC 3128 Australia t +61 3 9898 9222 f +61 3 9890 6310 email planner@mcphail.com.au www.mcphail.com.au
McPhail HLG Financial Planning Pty Ltd ABN 27 091 207 000 is a Corporate Authorised Representative and Corporate Credit Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL and Australian Credit License 240687 Level 7, 530 Collins Street Melbourne VIC 3000 Australia
Liability limited by a scheme approved under Professional Standards Legislation
companies are relatively small on a global scale, both have a market capitalisation near US$9 billion (about the same size by market cap as Orica or Transurban on the Australian Stock Exchange). The following table indicates the current top 10 holdings of the fund. These represent a total of 12.7% of the portfolio.
Top 10 Holdings as at 30 September 2012 Subsea 7 Billerudkorsnas Ingersoll-Rand Eastman Chemical Gea Group SBA Communications Triumph Group DKSH Holdings Universal Robina Corp. Owens Corning 1.5% 1.5% 1.4% 1.3% 1.3% 1.2% 1.2% 1.2% 1.2% 1.2%
Investment Philosophy
The manager seeks to build a globally diversified portfolio of quality small and mid-sized listed companies. The manager researches over 100 industry sub-sectors to assess the relative attractiveness of these sectors on a global basis. From this point, stocks within sectors considered attractive are assessed on a fundamental basis. The manager attempts to identify companies that are undervalued by the market and operate in industries with long term growth potential. The portfolio will generally hold between 125 175 stocks. This is designed to provide broad diversification within this subsector. The average capitalization of companies in the portfolio tends to be between US$1 2 billion. Since inception the fund has produced an annualised return after fees of 6.42% p.a., compared to the relevant index return of 1.44% p.a. over the same time period. The following table illustrates the performance of the fund to 31 December 2012 (after fund manager fees):
Return after 1 3 manager fees month month BlackRock Gbl Sml Caps (H) S&P/Global Mid/Small Cap ex Aust index Active return 2.5% 1.8% 1 year 3 years 5 years 1.7% 0.5% Since Inception (04/01) pa 6.4% 1.4%
While the fund has a good long term record when compared to the relevant benchmark, shorter term returns (1 3 years) have lagged the relevant benchmark. This is in large part due to the managers cautious approach during this period. While global equity markets are being driven more by liquidity than fundamentals, we would expect the manager to continue to underperform the index. This reflects the managers bias towards assessing the fundamental quality of a companys growth prospects over the longer term. We would expect this approach to provide more sustainable long term returns in a sector that is inherently sensitive to changes in economic conditions. We believe the fund blends well with other Global Equity funds by providing access to investment opportunities outside the scope of large cap managers. For further information regarding this or any other investment, please contact this office.
0.7%
1.3% -0.1%
-1.4%
1.2%
2.00%
The fund does not benchmark its geographic exposures. These arise as a derivative of the sector and stock analysis used to create the portfolio. As you would expect, the stocks held in the portfolio are unlikely to be familiar household names in Australia. Nevertheless many of the companies held have global operations belying their relative size. Moreover, a number of the companies held operate in industries you may not be familiar with i.e. Subsea 7 is a Norwegian company that provides sea-bed to surface engineering and construction services to resource companies. SBA Communications builds, owns and operates wireless communications infrastructure (towers etc) throughout the Americas. While both