Investment Strategies

BTIM Global Equities

Earlier this year, BTIM established its new Australian based Global equities capability and launched the BT Concentrated Global Share Fund in August 2016.

Key to the investment approach is that in the short term companies’ share prices are more volatile than their underlying earnings. This can be exploited by investing in stocks not currently reflecting their intrinsic value but which we consider will revert to it. To exploit this mispricing we:

  • concentrate on identifying the highest quality businesses in an industry peer group
  • research those companies thoroughly, to identify their intrinsic value and
  • display patience and only buy these stocks when they are at a significant value discount.

The result is a portfolio which is concentrated and often contrarian in nature, which will provide a differentiated portfolio from many of our peers. We are patient investors and do not mind holding attractively valued and out of favour companies that generate strong free cash-flows, pending the broader market discovering them. Retaining discipline in entry and exit points is key in successful investing and core to our approach.

We ignore the benchmark in portfolio construction and concentrate on the roughly 20 percent of the market which is not fairly priced at one time. Where we find an opportunity, we seek a significant position, resulting in a concentrated portfolio of 35-55 stocks.

Our portfolio is well positioned for a move, however slight, towards normalisation of the interest rate environment. The market has been dominated by macro-thematic trades in recent times – most notably the compression of bond yields given low interest rates and quantitative easing. The historically low yield levels, combined with signs that central banks are reluctant to travel further down the path of negative interest rates and may be looking at expanding fiscal spending to support growth, suggests that the impact of low yields may be waning. This leaves some parts of the market vulnerable to pullback and provides opportunities in other parts as the market regains a focus on stock and company fundamentals. In short, it is an environment which is conducive to our bottom-up, stock focused approach. The portfolio’s largest positions at this time includes: financials (Lloyds Banking Group and Wells Fargo), stock exchanges (Japan Exchange Group and Deutsche Bourse), as well as Google’s holding company, Alphabet Inc in the US, and Belgian brewery group Anheuser-Busch.