Ausbil Australian Active Equity Fund

Australian Shares Manager Review

PRODUCT

Ausbil Australian Active Equity Fund is an actively managed core portfolio of Australian companies. The investable universe generally comprises listed securities within the S&P/ASX 300 Index.

ORGANISATION

Ausbil Dexia Limited (Ausbil) is an Australian equities specialist manager with approximately $14 billion in funds under management as at June 2011. Established in April 1997, its core business is the management of Australian equities and emerging leader investment portfolios for major superannuation funds, institutional investors and master trust clients. Ausbil seeks to deliver consistent and superior returns through its style neutral process. 

Ausbil Dexia Limited is a joint venture between foundation investors, including senior members of the investment team, and Dexia Asset Management (DAM).

DAM is the asset management arm of the Dexia Group, a major A+ rated European bank. The Dexia Group has in excess of $176 billion of assets under management.

INVESTMENT PROCESS

Investment Objective

Provide a total return (before fees) which exceeds the S&P/ASX 300 Accumulation Index by 3% p.a. over rolling three year periods with moderate tax effective income.

Investment Philosophy and Style

Ausbil’s investment philosophy states that active management of a portfolio will facilitate consistent and risk-controlled outperformance. Rather than focusing only on growth or value investing, its investment process seeks to exploit pricing inefficiencies across the entire market, at all stages of the cycle and across all market conditions.

Ausbil views that stock prices ultimately follow earnings and earnings revisions. Our process seeks to identify earnings and earnings revisions at an early stage, and hence to pre-empt stock price movements. Ausbil seeks to position its portfolio towards those sectors and stocks which it believes will experience positive earnings revisions and away from those which will suffer negative revisions.

Ausbil is an active Australian-equity manager that employs a mixture of top-down and bottom-up investment processes. The manager's assessment of the macroeconomic environment provides the framework for the investment strategy.

Investment Strategy

The investment universe comprises listed securities in the S&P/ASX 300 Accumulation Index. The fund may also invest in cash and short term money market securities, bank bill securities, unit trusts, options and derivatives contracts.

The ‘top-down’ strategy will typically invest in 30 to 40 mid to large cap Australian shares with the process favouring companies with positive earnings and earnings revisions.

PERFORMANCE

* Inception – July 1997; ** S&P/ASX 300 Accumulation Index

Established in July 1997, the Ausbil Australian Active Equity Fund has outperformed its benchmark over longer periods to June 2011.

COMMENT

Key members of the Ausbil investment team exhibit strong depth and calibre. Paul Xiradis, John Grace, Adam Dixon and John Honan, each industry veterans carry considerable investment management experience, having managed money over different investment cycles. There have been no departures from the senior ranks of the team in over seven years.

The Ausbil research process has been applied consistently since the inception of the fund. The combination of top-down inputs with bottom-up stock research has been implemented effectively over various investment environments.

Ausbil has displayed an impressive track record, having outperformed its benchmark across medium and long term periods and beaten rivals consistently over the longer term. Fees are below average.

The long only Australian equity product should generally sit within the growth component of a balanced portfolio.