Australian Equities High Conviction Portfolio

Australian Equities High Conviction Portfolio

The Australian Equities High Conviction Portfolio is designed for investors with a long-term investment objective focused on achieving portfolio growth with less focus on generating excess income. Investors in this portfolio are prepared to accept higher volatility in return for higher growth.

Portfolio overview

  • Investment bias: Style neutral with a quality focus
  • Benchmark: S&P/ASX 200 Accumulation Index
  • Investment objective: To outperform the S&P/ASX 200 Accumulation Index by 4% p.a. over a rolling three-year period
  • Investable universe: ASX listed securities with a focus on the S&P/ASX 200
  • Number of stocks: 15–30
  • Asset allocation: Australian equities 80%–100%, Cash 0%–20%
  • Portfolio stock limit: 15% maximum weighting
  • Investment timeframe: 3–5 years
  • Portfolio managers: Jamie Nicol (Chief Investment Officer), Scott Bender (Portfolio Manager)

Portfolio ratings

Lonsec Recommended
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Investment philosophy

DNR Capital believes a focus on quality companies will enhance returns when it is combined with a thorough valuation overlay. We seek to identify quality companies that are mispriced by overlaying our quality filter, our ‘Quality Web’, with a strong valuation discipline. The portfolio is high conviction, after-tax focused and invests for the medium-to-long term.

Investment strategy

The Australian Equities High Conviction Portfolio has an investment style best described as ‘style neutral’. The stock selection process has a strong bottom-up discipline and focuses on buying quality companies at reasonable prices. We define quality companies as being those companies with the following five attributes:

  • earnings strength (particularly improving return)
  • superior industry position
  • a sound balance sheet
  • strong management
  • low environmental, social and governance (ESG) risk

Where we are satisfied that a company possesses quality characteristics, then it is eligible for inclusion in the portfolio. However, it must also represent value and sit comfortably within our portfolio construction requirements.

A range of valuation methodologies are used depending on the nature of the company being assessed to identify mispriced opportunities.

The portfolio construction process is influenced by a top-down economic appraisal and also considers the risk characteristics of the portfolio, such as stock and sector correlations.

For more information on the Australian Equities High Conviction Portfolio, please contact us on info@dnrcapital.com.au or refer to our monthly update below:

Click here to download the Australian Equities High Conviction Portfolio monthly update.

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