Weightings

Hi Ray,

It is a combination of the points you mentioned plus obviously the volatility (Beta) associated with individual stocks/sectors which by definition influences the risk/reward. The main considerations are:

• We are conscious of a sector or stocks index weight. For example after recently selling National Australia Bank (NAB) our Active Growth Portfolio only has a 6% banking exposure, i.e.  significantly underweight a sector which represents over 20% of the ASX. Hence we are looking for an ideal opportunity to increase this exposure but we are in no hurry at this stage.
• We don’t have a minimum weighting, but we cannot have more than 10% in any one stock at the inception of a position as a risk management mechanism.
• We run high conviction portfolios, with ~20 positions, meaning an average position will be 5%.
• We are very focused on a stocks quality and valuation but we don’t want the whole portfolio positioned towards the same underlying macro-view, i.e. we are looking for a ‘skew’ towards our core views, not an all on black methodology, targeting incremental outperformance over the medium term (3 years).