Investing with Confidence
Australia provides a safe place for residents to live, a rewarding environment to work and many opportunities for financial success. In particular, the Australian share market can provide opportunities for those who want to grow their financial wealth over the medium to long term.
With over 1800 companies listed on the Australian Stock Exchange (ASX), selecting and investing in the right companies can be daunting. A fund manager has specialist knowledge to select shares that demonstrate potential to outperform the market average and deliver profitable returns. A fund manager also provides a cost-effective, convenient and diversified way to invest – ultimately giving you the ability to invest confidently.
How do you decide on a fund manager?
Decide on the right fund manager by using a sound framework to access their investment capabilities. Your framework should include analysis of the “3 P’s – pedigree, process, and people”. Strong and effective management of these three key elements leads to the “4th P – performance”. We have provided below an example of the pedigree, process, people and performance framework and the factors you should take into account in evaluating a funds management team.
Pedigree – Has the investment firm stood ‘the test of time’ in the Australian marketplace and do they have a business history and methodology that is consistent and clear? It is important to understand a fund manager’s uniqueness in the marketplace and how it goes about analysing the financial strength and quality of businesses listed on the Australian Stock Exchange. The foundation behind any financial risk management and research company should be based on guiding principles that reflect its process for selecting the most promising stocks.
Process – Fund managers use many different processes to guide their investment decisions. For example, a fund manager may take a ‘top down’ or ‘bottom up’ approach or a combination of both when assessing and selecting shares for their portfolio. A bottom up approach can mean assessing a company’s financial health, growth potential, low insolvency risk and must also be undervalued relative to the market. A qualitative analysis may also be applied to assess economic conditions, industry dynamics, management capabilities and recent announcements for their potential impact on future share price performance.
People – Fund managers offer different levels of experience and expertise and the investment team is usually led by a senior fund manager. Some members of the team actively participate in an Investment Committee decision-making process.
Performance – For any funds management team, performance is the outcome of experience, a solid foundation and excellent investment framework. For example, the Lincoln Australian Share Fund has delivered outstanding performance results with a total return of 42.37% for the year to 30 November 2007 reflecting a market position as the No 1 Large Cap Growth Fund based on Morningstar web data.
For all new Australian residents, finding a house in which to live as well as suitable and rewarding employment is important, but so too is the management of your hard earned money. Selecting the right fund manager can make the investment process less daunting and enables you to spend more time following other life pursuits. For further information on the Lincoln Australian Share Fund, please contact us on the details below.
Information supplied by:
Lincoln
Phone: 1300 676 332
Email: enquiries@lincolnindicators.com.au
Website: lincolnindicators.com.au/lisharefund
