Our quarterly managed funds report outlines the pathway best-suited to deliver on our current asset allocation strategy and the basis on which our chosen funds are vetted. As well as revisiting the global uncertainties and opportunities that shaped our asset allocation strategy, we report on the performance of the funds we see as best placed to implement our tactical asset allocation position.  We also profile some of our preferred funds across Australian equities, global hedge funds and non-traditional fixed interest.

Following the release of our Fourth Quarter Asset Allocation Strategy, in our Behind the Strategy video series Wilsons Head of Investment Strategy, David Cassidy and Wilsons Investment Advisor, Alexandra Kalceff discuss:

The Wilsons Australian Equity Focus List is a weighted list of companies following a quality/growth investment theme. We believe these two style traits in Australian equities can outperform over the medium/long-term, given the evidence that investors reward return on capital (quality) and earnings (growth).

Global equity markets face an uncertain near-term outlook in respect of the run-in to the US election and short-term path of the pandemic. Nevertheless, the backdrop of ultra-low rates and massive fiscal spending provides a supportive environment for equities over the next 12 months. In our fourth quarter asset allocation strategy, we outline our current view and key asset allocation changes as we balance near-term uncertainties against medium-term opportunity.

In our new video series, Wilsons Head of Investment Strategy, David Cassidy chats with Wilsons Investment Advisor, Alexandra Kalceff about the factors weighing on markets and shaping our asset allocation strategy.

Conviction Insights represents our highest conviction calls from across our coverage universe. This month we add ReadyTech (RDY) to our Conviction Insights lineup. A leading provider of education and employment software, we are attracted to RDY’s high recurring revenue mix, uncommonly strong EBITDA margins and free cash flow. ReadyTech seems well placed to drive double-digit top-line growth setting the group apart from peers. RDY’s product is also integral to the investment case – the company has built a market-leading, modern, cloud-based solution that caters to mission-critical business functions.

Income focused investing has proved to be a difficult investment style in Australian equities in recent years. Only 10% of professionally managed income funds have outperformed the market over the last 5 years, in contrast to 70% of growth funds, according to Lonsec. This is partly a reflection of the market’s strong preference for growth over value (a proxy for income) in recent years.

After a 7% surge in August, the US equity market now sits 10% below its early September highs. Australia is down a more modest 4% from its highs, but as we discussed last week, the local market has been locked in a relatively tight trading range for over 3 months.