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Our approach to investing in global equities is based on the firm belief that a portfolio of very high quality businesses will deliver above average returns over the medium to long term. With this in mind, we seek to identify superior companies with sustainable competitive advantages and an ability to consistently generate above average returns on capital.
Broadly speaking, we invest in companies based on their investment merit as determined by their prospects, quality and valuations.
Ned Bell, CIO at Bell Asset Management discusses why Bell’s investment approach is focused on bottom -up stock selection with a Quality bias, what the key differentiators are across their fund strategies and the importance of a valuation discipline to identify disconnection between Quality and Value.
Quantitative
Prioritization
Qualitative
Fundamental test:
pass or fail
Valuation
Portfolio Construction
Establish universe
Core ~ 900
Select “
SMID ~ 700
Idea generation
~ 450
“
~ 350
Quality test
~ 250
“
~ 150
Holdings
90 ~ 100
30 ~ 50
35 ~ 55
Company quality will ultimately drive share prices over time, and as such we aim to identify leaders within their respective sectors. We define a ‘high quality company’ as one with an attractive combination of:
We employ a “bottom-up” stock selection approach to investing in global equities. We consider the MSCI Developed and Emerging Markets as our starting universe and then methodically shrink our potential investment universe by applying strict quantitative criteria. Over time we have found that this approach has had the dual benefit of:
a) eliminating poor quality companies from investment consideration, and
b) focusing our research efforts on a smaller & higher quality universe of companies.
The investment team undertake extensive company research across the globe. Over the past 4 years, we have conducted over 1,500 company meetings. We have generated over 10,000 company research posts on our internal research database.
Bell Asset Management (BAM) employs a robust and ongoing commitment towards integrating Environmental, Social and Governance (ESG) issues within our investment process. We employ a disciplined investment framework combined with Stewardship and ESG specific activities including ESG screening, ESG analysis, active engagement and proxy voting with companies in all of our portfolios.
We believe that integrating ESG factors into our investment process will deliver superior long term returns to our clients. We believe that as stewards of our client’s capital, active ownership and engagement is in the best interests of our investors.
Documents below are available for download:
