BT Australian Share Fund upgraded to ‘gold’

Share on facebook
Share on twitter
Share on linkedin
Share on email

Morningstar has upgraded BT’s Core Australian Share Fund to ‘gold’ and reaffirmed the ‘gold’ rating of BT’s Smaller Companies Fund.

Comprehensive company research is the crucial factor in the success of the Core Australian Share Fund, Morningstar says.

“The well-considered and repeatable investment process is clearly focused in adding value through traditional bottom-up company research and active stock selection,” the researcher says.

Crispin Murray has been head of Australian equities and a portfolio manager at BT since 2003. “His impact on the research team, philosophy and process have been overwhelmingly positive. The investment team is large, stable and collaborative,” Morningstar says.

The research group considers the strength of a company’s business franchise, including its relative position in the sector and outlook for the sector. It looks at the quality of company management and business risk factors.

Key factors BT looks for in companies are a high, sustainable or improving return of capital and an approach of investing capital at high rates of return.

The portfolio of around 50 large cap stocks is style-neutral. Around 10 per cent of the portfolio is allocated to an in-house small cap strategy, which holds 60 to 90 stocks.

The strategy has beaten the index and peers in seven out of the past 10 years. Over the five years to the end of August it produced an average return of 11.9 per cent a year, compared with an increase of 10.6 per cent a year for the S&P/ASX 200 and 9.9 per cent a year for the other funds in its category.

It has had some bad years. In 2016 it was caught out by the rally in commodity stocks and underperformed the index by 6 per cent.

It is also a strong long-term performer on a risk-adjusted basis. Over a three-year period its standard deviation was 12.02 per cent, compared with the index risk of 12.3 per cent and the average of 12.2 per cent for its peers.

As for the BT Smaller Companies Fund, Morningstar says the portfolio managers, Paul Hannan and Noel Webster, “are among the best small cap stock pickers in the Australian market, making highly perceptive investment decisions through the cycle.”

Typically, the portfolio has 65 to 75 stocks, with a slight tilt to growth or value depending on market conditions.

Like the Core Australian Share Fund, the Smaller Companies Fund uses detailed bottom-up fundamental company research.

 

Share on facebook
Share on twitter
Share on linkedin
Share on email