On a simple model that accounts for forecast ROE and forecast earnings growth, it is very difficult not to see CBA, and to a lesser extent NAB, as anything other than relatively rich.
We have banks (at a modest underweight) in the portfolio as a rates beta play (leveraged to higher rates through NIM expansion).
The insurers do most of the heavy lifting (i.e. we are overweight) at the sectoral level for the financials. When controlling for forecast return on equity, and NPAT growth, MPL stands out as particularly cheap, and to a slightly lesser extent, SUN.
At the other end, the insurance brokers stand out as somewhat expensive.
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Please note that past performance is not a reliable indicator of future performance.
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