Tilts; direct equities

We typically manage our direct equity portfolios with a QGARP focus, Quality Growth at a Reasonable Price.

We do so in that order: Quality first, Growth second, Reasonable Price third, by weighting or importance in our process.

You can also see that we factor time around that structural framework. We narrowed our usual underweight to Value enormously over the past year for the first time in 8 years.

We did this because the factor dispersion (below, captured by simple PEs in the growth versus value indices, and the spread or ratio between them in the far right column) is at levels we’ve not seen since the tech wreck.

It is, simply put, pretty crazy, for some of the secular growth, ultra high quality companies out there.

An example would be FPH trading at 50x forward earnings. DMP similarly reached crazy multiples, and is still expensive, even after dropping from $160 to $60.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

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