Frequently Asked Questions
Who owns GVI?
GVI is jointly owned by Investors Mutual Ltd (IML), 67%, and by Treasury Group Limited, 37%, a company listed on the Australian Stock Exchange. Key staff have the opportunity for equity participation via options which, when exercised, will result in 25% ownership of the company.
Treasury Group Investment Services Limited, a subsidiary of Treasury Group Ltd provides all non-investment related activities such as risk management, compliance, human resources, operational support, administration, marketing and accounting to GVI.
What is the experience of the team?
The GVI Investment team has a collective investment experience of almost 60 years with an average of 14 years across all team members. The team has been selected from a combination of diverse backgrounds and experience sharing a similar value-orientated approach to investing. They are like-minded people who fundamentally enjoy what they do.
Does management invest in the GVI Global Industrial Share Fund?
Management and members of the investment team have funds invested in the GVI Global Industrial Share Fund which aligns their interests with those of their investors.
Why invest with GVI?
As a boutique investment manager, our aim is to create wealth for our clients in a sensible manner by investing in solid businesses that our analysis indicates can continue to grow their earnings and dividends over time. How are we different?
- We are an Australian-based investment manager and pride ourselves in being transparent and accessible to our investors
- We conscientiously provide a lower risk way of investing overseas
- Not being benchmark aware allows for an unconstrained "best ideas" approach
- Our portfolio make-up demonstrates that we are a "True to Label" international equities manager. That is, we don't end up with an index like weighting!
- Delivery of consistent returns: Yield + Growth with explicit focus on dividend paying companies
GVI can be used as a core international manager or may be used to complement the investment styles of other managers in your portfolio.
How many stocks normally make up a GVI investment portfolio?
We aim to maintain a diversified portfolio of between 20-70 stocks. GVI does not consider the benchmark or index when buying a stock and the GVI portfolios are constructed as a direct result of the opportunities that our fundamental analysis unfolds.
What is the time horizon of stocks in a GVI portfolio?
A minimum 3 year outlook is involved in our assessment of a business and as a result, the turnover within the portfolio is expected to be relatively low around 30% p.a.
How important is income to a GVI portfolio?
GVI believes that dividends are an important long term component of the total return to investors. You only have to look at the returns of the UK market over the last 100 years and the US market over similar periods and the story is the same - half of the total return is comprised of dividend yield. High yields provide a good floor for investment returns in flat and falling markets, thereby providing strong defensive qualities. As a result, GVI has a preference for established global industrial companies that currently pay or that we believe will have the capacity to distribute attractive dividends in the future.
Do you manage the fund for tax effectiveness and what advantages do you see from your chosen approach?
There is no explicit tax effective approach. However, the long term buy and hold approach (lower turnover) combined with a focus on dividend paying companies should, we believe, translate to a return where dividend income would comprise an important part of the total return with a lower amount of taxable realised capital gains.
To hedge or not to hedge - to what degree do you hedge currency and why?
We adopt an ongoing policy position to substantially hedge the portfolio back into $AUD (between 80 - 90%) and seek to neutralise the vagaries of FX fluctuations. We do not actively trade currency to enhance returns as we are stockpickers, not currency traders. The risks for Australian investors are in $AUD and hedging the portfolio aims to take currency out of the equation as much as reasonably possible. By hedging, it effectively allows investors to make a like for like comparison of similar businesses here in Australia. In line with our yield plus growth approach, it also allows the team to focus on the business attributes without having to consider FX movements.
How important is the MSCI weightings in your investment activities & why?
At GVI, the MSCI weightings are not important at all. We are benchmark unaware as we invest in quality companies regardless of the country of domicile (within Developed markets) or percentage of index weight. Our focus on risk is in an absolute sense (can I lose some of my money and by how much?) rather than on a relative basis.
How can you invest in all these overseas companies being based in Sydney, Australia?
We consider being based here in Sydney a considerable advantage given our long-term value based approach. GVI is away from all the day to day market noise which we think can potentially act to cloud one's judgement, consume time and energy and create situations where rash decisions can be made. We have a specific investment universe of stocks that we are looking for and our screening process allows us to reduce the investment universe to a smaller, more targeted opportunity set (see Investment Process). Being away from the noise, we can spend a lot of time on research and analysis which inherently involves each team member spending many weeks of the year travelling overseas meeting company management.
Can a GVI portfolio fund invest in Australian Stocks?
GVI seeks to find the most attractively positioned and priced companies from all developed countries around the world, including Australia. In the future, there is no reason whatever that an Australian stock could not feature in our portfolio once it satisfies our key investment criteria.
How do the stocks held in a GVI portfolio benefit from the economic expansion currently occurring in Asia (particularly China)?
GVI only invests in companies headquartered in developed countries and as such, has a large portion of the portfolio in Europe where we are finding excellent valuations and opportunities. Many of these companies are global in nature and have operations in developing and emerging markets such as Asia, South America and Africa.
A GVI portfolio can invest in Japan, Hong Kong and Singapore with access to China and other Asian countries via companies such as manufacturer Unilever, Deutsche Post (DHL Courier and Logistics business), Dutch/UK energy giant Royal Dutch, UK Pharmaceutical Glaxo SmithKline, telecom business Telenor Norway and international branded food manufacturers such as Kraft and Nestlé. We feel this is a smarter way of accessing Asian growth by not absorbing the volatility inherent by investing directly into emerging markets.
Are you finding much value in the US market?
We are increasingly finding more US based opportunities in recent times, particularly after the recent correction in May/June 2006. Pharmaceuticals, integrated energy companies, utilities and branded food manufacturers are looking more attractive than they did prior to 2006.
What sort of returns does GVI expect?
The aim is to beat our benchmark (the MSCI World Accumulation Index - AUD Hedged) over rolling 3 year periods but to do it sensibly. That is, we expect to provide investors with a smoother investment journey by lowering the risks where possible.