Investment Process
GVI has a clear focus on the quality and type of company it wishes to include in the portfolio. The GVI investment process starts by filtering the global universe of over 40,000 stocks through a series of specific quantitative and qualitative screens. The screening process is designed to exclude lower quality companies and reduce the global investment universe to a manageable number of stocks. This allows the investment team to focus its attention on high quality companies with attributes favoured by GVI worthy of further research.
Some of the key guidelines for the reduction of stocks to an investment universe include:
- No emerging markets
- Market capitalisation constraints
- Positive earnings
- Interest cover
- Dividend yield
- Attractive PE
- Price/Book
Stock Selection
The Investment universe is grouped by sector and each team member then selects the best prospective stock candidates from each sector and a focus list of approximately 150 stocks is compiled.
The assessment of a stock's relative value to its sector is based on one or more of the following criteria:
- Price/Earnings Ratio
- Dividend Yield
- Price/Cash Flow
- Price/Book
The stocks within the focus list are selected with a keen appreciation of the key drivers and dynamics within each industry. Also considered are their competitors, their business model and their relative position within the industry.
Stock Analysis & Research
Fundamental Analysis
GVI carries out a detailed assessment of each stock in the Focus List. The Focus List is reviewed weekly to identify and prioritise stocks that will be subjected to in-depth fundamental analysis.
The assessment of each stock is a five-step process which includes detailed fundamental analysis, company visits and valuations to determine price targets.
Foreign Currency Management
GVI manages the foreign currency exposures to minimise fluctuations in value arising from changes in exchange rates. Portfolios will therefore be predominantly hedged back to Australian dollars. GVI believes that hedging its portfolio back to AUD substantially preserves the expected returns at the time of investment as well as allowing the analysts the freedom to analyse stocks free of currency concerns.
Portfolio Turnover
Due to our long-term investment horizon GVI's portfolio turnover is expected to be approximately 30%.
Benchmark Unaware
The GVI portfolio construction process does not reference the index.
Portfolios are constructed as a result of individual stock selection and not as a result of any reference to an index or market benchmark. This results in a portfolio which is at times likely to exhibit significant departures from the world market benchmark weightings in global industry sectors, countries and individual stocks.