Argo is a long-term investor in Australian equities and has been steadily building a large, diversified portfolio since 1946. It believes in the cumulative effect of investing in quality companies over a long-term horizon and avoids the temptation to seek short-term gains in high-risk situations.
Argo’s investment objective is to maximise long-term returns to shareholders through a balance of capital and dividend growth. The diversified portfolio is deliberately conservative, with the 20 largest “blue chip” holdings making up more than 60% of the value of the portfolio and providing over 60% of the dividend income. Smaller companies are also held within the portfolio, where Argo identifies the potential for long-term growth and increasing dividends.
Argo is a value investor, with a bottom-up approach to investment analysis. It seeks to identify the highest quality Australian companies and trusts through detailed analysis of each entity, and then over time, buy or add these stocks to the portfolio when they are trading at prices which represent what Argo considers to be good, long-term value. This patient and conservative approach has proved successful over time and provided shareholders with both long-term capital growth and dividend income since inception.
Cohen & Steers
The Portfolio Manager’s investment philosophy begins with recognition that success in global infrastructure investing requires a balance of both top-down industry sector and sub-sector research, combined with specific bottom-up company analysis.
The Portfolio Manager undertakes a screening process of the global infrastructure universe, distilling away a range of companies, such that the only ones left are those that truly exhibit the characteristics of an infrastructure investment – those that derive the majority of their revenues from the construction, development, financing or operation of infrastructure assets.
This approach is further refined through an additional focus upon infrastructure sub-sectors, taking into account, that there are often significant differences in the underlying operating and regulatory environments of sub-sectors. The Portfolio Manager seeks to have a complete and in-depth understanding of the factors which determine the relative attractiveness of sub-sectors, and enhance this understanding by leveraging its position in, and knowledge of, local markets, to incorporate information and advice provided by management teams, local government entities and regulators.
This philosophy is finally combined with a bottom-up company analysis in search of those companies that represent compelling value in the context of the global listed infrastructure universe. The approach taken is one of relative valuation, noting that the Portfolio Manager believes that valuations can still be attractive even at higher than historical levels. A strict adherence to this philosophy enables the Portfolio Manager to identify and invest in securities which are high quality but fundamentally undervalued, while avoiding securities which appear fundamentally overvalued, or those that may appear cheap, but are low quality investments.
The Portfolio Manager applies the same disciplined approach to investing in securities across countries, asset classes and industry sub-sectors. The Portfolio Manager ultimately focuses on investing in companies that will deliver strong returns consisting of current income and capital appreciation, and is not biased towards developed or emerging markets, or particular sub-sectors. To that end, the sub-sector allocation philosophy described above is a dynamic approach, and is constantly re-evaluated.