Investing

Growth Portfolio

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Investing for

Growth

2016
The Mechanics

Growth Portfolio

The Growth Portfolio is designed to ensure clients gain exposure to the strongest sectors in the market.

The mandate:

  • Stocks outside the top 50 including mid-cap and to smaller extent small-cap
  • To identify investments opportunities that add growth potential to a portfolio
  • Our target return is 12% per annum
  • Specific allocations aimed at each investment
  • Trailing stops applied to all positions ensuring that underperforming investments are exited

Strategy:

The Growth Portfolio invests into a diverse mix of assets. The strategy is regularly reviewed and re-weighted to the benchmark. The strategy incorporates an element of gearing through the strategic use of derivatives to enable greater potential returns. The gearing component is always conducted in a manner that ensures downside risk is defined and levels of gearing are appropriately targeted.

Keeping it simple:

  • Identify the trend in the stock
  • Assess company metrics to ensure suitability for investment (PE ratio, Liquidity, Forecast earnings etc)
  • Set target buy or sell areas to enter the investment
  • Once the investment has been entered apply specific trailing stop to monitor the risk

How do we identify

Positions

VFS Group’s Investment Committee look at a number of variables when identifying new investments for the Growth portfolio.

First Step: Technical Analysis

The first thing is that the stock has to be in an uptrend and we do not invest in stocks that are moving lower because that tends to suggest that they do have something going against them. Our first scan is always done by looking at the chart, stocks must be in an upward trend. We also apply VFS propriatry technology to then filter this process to 20-30 companies.

Fundamental Analysis:

Earnings and dividends: How much profit the company makes for a period and how much gets paid out to shareholders

Market Capitalization: The total dollar value of all company shares, calculated by multiplying the shares outstanding by the current market price, this plays a key role in our screening process.

Institutional ownership: What percentage of the shares are owned by mutual funds and other institutions? If the big players are involved, we are more interested.

Generally our stock selection for the ASX growth portfolio is outside the top 50 and inside the top 300.


The exit of a position is just as important as the entry

Timing a position

There are a number of reasons to own a stock but the ongoing trade management can be critical in whether the investment will be a profitable one.

Before an investment is entered into it is important to know what your risk levels are and also to understand what the rest of the market is seeing. One of the keys to making an investment is to interpret how the market will react at certain levels and why these are important. The idea is to understand when going with the herd is the right thing to do and when going against the market is the right thing to do. Once this is understood your will be in control of your investment.

Our growth portfolio is the market leader in controlling your investment. Importantly we let the good investments run and close out of the underperforming positions.

The only way this can be done is to be systematic in our approach and to be in control of the situation.

Why do some people consistently invest better than others? The answer is a simple one. It comes down to the management of your open positions and being able to look at the situation objectively. At VFS it is this simple approach that has provided a platform for you to invest confidently in the equity markets.



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Wealth

Advisors

VFS Group is a holistic financial services firm with an acute focus on wealth creation and management. Our mandate is to provide quality financial advice to all Australians.

Our mantra is centred around Knowledge, Strategy & Wealth. We invite you to take this opportunity to secure your future with us.
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Martin

Woods

Martin has been working as an adviser for over 10 years. With a background in Capital Markets he has applied his expertise to provide investment models for his clients.