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| Fund Overview | The investment team looks for industrial businesses that are simple to understand; they generally avoid large caps, pure mining, biotech and start-ups. They also look for: - Access to management; - Businesses with a competitive edge; - Profitable companies with good margins, organic growth prospects, strong market position and a track record of healthy dividend growth; - Sectors with structural advantage and barriers to entry; - 15% p.a. pre-tax compound return on each holding; and - A history of stable and predictable cash flows that DS Capital can understand and value. |
| Manager Comments | The portfolio performed reasonably well over the quarter, with strong results from several holdings including Breville and Lifestyle Communities. Softer than expected results came from McMillan Shakespeare, Experience Co and Challenger. DS Capital believe softer global economic growth will maintain pressure on global interest rates that have fallen from the multi-year highs of October 2018 deferring a return to higher rates that seemed likely just six months ago. They noted that, while lower interest rates are theoretically favourable for equity markets, weaker economic conditions can make it more difficult for businesses to grow earnings. Post reporting season company meetings, DS Capital have compiled a list of businesses that they would like to own or add to their current holding. They're seeing new opportunities, however, they are looking to deploy their cash (20% of the portfolio) sparingly. |
| More Information |
