Mainstreet offers investors four Australian high conviction (10 stock) equities portfolios and a high conviction (25 stock) global portfolio of top quality stocks
These portfolio offers investors an opportunity to invest in a highly-concentrated equity portfolio consisting of ‘best investment ideas’. Mainstreet perceives outstanding companies to be those that can sustainably exploit competitive advantages in order to continually earn returns on capital that are materially in excess of their cost of capital. Mainstreet focuses on risk-adjusted returns, rather than benchmark-relative returns. As a result, the investment process is designed to generate an unconstrained, highly-concentrated portfolio of high-quality companies. The investment process integrates three key disciplines:
- Intensive bottom-up stock analysis and industry research.
- Broad and detailed macroeconomic insight.
- Rigorous portfolio construction and risk discipline.
Mainstreet will exist to allow dealer groups and financial advisory firms of all sizes to be able to offer their clientele a reduced-risk, long-term global investment portfolio, which until now has been out of reach for many.
Mainstreet believes a focus on quality companies will enhance returns when it is combined with a thorough valuation overlay. We seek to identify quality companies that are mispriced by overlaying our quantitative overlay with a strong intrinsic valuation discipline. The portfolios are high conviction, after-tax focused and invested for the medium-to-long term.
Active Asset allocation
Asset allocation is often acknowledged as the key driver of investment returns. We consider two key asset allocation issues:
- Sector allocation employs a medium-term horizon. Utilised from time to time by investors with a high conviction and where there is significant mis-pricing in one or more industry sectors. Expectation is for a return to “fair” or “normal” values over, say, three to five years.
- Country allocation has a short time horizon, usually one to three years. The aim is to manage risk and improve returns by allocating between the major countries because of anomalies in market pricing.
turns on capital that are materially in excess of their cost of capital.
Investment process – Australian Equities
Mainstreet uses a fundamental bottom-up research process with a top-down overlay. Each stage of the process is outlined below.
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- for a stock to be eligible for investment is must satisfy our liquidly assessment.
- quantitative and quality screening
- company and industry contacts
- weekly meetings to discuss findings and allocate tasks
- phase 1 – Mainstreet Quantitative assessment
– strength of management
– balance sheet
– industry structure
- phase 2 – fundamental bottom up valuation and investment thesis
Recommended stocks considered given:
- top-down considerations
- portfolio characteristic impacts
- stock and sector correlation analysis
- after-tax consideration
Ongoing portfolio management and risk review
- Risk analytics
- Investment Committee meeting
- conclusions constantly retested
- sell decisions based on:
– reach target valuation
– deterioration of quality characteristics / investment thesis
This process is adapted for the Australian Equities Income Portfolio, the Australian Equities Growth Portfolio and the Australian Equities Smaller Companies Portfolio, to take into consideration the respective income and Growth investing criteria specific to these portfolios.
Investment process – International Equities
Similar to the Australian portfolio research process, Mainstreet uses a fundamental bottom-up research process with a top-down overlay. Each stage of the process is outlined below:
Selection process Pyramid
Our corporate governance structure is critical to financial and operational well being. Not only to set up an operationally efficient business model, but also to provide a structure through which Company objectives are set, and monitored. To ensure that Mainstreet delivers on its promise to all stakeholders the Company follows a Business Management System (“BMS”) that complies with industry standards. The BMS provides a framework for the continual review and improvement of Mainstreet processes with continuous improvement and corporate governance being a key objective. Policies in relation to all key areas of the Company’s operation, set out specific objectives and aspirations and how they are to be achieved. Formalised processes, tool kits and pro-forma documentation ensure that quality is delivered.