The equity department manages strategies of listed equities within the following areas:
All equity strategies are different in terms of the geographic investment universe and the underlying investment processes. However, there are some similarities in the research approach in the stock-picking part of the investment processes. The main focus of the research is to identify companies’ long-term earnings potential and compare this with the earnings growth embedded in the current share price. In our company research we focus on the following key elements:
- Understanding of the business model and products
- The company’s ability to create a higher economic return over the next 2-3 years than that of the general economy, and whether this is reflected in the share price
- The potential for sustained or improved earnings growth and return on shareholders’ equity
- The ability to sustain or improve the market position of the products
- The competences, strategy and focus of the management team
- Corporate governance, level of information and CSR
In order to effectively screen the investment universe and optimise the portfolio construction, the use of proprietary screening-based research tools is an integrated part of the investment process for some of the strategies.
The strategies are all characterised by a broad investment universe, but at the same time the portfolio construction is concentrated and reflects a high conviction approach in the selection of securities. As a consequence benchmark focus is limited, and benchmark is primarily used as a performance reference.