| The Lazard
Australian Equity Fund invests primarily in companies
among the 200 largest listed on the Australian Stock
Exchange. The number of holdings will generally range
from 25 to 45, which means we take active investment
decisions to invest in a concentrated portfolio of companies
we believed are underpriced.
Our primary stock-selection screen identifies companies
that are trading at discounts relative to our assessment
of their intrinsic value. We use fundamental analysis
to establish those values and we think of ourselves
as “valuation” managers.
While the Fund is concentrated in a small number of
companies relative to the benchmark and our competitors,
we have identified key benchmark risks that we take
into account at the portfolio construction stage. These
considerations are designed to ensure a degree of benchmark
awareness and economic diversification, helping us to
manage the portfolio to the absolute and relative volatility
expectations of our clients.
Capacity
We believe capacity is an issue given
the limited size of the Australian equity marketplace.
Our simulation analysis suggests that we could maintain
funds under management at approximately 0.8% - 0.9%
of the Australian Stock Exchange’s (“ASX”)
market capitalisation before our ability to add value
for our clients would be affected.
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