| The Lazard
Select Australian Equity Fund invests primarily in companies
among the 200 largest listed on the Australian Stock
Exchange. The Strategy is focused on a highly concentrated
portfolio that will generally range between 12 and 25
of our “best ideas” chosen for their potential
to deliver large absolute returns over the long term.
Our primary stock-selection screen identifies companies
that are trading at discounts relative to our assessment
of their intrinsic values. We use fundamental analysis
to establish their values and we think of ourselves
as “valuation” managers.
By contrast with the more diversified Lazard Australian
Equity Fund, the Lazard Select Australian Equity Fund
places less emphasis on benchmark risk control in the
portfolio construction process. It is focused on producing
strong, absolute returns for investors over the long-term,
rather than the more traditional relative return targets.
The small number of stocks in the Fund, and the absence
of benchmark risk controls can result in periods of
significant performance divergence from the index. However,
while the Fund is inherently volatile relative to the
broad market indices, it includes the companies our
research indicates offer the highest long-term absolute
returns.
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. |
