Selector High Conviction Equity Fund
A high conviction, benchmark agnostic Australian equities fund aiming to capture real earnings per share growth over the long-term.
SFML investment approach is consistent across all portfolios. We aim to identify businesses that are financially sustainable so that they can deliver real EPS growth and compound returns required for long term out performance.
The approach is guided by our philosophy of seeking businesses with leadership qualities, run by competent management teams, underpinned by strong balance sheets and with a focus on capital management.
SFML builds concentrated portfolios from high conviction ideas, rather than hugging an index. We are prepared to hold them through the business cycle to produce the long term returns we seek for our clients. We do not aim to exploit short-term market inefficiencies.
This is a risk out process. We are trying to take as much risk off the table as possible before we invest. The key areas of risk we focus on are board and management competency and the culture they are responsible for, business qualities, balance sheet and capital management. We believe net cash balance sheet carries lower risk and more optionality than an optimised or extended balance sheet. We ultimately compare equity risk to a risk-free rate.
Our approach has been consistent since inception. It is framed by our Roadmap, which is both qualitative and quantitative in nature. Our Roadmap provides a repeatable framework that drives our company engagement program, our quantitative program of financial modelling including our stock universe data screen, and our structured voting program.
The portfolio will generally consist of 15 – 30 investments. As such, individual investments may initially represent up to 5% of the total investment portfolio. If selected correctly, individual stocks in a concentrated portfolio will have a meaningful impact on performance and may grow beyond the initial 5% level to a limit of 10%.
Selector invests in Australian equities, and does not use leverage or derivatives. Experience has taught us that these simple constraints, when combined with hard risk limits, provide significant protection to the portfolio with limited impact on the performance of the Fund.
The stock selection process is based on a consistent and repeatable framework. The foundation for this common-sense approach is the considerable industry experience of our portfolio managers. The stock selection process is termed “bottom up investing”, as we focus on the business first, ensuring that investments are selected based on their individual merit. The portfolio is built stock by stock as each business is subjected to our rigorous stock selection process.
We seek businesses with leadership qualities, run by competent management teams, underpinned by strong balance sheets with a focus on capital management.
Management
We seek honest, competent leadership. We expect high standards of corporate governance from the board and management, with these qualities reflected in the culture of a business.
Business
We seek businesses with uniqueness, including demonstration of leadership within their chosen fields. This requires sustainable levels of re-investment maintained ahead of the curve.
Balance Sheet
We prefer a strong balance sheet. This is our “get out of jail card” if things go wrong in a business.
Capital Management
We seek businesses that can grow organically, demonstrate strong cashflows and real EPS growth over the long term. Ultimately, this drives higher dividends per share.
Detailed qualitative research
The portfolio managers undertake detailed qualitative research on each business on the shortlist. This starts with researching the business, its industry, channel checks of the competitive landscape and importantly management interviews. This is where the experience of our portfolio managers becomes our key advantage. The portfolio managers are continuously engaged in an ongoing program of domestic and international company visits.
Detailed quantitative research
A financial model is developed for each business on the shortlist. No information is dumped into the model. The income statement, balance sheet, and cash flow items are inputted individually by the portfolio managers and over 50 financial ratios are calculated. The portfolio managers are seeking to analyse long-term trends through this financial modelling.
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Selector is a Sydney based fund manager. Our team combines deep experience in financial markets with diversity of background and thought. We believe in long-term wealth creation and building lasting relationships with our investors.
We focus on stock selection, the funds are high conviction, concentrated and index unaware. Our aim is to capture real earnings per share growth over the long-term. As a result, the portfolios have low turnover and produce tax effective returns. Our ongoing focus on culture and financial sustainability lends itself to strong ESG outcomes.
Selector has a 20-year track record of outperformance and we continue to seek businesses with leadership qualities, run by competent management teams, underpinned by strong balance sheets and with a focus on capital management.
We are a profitable investment firm, we maintain a strong balance sheet, we have no debt.
Tony Scenna is a Founder, a Portfolio Manager, Director and major shareholder of Selector. Tony is also an investor in the funds alongside our clients. Tony has over 40 years of continuous funds management experience. In 1988, Tony was a founder of Harper Bernays Limited and was the Managing Director from 1994 to April 2002.
Prior to this, Tony spent five years as an Investment Analyst and then Portfolio Manager at Perpetual Trustees Australia Limited with joint responsibility for the Perpetual Industrial Share Fund, Perpetual’s flagship product. Tony has a Bachelor of Economics from the University of Sydney.
Corey Vincent is a Founder, a Portfolio Manager, a Director and a major shareholder of Selector. Corey is also an investor in the funds alongside our clients. Corey has over 30 years experience in financial markets as a Portfolio Manager and in sell side stockbroking and was formerly an Affiliate of the ASX. Corey was the founding Chairman of VBM Capital Limited from 2001-2006.
Corey has a Diploma of Financial Advising (FINSIA), and a MBA awarded with Distinction from Edinburgh Business School, completed the AICD Company Directors Diploma and was admitted as a Fellow of the Australian Institute of Company Directors.
John Maragiannis is an Executive Director and major shareholder of Selector. John is also an investor in the funds alongside our clients. John has over 30 years Industry experience with leading International and Australian Funds Management firms. John worked in senior roles with Credit Suisse, Schroders, Credit Agricole and Zurich Scudder.
John also worked at National Mutual and at AMP. John has a Bachelor of Commerce, University Wollongong and Masters of Commerce, UNSW. John is a founding principal of Axius Partners who specialise in Funds Management Advisory and Incubation, Third Party Distribution services and Capital Advisory.
George is an Executive Director and a major shareholder of Selector and a member of the Investment and Compliance Committees. He is also an investor in the funds. A career senior banker and funds management executive, George is a co-founder of Axius Partners; a diversified capital raising and advisory business. George has over 30 years’ experience in Banking & Finance, Real Estate and Funds Management.
He is an experienced senior leader with a history of successfully building teams and businesses. George has held Executive positions at ANZ Bank over a 24-year career across business divisions and client industry sectors. George held a number of roles, covering risk management, asset management, capital markets, relationship management and industry strategy. In his previous role as Global Head of Property he was responsible for the bank’s real estate and construction finance business, a key component of the Bank’s Institutional division.
He is a Director and Treasurer of The Hellenic Initiative (Australia). George has a Master of Commerce (Professional Accounting) from UNSW and a Bachelor degree in Commerce (Economics & Industrial Relations) from the University of Wollongong. He is a Fellow of the Financial Services Institute of Australia (FINSIA).
Kari is the Company Secretary, Dealer & Head of ESG at Selector. Kari has 25 years’ experience in Finance, Accounting and Administration. Kari is the Chair of the Selector Investment Committee and an investor in the fund.
Kari had spent the prior 14 years working as the Chief Financial Officer for a medium sized retail business. Kari has a Bachelor of Commerce and Master of Accounting (Professional) both from Macquarie University.
Harry Mentis-Bullock is a Deputy Portfolio Manager at Selector and has six years of experience in funds management. Harry is also an investor in the funds alongside our clients.
Harry has a degree in a Bachelor of Business, majoring in Finance and Economics at the University of Technology Sydney and a Mini-MBA in BioPharma Innovation from Rutgers Business School.
Carolyn is the Head of Operations and Compliance at Selector and has worked in the industry for over 25 years establishing new funds management businesses, most recently Airlie; as well as establishing unit trusts, mandates, LICs & UCITS for existing funds management entities such as Treasury Group.
Her previous roles include heading up investment operations and compliance, BCP and IT, investor and client relations functions as well as acting as company secretary. She has a Diploma of Financial Markets, a Diploma of Editing & Publishing & has also worked as a legal editor & publisher.
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