Independent Australian investment management company, Dalton Nicol Reid has been awarded a ‘Recommended’ rating for its highly successful Australian Equities High Conviction portfolio, from asset and investment management consultants, Atchison Consultants.
The Dalton Nicol Reid Australian Equities High Conviction portfolio is managed by six full time staff, including Jamie Nicol, Chief Investment Officer and Scott Bender, Portfolio Manager. The team is also supported by two independent consultants, taking the total investment team to eight.
CEO and Director, Harley Dalton, said the result was pleasing as it recognised the strength of the investment team’s experience and investment strategy.
“This is the third time our capability has been reviewed by an asset consultant and it is pleasing to achieve another strong result. We believe our investment approach and performance track record in difficult market conditions, is now well proven. We are continuing to expand our investor base and this rating is another step in that process,’” Mr Dalton said.
Among the strengths of the capability, Atchison Consultants pointed towards the stable investment management team and a proven investment process tested over the complete investment cycle.
Dalton Nicol Reid’s independent Investment Committee member oversight was seen as a positive, to ensure rigour around the investment process. Atchison’s also noted that the low turnover of stocks and concentrated portfolio made the offering suitable for an SMA model given it minimises trading costs and is relatively tax efficient.
Mr Dalton said;“Dalton Nicol Reid was established in 2001 and the Australian Equities High Conviction portfolio has returned12.1per cent p.a. over 10 years to October 2012. Our investment style is based on buying quality stocks at reasonable prices and not deviating from this fundamental view has been the key to our success through the cycle. Couple this with a stable investment team for 10 years and we have put ourselves in a strong position to consistently outperform.”
“We currently manage more than $400 million for retail, institutional and wholesale investors.”
Dalton Nicol Reid uses a five-point quality matrix to identify relative quality of listed companies. This includes balance sheet assessment, industry structure, management strength, earnings strength and ESG (environmental, social and governance). Mr Dalton said there is a growing body of evidence that supports ‘quality’ investing.
“Research on quality investing has largely focused on the back testing of various quality screens to determine the impact of quality on returns. On the whole, this research has shown a strong linkage between quality and performance over the medium and long term.”
“A quality portfolio will be agnostic to value or growth. Following a quality investment approach allows us to identify companies that are mispriced by overlaying this quality filter with a strong valuation discipline. It also allows us to enhance returns by identifying companies when they are out of favour.”