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Newport Asset Management

Newport Private Wealth Pty Ltd  (ABN 16 166 931 960)

Australian Financial Services Licence  451820

 

Terms & Disclaimer

Latest Fact Sheet >>

 

Investment Objective

The objective of the Newport Australian SMA model portfolio is to provide investors with medium to long-term capital growth from a portfolio  derived from Australia’s largest 200 stocks. The SMA aims to deliver a return superior to that of the market over periods of five years or longer with lower volatility than the index.

 

Investment Philosophy

The Investment strategy is quant driven. The universe is screened using Value & Momentum metrics. Research shows that ‘cheap’ stocks outperform ‘expensive’ stocks over time & only a few key variables are necessary to determine relative value. However ‘cheap’ stocks can remain ‘cheap’ for some time. To avoid the so called ‘value trap’ stocks must have upward momentum.

 

Stage 1: Value Score

 

● Universe is ranked on a relative value basis
● 4 “value” factors – these are the key drivers of performance
● A quintile ranking is derived for each factor
● An overall quintile ranking is derived by averaging the 4 value factors
● Quintile 1 = value, Quintile 5 = expensive
● Only quintile 1 & 2 ranked stocks pass the Value Score

 

Stage 2: Momentum Score

 

● Universe is ranked on a relative basis
● Stocks trading at/near their medium term highs are preferred
● This is a solid indicator of medium term price momentum
● A quintile ranking is derived for momentum
● Quintile 1 = upward trend, Quintile 5 = downward trend
● Only quintile 1 ranked stocks pass the Momentum Score

 

Stage 3: Portfolio Construction

 

● Stocks that pass the Value & Momentum screen are included in the portfolio
● Liquidity filter is applied to avoid illiquid stocks
● Stocks are initially equally weighted (mandate limits apply)
● Stocks are held until price momentum reverses
● Downside price exit points are identified
● Profits taken in ‘’extreme’’ upside price moves

 

The Australian Equity SMA Model Portfolio is available on the following SMA platforms: