The Clever Country?
We have been preparing some statistics today as part of an external review being done on The Montgomery Fund. One thing the reviewers want to know is how our portfolio differs to the index in terms of its exposure to different industry sectors.
The answer is that it differs markedly. We are far more interested in owning great businesses than in minimising our index “tracking error”. One striking example is the information technology sector, where The Montgomery Fund has identified some interesting opportunities and has allocated almost 15% of its capital. By comparison, information technology makes up less than 1% the ASX300 index.
The real issue of course is what this second number says about the composition of the Australian economy. Our competitive advantage in digging things out of the ground has now been lost to high costs. As a nation, what other tricks do we have up our sleeve?
Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Andrew Legget
:
With it being test match cricket season i will use that as an example. The Aussie economy at the moment appears to be like the South African Bowling Attack.
They are both mentioned in some quarters as being the number one in the world, however the truth is just like the fact that the South Africans may have the best fast bowling attack, they definitley do not have even close to the best spinner or spin attack, the Australian economy has great strength in mining and also perhaps agriculture but we do not have strength in a lot of other areas.
This leads into Rogers recent post about encouraging more production, we really need to start finding ways to expand the number of things we do well and to make us as competitive as possible.
The fund is right to differ from the index as a lot of the companies that make up the index, although big, are not necessarily the best companies nor where the money might come from in the future.
Roger Montgomery
:
Another excellent post for which I am grateful.