LWC High Conviction Portfolio

The LWC High Conviction Portfolio (LWCHCP) is an actively managed, long only, concentrated (10-15 stocks) portfolio of Australian equities. Cash and companies in the ASX200 typically make up 80%+ of the portfolio. We favour large-cap companies with a long history of profitability and high levels of liquidity. The portfolio does not try and replicate any index rather it has a clear aim of producing attractive and consistent long term returns to investors. We aim to outperform the ASX200 Accumulation Index by +5% p.a. (after fees) over a rolling 5 year time frame.

Fundamental Research

The foundation of the portfolio is to identify companies for investment through rigorous bottom-up fundamental research. The portfolio is style neutral, we will invest in both ‘value’ and ‘growth’ companies through different market cycles depending where the best opportunities are. Finally, before including any company in the portfolio we always ask ourselves “what’s the downside?”

Macroeconomic Analysis

When constructing the portfolio we use a macroeconomic overlay to ensure it will gain maximum benefit from our macro forecasts. Factors we consider include interest rates, exchange rates and commodity prices. The portfolio is then constructed to ensure that the companies and sectors we consider to have the best risk-reward potential have the largest allocation of capital. We are careful to avoid overexposure to any particular stock, sector, thematic or risk.

Cash Levels

The portfolio will typically be 95%+ invested in equities however we do not hold stocks just for the sake of it. If an attractive opportunity cannot be identified we are happy to hold cash until one arises. We will also hold elevated cash levels if we believe there is a high risk of a global correction in equities. We take the view that while holding cash is not an attractive investment it beats losing money. This has served the strategy well in the past.

Liquidity

We always ensure that across the portfolio there is high levels of liquidity. This enables us to move quickly in and out of positions if necessary.