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Top stock picks by top managers

Christine St Anne  |  27 Feb 2013Text size  Decrease  Increase  |  

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Christine St Anne is Morningstar's online editor.


The Oscars, Hollywood's night of nights, dominated the news this week as the Academy of Motion Picture Arts and Sciences acknowledged the best and the brightest in the film industry.

Closer to home, another industry was also recognised - Australia's funds management industry. The Australian Morningstar Awards 2013 honoured investment managers who had delivered solid returns for their investors.

Despite the volatile markets, these investment managers were still able to deliver a positive track record of risk-adjusted returns.

Morningstar co-head of research Tim Murphy had said earlier this week: "Winners in the Australian Morningstar Awards 2013 have all shown themselves to be first-class stewards of their investors' capital."

"The quality of their people, process, philosophy and investment style are testament to this, and this continues to enable them to provide outstanding results for their investors."

In this article, we take a peek behind the curtain to see what kind of companies the winning managers are investing in.


Perpetual Investments - Fund Manager of the Year

Perpetual Investments scooped up three awards, including Fund Manager of the Year. The manager also won in the Multi-Sector and Emerging Manager category.

While Perpetual did not win for any specific individual fund - rather, the award acknowledged the quality of the manager's overall business - the Perpetual Australian Share Strategy [4361] gives an insight into the manager's processes and the types of companies the manager likes to invest in.

Perpetual seeks out quality companies trading at cheap valuations. This approach often leads to the portfolio being underweight in speculative and cyclical sectors, where earnings visibility can be questionable.

Morningstar says the team has proved itself in a variety of market conditions and has continued to perform despite key departures, including former head of equities John Sevior.

With its focus on quality companies, it's not surprising the manager has a large exposure to financial services, with three of the four major banks in the fund's top 10 holdings. Other top 10 holdings include News Corporation (NWS), Aurizon Holdings (AZJ) - formerly known as QR National - and Crown Limited (CWN).