TheBT Financial Grouphas indicated it has shifted its investment strategy with a stronger focus on stock selection and valuation.
BT head of Australian equities Crispin Murray says over the last few months the group has been focusing heavily on portfolio construction, and specifically the correlation between stocks and stock specific risk within the funds.
According to Murray, one of the factors resulting in the group’s poor six month performance activity last year was the failure to identify correlations between certain stocks in funds, resulting in negative domino effects.
BT portfolio manager Scott Maddock says the research process has adjusted slightly since Murray stepped into the role, with the research team now using a greater number of valuation processes.
“We are now using a number of different valuation methodologies, so that we don’t have one style of valuation,” Murray says.
“We don’t want style to be the main driver, but stock specific risk instead.”
However the group says the changes in portfolio construction will not affect the group’s style or risk budget, which will remain the same.
The group has also recently introduced a number of tools to reduce the amount of style drift within funds, with Murray saying the group is defining itself as a core manager.
The group also flagged its current move away from large sector positioning towards more domestically oriented businesses.
“Whereas previously we had a small number of large active positions, we will now take a large number of small active positions,” a BT spokesperson says.
Ironically, BT head of investment Guy Strapp says the group’s Australian Equity and Listed Property and Securities products, which have recently received ‘hold’ and even ‘sell’ ratings, have been the group’s best performing capabilities over recent months.
