Touchstone’s investment philosophy revolves around three core principles.
Successful long-term investing is a combination of both ‘art’ and ‘science’
We believe successful investing is only achieved through combining aspects of both art and science.
The science aspect is relatively straightforward – it’s the part of investing that relates to the accounting and valuation of companies, and the forecasting of future returns. Here we employ a range of quantitative tools based on widely accepted finance theory, and supported by robust academic research.
The art aspect of investing is much more challenging – it requires significant experience and involves the exercising of sound and balanced judgment when weighing up the relevant factors, necessary when assessing and selecting investments from the range of alternatives available within the market.
The Australian share market is risky due to its high concentrations
The Australian equity market is far more concentrated – and therefore riskier – than many of its overseas counterparts. Our share market’s unique composition largely results from the disproportionately high weighting of its top 10-15 stocks. This risk is mirrored in the majority of Australian managed portfolios (both active and passive), which also contain significantly higher levels of risk due to their index-based construction.
Quality is not appreciated over time
We believe quality is often under-appreciated, despite quality companies tending to generate more enduring returns over the long term. Equity markets consistently undervalue higher quality businesses at different times during the cycle, leading to the mispricing of their securities.
Touchstone was specifically formed to take advantage of these dynamics, via:
A highly experienced and diverse team of investment professionals
- A concentrated, index unaware approach to investing, and
- A bias toward investing in quality businesses at reasonable prices.
The business is majority-owned by the investment team, and we also invest in the strategy – ensuring our goals are aligned with those of our investors. We are a well-resourced and highly experienced team, adopting a collaborative approach with shared responsibility for portfolio management and investment strategy.