to invest in shares that offer a good return and dividend and shies away from those that don’t return cash to investors, according to Uys Meyer, CEO of Blue Alpha Investment Management and manager of the fund.
“We do not follow a dogmatic approach to share selection and have an approach to capital preservation that will maximise returns over the long term for investors,” he says. “This is evident in our long-term ranking against both the market and our peer group.”
The fund currently has no exposure to resources and has been underweight in this sector since at least 2011, according to him.
“The only thing that matters to an investor is the return on what they’ve invested,” Meyer says. Dividends, for example, are important in terms of management discipline as the company’s return on investment is shared with shareholders, he says.
One of the largest single local holdings in the fund is Woolworths Holdings. Ian Moir, CEO of the retailer, is doing well in terms of capital allocation, according to Meyer. The company also boasts the potential of entering the food retail market in its two Australian units – Country Road and David Jones – of which Woolworths now has full operational control, he says. Locally, the retailer’s target market, namely high-end consumers, is more resilient to the current economic downswing than those of competitors at the lower end of the spectrum, such as Shoprite, he says.