Aeon Active Equity Prescient Fund

Investment Philosophy

At Aeon Investment Management, our investment philosophy is based on the conviction that significant inefficiencies can occur in the market arising from extremes in market sentiment (excessive optimism or pessimism) or the misallocation of capital between distinct investment styles, at different times across a range of asset classes and strategies. A structured investment process which is able to monitor and value a wide range of opportunities is best able to capitalise on these inefficiencies.

We focus on the rigorous process of asset valuation and return modelling, using both fundamental and quantitative analysis. Since it is not possible to perfectly predict future market movements, our process guides us in constructing portfolios that can deliver outperformance of the benchmark in a range of scenarios, over a complete market cycle.

The investment process is structured to analyse and monitor the risk-return characteristics of a wide range of asset classes and investment strategies. Diversifying the sources of alpha gives us the ability to construct portfolios with superior risk-return characteristics.

The investment process is structured to analyse and monitor the risk return characteristics of a wide range of asset classes and investment strategies. Diversifying the sources of alpha gives us the ability to construct portfolios that can deliver outperformance relative to their benchmarks in a range of scenarios, over a complete market cycle.

Aeon Investment Management’s equity investment style is that of Growth At a Reasonable Price (GARP). Our adaptation of the GARP style seeks to combine the best of growth and value investing, by buying companies with sustainable growth rates greater than that implied by the company’s market valuation. Specifically, we target companies where the Sustainable Earnings Per Share Growth Rate demonstrably surpasses its Implied Earnings Per Share Growth Rate.

The steps involved in our valuation methodology are:

Implied Growth vs Sustainable Growth (IG vs SG) & Flash Investment Case
Full Investment Case
Portfolio Construction

A disciplined approach to our GARP style will lead us to buy undervalued companies, regardless of whether they are classified as ‘growth’ or ‘value’. A consistent implementation of our philosophy will lead to outperformance of the benchmark over time, regardless of the dominant investment style.

Risk Management and Return Modelling

The portfolio is structured with overweight and underweight positions relative to the benchmark, which is dependent on the gap between the implied and sustainable growth rates. A real time model monitors the portfolio positions, and the effect of the sector and stock selection decisions on the performance relative to benchmark. The risk management framework encourages diversification and reduces the risk of significantly underperforming the benchmark.

Strategy Benefits

Exposed to a fully invested, diversified equity portfolio.
Cost efficient.
Able to capture diversified sources of return.

Equity Mandates

All equity funds or products are managed according to the same philosophy and process, subject to client requirement and mandate constraints.

Disclaimer

Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. CIS’s are traded at the ruling price and can engage in scrip lending and borrowing. A schedule of fees, charges and maximum commissions is available on request from the Manager. There is no guarantee in respect of capital or returns in a portfolio. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. Performance has been calculated using net NAV to NAV numbers with income reinvested. A detailed disclaimer can be viewed here.