Aeon Balanced Prescient Fund

Investment Philosophy

The Aeon Balanced Fund applies the same GARP-based philosophy and Implied Growth vs Sustainable Growth (IG vs SG) framework across all asset classes — equity, listed property, fixed income, and money market. The intention in each asset class is to determine what is priced in with respect to key drivers and position the portfolio accordingly. In equity it is earnings growth; in property it is dividend growth and property valuations; in fixed income it is inflation and interest rate expectations. Significant inefficiencies can occur across asset classes due to market participants having excessive optimism or pessimism regarding the outlook for the market or individual securities. The over-allocation of capital to a certain investment style (growth or value) can also lead to inefficiencies in the market price of securities. We look to capitalise on these inefficiencies by buying companies with long-term sustainable growth rates greater than that implied by the company’s market valuation. We also utilise our proprietary Macro Economic Model, Fear/Greed Model and Currency Model to assess under- or overvalued levels across geographies, sectors, and asset classes.

Investors should consider the Aeon Balanced Fund where they have a long-term horizon (5 years or longer) and are looking for inflation-beating returns across a diversified range of domestic and global asset classes.

Investment Objectives

Aeon’s Balanced Fund strategy invests in a range of income, domestic and foreign equity assets and strategies in order to:

Earn inflation-beating returns by investing across multiple asset classes.
Provide investors with stable income and modest capital appreciation in the long run.
Manage risk through disciplined portfolio construction.
Employ low-cost trading techniques.

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

Each asset class is treated independently with its own philosophy, process, and performance measurement, ensuring optimum positioning across equity, listed property, fixed income, and money market. Diversifying the sources of alpha gives us the ability to construct portfolios with superior risk-return characteristics.

A consistent implementation of our philosophy is expected to lead to outperformance of the benchmark (CPI+5%) over a complete market cycle, regardless of the dominant investment style.

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.