Platypus Australian Equity

Portfolio Long Only

Fund Investment Objectives

At Platypus Asset Management, we believe that the Australian market index does not offer investors good risk-adjusted rewards. Therefore, those seeking to invest in a relatively high-risk asset class, such as Australian equities, should seek to achieve a risk-return outcome significantly superior to that of the index. We believe that the share price performance of any company will ultimately be driven by the growth in its profitability. Value can be added by seeking out those companies with extended growth prospects and by paying a sensible price for that growth. We also recognise that virtually all stocks suffer from significant mispricings from time to time. This can be due to the mispricing of future earnings, information inefficiency, investor sentiment, or merely because the company is a "forgotten" stock. These mispricings offer shorter term, but valuable opportunities to add value. Therefore, we believe the most sensible way to achieve meaningful risk-adjusted returns in the Australian market is to build a portfolio that:  consists predominantly of companies that have the ability to grow their footprint in a sustainable manner;  is also able to invest in companies with superior risk-adjusted rates of return because the stock is temporarily undervalued, regardless of growth characteristics; and  is constructed and managed having regard to the portfolio's absolute risk and return characteristics - rather than seeking to manage the risk (ie. tracking error) relative to a market index. We are active managers with a high degree of conviction in our philosophy and process. As a result, our portfolios are concentrated - typically 25-35 stocks(Flagship). Our investment philosophy drives our primary focus, which is to identify those companies with extended growth prospects, and to invest in those companies at sensible prices. We understand that the drivers of earnings growth will vary across company and industry and we therefore utilise a combination of top-down macroeconomic and bottom-up company analysis. We employ a combination of qualitative, fundamental and quantitative analysis. Each technique complements and supports the other. Each technique has been developed and is managed drawing on our deep understanding of markets - our experience and our intuition. This multi-faceted approach provides a distinctive discipline and rigour resulting in a deep understanding of each company we own. In addition to our focus on long-term growth prospects, our investment process identifies shorter term trading opportunities, such as temporary mispricings, which provide opportunities to add incremental value to our portfolios. We are index-agnostic. That is, our portfolios are constructed having regard to the absolute risk and return profile of each individual stock and the portfolio as a whole - rather than being primarily focused on benchmark-relative risk. The objective for the flagship/core strategy (Australian Equities Trust) is to outperform the S&P/ASX300 Accumulation Index by 4% pa over rolling three year periods. Portfolios are constructed having regard for the portfolio's absolute risk and return characteristics rather than seeking to explicitly manage the risk (ie. tracking error) relative to a market index. We do however anticipate (and history suggests) that our tracking error will exceed 5% (ex post tracking error has typically been 5-7%). Given the concentrated nature of our portfolios, we expect greater volatility than that of the benchmark