GROWING WEALTH THROUGH GLOBAL INVESTING

The following ideas underpin our investment philosophy:

• Invest in businesses that own brands. Brands are powerful trademarks that are top of mind when consumers make buying decisions. Dominant brands allow companies to charge more for products and services that are familiar and trusted. When we analyse brands, we look for businesses that have advantages that can be sustained for decades to come.
• We invest in global companies, regardless of the company’s head office geography. We prefer businesses with the ability to sell their products and services in both developed and developing markets. These companies have proven manufacturing, marketing and distribution capabilities that are operational in multiple countries.
• We look for investments that generate cash that can be paid out to shareholders to provide a growing income in the form of increasing dividends. The power of compounding is unleashed as the additional shares purchased with dividend income, in turn, generates more dividend income. On occasion, we will invest in a growing brand that does not currently pay dividends but is likely to pay dividends in the future.
• We invest in businesses that do not have excessive short-term debt. Excess debt makes companies more vulnerable to economic cycles and interest rate increases.
• We prefer investments that are likely to benefit from advances in technologies that enable more efficient production and distribution.
• We prefer stable market leaders with long track records rather than young, unproven companies with limited financial history.
• We prefer simple businesses that are easy to understand.
• Our preference is to hold our investments for the long term. We like avoiding capital gains taxes and excessive transaction fees.
• We expect markets to crash from time to time, and when they do, we increase our holdings of our favourite companies.
• We focus on both the analytical and physiological elements of investing. We understand that investor temperament is vital for investment success. We avoid the euphoria of overpriced markets and are active when markets or individual companies have temporarily declined in price.

This philosophy leads us to scour international stock markets for great brands that are temporarily unloved and selling at reduced prices. Buying these great companies allows us to generate the income and return our clients require to meet their financial goals.

INVESTOR TEMPERAMENT

Emotional control is more important than IQ when it comes to investment success. Extreme market cycles, characterised by bubbles and crashes, are more influenced by human psychology than economic fundamentals. The emotions of fear and greed are dominant at the depths of a crash and peaks of a bubble.

The AXIAM fund management team are experts in investor psychology and temperament. We provide on-going counsel to our clients to ensure they don’t make irrational investment decisions that will damage investment returns. This counsel is most valuable at market extremes when prices are very high or low. We protect our clients from the temptation to buy into euphoria and overpay for shares. Daily new prices highs and positive news in the media characterise phases of market euphoria. Of equal importance, we ensure our clients purchase more shares in great companies at the best possible prices when markets decline. We carefully analyse these companies to ensure fundamentals remain intact. Negative news in the media and depressed sentiment can represent the best buying time to make additional purchases. This thinking is best summarised by Warren Buffett when he says “Be fearful when others are greedy, and greedy when others are fearful”.

In addition to ensuring our clients “buy low”, we provide on-going guidance during any stage of the investment cycle. We look for market opportunity regardless of the current circumstances.