Insync adopts a two-step process to construct the portfolio for the Global Titans Fund.
Step 1 ? Screening
We employ four simple, yet efficient, screens to narrow the universe of over 40,000 listed global companies down to 150 exceptional?quality companies that we believe have the potential to consistently grow their profits and deliver shareholder returns through increased dividends and/or buybacks. These screens are as follows:
|Size||Large stocks to ensure sufficient liquidity and better protection in down markets.|
|Balance Sheet||Reduces risk of cut in dividends during business downturns.|
|Profitability||Bias to companies that consistently deliver high ROIC.|
|Capital Allocation||Increasing dividends and/or buybacks.|
Step 2 ? Focus
Insync uses this list of highly profitable and shareholder oriented companies to conduct fundamental research on the most attractive opportunities. Preference is given to companies that trade at attractive valuations. Capital allocation is a key area of focus with a preference towards companies that have adopted a balanced approach to returning cash back to shareholders and retaining earnings to grow future profitability.
Assessing the industry structure in which each company operates, and the trend of a company?s return on investment, is important. Companies that pass this due diligence process are then valued using dividend discount models, free cash flow yield and proprietary implied growth and expected return models. The end result is a high conviction portfolio of typically 15-30 stocks.