Investment Analysis

Investment Analysis

Background

Once an investor decides to include shares, or hybrids, or managed investments such as ETFs, LICs, or managed funds, into their portfolio, the inevitable question arises : how do they choose which ones to buy out of the thousands on offer ?

Whilst there are many different approaches for analysing investments, we will share how Lonsec, as a professional research house, goes about its investment analysis and research process.

Shares

Lonsec considers the primary purpose of investing in equities is to generate dividend income, capital growth or a combination of both and it is this risk versus reward relationship that determines the attractiveness of those shares as an investment.

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Hybrids

Hybrids are securities listed on the ASX that have elements of both debt and equities. They have experienced a significant increase in market size and popularity in the past decade, however they are not straightforward investments. The reality is that hybrids carry with them significant complexity, and so a thorough research process for these securities is vital.

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Managed investments

Our research process is premised on the belief that managing money is a combination of ‘art’ and ‘science’ and that
there is more than one way to manage money; there are, however, a number of critical ingredients that combine to
produce a quality financial product.

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Note this covers managed funds, ETFs, and LICs/LITs.