Why HID Prime Value Australian Equities Investment Strategy
The HID Prime Value SMA is an Australian registered managed investment scheme offered exclusively to benefit HID Financial Services clients. The HID Prime Value SMA provides you with direct access to Prime Value Asset Management Limited’s investment management capabilities, with the potential tax advantages of owning individual securities.
The HID Prime Value SMA provides each investor with their own separately managed account (SMA) or portfolio; meaning each investor is the beneficial owner of the securities in their SMA account (Account). You receive the benefits of all capital gains/ losses, income and franking credits, and can track your investments online.
This fulfils the desire for transparency and direct share ownership sought by many investors.
The HID Prime Value SMA offers a choice of the following Australian equity investment strategies (each referred to as a Model Portfolio):
Prime Value Opportunities; and
Prime Value Equity Income
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Our investment philosophy is built on:
Stewardship: We take our role as stewards earnestly and value our responsibility to investors – putting our clients first. Co-investing alongside our investors ensures a true alignment of interest.
Quality investing requires a balance between Art and Science: We believe all economic and financial tests require flexibility, depending on the phase in the economic cycle or the type of stock. There is no standard way of identifying winners or losers in the stock market. Experience and common sense dictate how the formula must be adapted to determine the appropriate investment decision for each security.
The Funds enjoys the flexibility of being a style-neutral manager because it allows us to select stocks from across the ASX. This independent approach has delivered for over 16 years and means our process is not easily replicated.
Minimising mistakes: Minimising mistakes is our number one imperative. We must remember investment decisions are based on market views and intelligence that is often faulty, and on research that is never complete and error-free. Managers therefore live and die on their own judgments. This may seem to be lacking the heroics of picking big winners, but in practice the Investment Manager who makes the fewest mistakes usually produces superior results. Our research efforts are focused as much on avoiding losers as identifying winners.
Benchmarks are inefficient: Benchmarks provide a feel for how well the market has performed generally, but are not necessarily a good model for building a stock portfolio. Our main focus is on good companies selling below their intrinsic value regardless of their weighting in the benchmark or whether they are large, mid, small or micro cap stocks. The ability to consider “all caps” allows us opportunities often overlooked by major fund managers and stockbrokers. There are good reasons to look beyond the obvious. Stocks outside the ASX 100 are less influenced by trading and market factors and are more suited to detailed fundamental analysis as the basis for investment selections.
Our portfolios are constructed based on the expected return characteristics of the individual companies without reference to their size. We invest in a “market of stocks”, free of benchmark constraints.
Key benefits of SMAs
The significant benefits of investing in the SMA include:
You retain beneficial ownership of the underlying securities. With beneficial ownership comes transparency of the underlying securities and potential tax advantages (see below).
View the securities that make up your Account at any time
You own a portfolio of securities, not just a unit in a trust, by investing through the SMA. HID Financial Services will provide you on-line access to your Account. You can log into the investor website at any time to view the individual securities that make up your Account.
Retain the key benefits of managed funds
The Model Portfolios (i.e. investment strategies) are all professionally constructed and managed by Prime Value Asset Management Limited, a professional investment manager with an impressive history.
You don’t inherit other investor’s capital gains
Unlike most other managed investment schemes, your tax position as a result of investing in the SMA is affected only by the activity within your own Account. You do not buy into gains which have built up from other investors’ earlier investments, and you do not realise gains as a result of other investors’ decisions to withdraw from the SMA.
Move securities into or out of your Account
Applications and withdrawals can be in cash or in kind – all CHESS-held listed Australian securities are accepted. Transferring securities into or out of the SMA does not result in a realisation for capital gains tax purposes as long as the transfer is to the same person (beneficial owner). Once you have selected your Model Portfolio, we will sell those securities transferred in (or part thereof) not required and invest the proceeds as per your selection.
The SMA allows you to customise your Account to some extent. HID Financial Services will manage any customisation.
The HID Prime Value SMA offers a choice of the following Australian equity Model Portfolios:
When considering any investment, it is important that you understand:
all investments carry risk;
the value of investments will go up and down;
the level of returns will vary, and future returns may differ from past returns;
returns are not guaranteed, and investors may lose some of their money;
laws affecting registered managed investment schemes may change in the future;
assets with the highest long-term returns may also carry the highest level of short-term risk;
the level of risk for each investor will vary depending on a range of factors, including age, investment time frames, where other parts of the person’s wealth are invested, and the investor’s risk tolerance.
Refer to the HID Financial Services Product Disclosure Statement for the details of the investment risks.