Investment objective

The BlackRock Australian Equity Opportunities Fund (the Fund) aims to provide returns (before fees) of 8% per annum above the benchmark (S&P/ASX 200 Accumulation Index) over rolling three year periods, through holding long and short positions across the Australian equity market.

 

Fund strategy

The Fund aims to outperform the benchmark by gaining exposure to long and short positions across the Australian equity market. Key insights captured in our investment process include:

Analyst expectations

Reactions to changing earnings forecasts are monitored to discern shifts in investor behaviour. We have found that investors generally under-react to changing earnings forecasts. This tendency allows us to predict the relative performance of stocks.

Relative valuation

Company financial data is assessed to arrive at what we believe to be the underlying value of individual firms. Valuation models take into account asset values, earnings prospects and the potential for variability in forecasts over short and long term horizons.

Earnings quality

Company financial data is analysed to determine earnings quality and sustainability. Measures of earnings quality and sustainability embrace financial strength, as well as discretionary accounting decisions made by company management and business operating efficiency.

Market signals

We believe that the selling/buying of shares by market participants can signal prospective share price outperformance or underperformance over the medium term.

Timing

By analysing market data, we are able to identify the dominance of specific investment styles, such as growth and value, at certain points in the investment cycle.