Often investment commentary in the major newspapers focuses on macroeconomic factors: readers are confronted with GDP, NFP, ILO unemployment and a whole alphabet soup of data. This data is easily accessible to newspaper columnists and can be a gateway to much economic and political commentary, so it is perhaps unsurprising they focus on it. However, macroeconomic data is rarely the best indicator of company fortunes, which are the ultimate source of investment returns.
Writing in the FT, Terry Smith, Chief Executive of Fundsmith, discussed why he believes that it is far more important to focus on the fundamentals of individual companies. Smith’s investment principles centre on the idea of buying good companies, regardless of what else has been going on. He buys and holds high-quality companies offering a strong return on capital. Importantly, whilst he admits to not always sticking to this himself, Smith says that as long as the company fundamentals remain strong, investors should continue to hold that company.
This stoicism often comes in the face of vocal opposition. The nature of the investment world is that many large fund managers have a great deal of confidence in their ability to make the right call, and so have no reservations about telling those who disagree with them that they are wrong. However, having confidence in your research and sticking with good companies is an important characteristic of successful investing.
Cantab Asset Management’s individual equity investment approach focuses on finding shares which we want to hold for a long time and which can give consistently good returns over the period we hold them. Cantab Asset Management currently selects shares on a value basis, buying underpriced companies which are expected to give capital returns as they move to fair value. Cantab Asset Management uses its proprietary CAMBRIDGE method of stock analysis.
If you are interested in investing through Cantab Asset Management, whether in equities or in other investment securities, please contact us on 01223 522000.
Risk warnings
This document has been prepared based on our understanding of current UK law and HM Revenue and Customs practice, both of which may be the subject of change in the future. The opinions expressed herein are those of Cantab Asset Management Ltd and should not be construed as investment advice. Cantab Asset Management Ltd is authorised and regulated by the Financial Conduct Authority. As with all equity-based and bond-based investments, the value and the income therefrom can fall as well as rise and you may not get back all the money that you invested. The value of overseas securities will be influenced by the exchange rate used to convert these to sterling. Investments in stocks and shares should therefore be viewed as a medium to long-term investment. Past performance is not a guide to the future. It is important to note that in selecting ESG investments, a screening out process has taken place which eliminates many investments potentially providing good financial returns. By reducing the universe of possible investments, the investment performance of ESG portfolios might be less than that potentially produced by selecting from the larger unscreened universe.
