Whitefield’s Investment Objective

Whitefield aims to generate an investment return which is in excess of the return of the All Industrials Accumulation Index over the long term from investment in a portfolio of industrial (ie. all industries in the Australian market excluding resource) shares listed on the Australian Stock Exchange.

Whitefield’s Investment Strategy

Whitefield seeks to hold investments which are realistically capable of generating a robust rate of investment return through the generation and growth of their underlying earnings over multiple future years.

While share prices will fluctuate over short periods of time based on temporary influences such as the number of buyers relative to sellers, transient fears, sentiment or greed, the ultimate determinants of long term return for an investor are the future achievable earnings generated by a company relative to the cost that must be paid for that investment.

Consequently Whitefield researches, monitors and analyses the achievable future earnings which may be generated by each investment, the risk or certainty of delivering those earnings, and assesses the potential return which may progressively accrue to investors.

Whitefield structures its investment portfolio to give emphasis to those investments offering a favourable balance of potential return and certainty.

Whitefield holds a diversified investment portfolio containing approximately 50 holdings, with exposure across the major economic segments of the Australian industrial (non-resource) market. These segments include Banking, Finance, Consumer Discretionary, Consumer Staple, Healthcare, Industrial, IT, Non-Resource Materials, Property, Telecommunications and Utilities sectors.

Whitefield’s investments are spread across this breadth of stocks and industries to provide shareholders with a moderate degree of economic and stock specific diversity. The level of diversity within the portfolio assists investment returns in a number of ways:

• (a)
  Economic growth within industry segments may rise and fall over time. By holding a sufficient diversity of exposures Whitefield can benefit from growth in some industries even while other industries may be experiencing a slowdown.
• (b)
  The management, business structure and industry position of each stock differ, and consequently earnings growth and financial outcomes for each stock will vary over time. By holding a sufficient diversity of exposures Whitefield can benefit from earnings growth in some stocks even while other stocks may be experiencing a slowdown.
• (c)
  Investment outcomes can never be predicted with absolute certainty. In some circumstances an investment will produce an unfavourable outcome. The risk of any individual stock or sector having a material adverse impact on Whitefield’s total portfolio is lowered by the maintenance of a diverse portfolio.

Notwithstanding the benefits from a level of diversity, Whitefield does not seek to over-diversify its portfolio. By avoiding over-diversification, each investment in Whitefield’s portfolio has the potential to make a material contribution to the overall investment outcome of the company, and importantly the benefit of each favourably performing investment holding can be given greater proportionate emphasis.