In the final instalment of our thematic investing series, we explore why alpha is more obtainable when investing over the medium to long-term, the best bottom-up factors to use in order to capture it, and the importance of valuation when combined with quality, capital discipline and dividend.
This is the final paper in our series on thematic investing. In our first two papers, (‘Thematic investing – an alternative to benchmarks?’ and ‘Thematic investing – applications for alpha'), we looked at some of the limitations of investing in benchmarks, and described how thematic investing may be applied to help meet long-term investment objectives.
In this paper we discuss:
How short-term mis-pricings can create long-term opportunities
That valuation multiples are important, but by combining both quality and value, investors may experience the double benefit of potentially increasing expected returns whilst significantly reducing drawdowns
That one of the most important metrics by which we can measure management is their capital discipline
Read the full report here.
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