Australian Growth Fund: 2015 in review

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Australian Growth Fund: 2015 in review.

Our largest portfolio position, Ramsay Healthcare, delivered a 25% return over the year. Nine portfolio stocks delivered superior returns, so Ramsay was not our star performer, but in ten of the last 11 months Ramsay's share price out-performed the market. Importantly, Ramsay out-performed in three of the four months during which the market fell. Ramsay typifies our investment style; it has a tremendous scale advantage and substantial opportunities to grow by reinvesting its sizeable profits. We're pleased to have our flagship position delivering a solid and stable return over the year.

"Market efficiency" refers to the idea that share prices reflect all available information. In March we bought shares of ANZ and Westpac. We recognised that Aussie banks would be required by regulators to raise additional capital, and believed that banking shares reflected this information at the time. In fact as the banks have undertaken these raisings, their share prices have suffered. It is frustrating to see the market responding to an issue we thought was commonly understood. While the market being only "partially efficient" is challenging, investor perceptions cannot change the true value of a company over the long-term, so we remain comfortable with our Aussie bank positions.


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