How does Vinva utilise data in building a meaningful portfolio?

STEP ONE: DATA AND RESEARCH

Every signal starts with economic insight from Vinva’s investment team, not the data alone. Vinva processes information from hundreds of global sources – company filings, analyst research, industry data, news flow and more – to build proprietary insights, known as signals, that flag where a company may be under- or overvalued relative to its peers. This is active management in practice: each signal reflects a specific, researched view on what drives a company’s value, applied systematically across the portfolio.

STEP TWO: STOCK RANKING

Each company in the investment universe is scored using these signals, covering valuation, sentiment, earnings quality and broader business conditions. Rather than relying on any one measure, several are combined to form a more complete, considered view of each company’s prospects.

STEP THREE: RISK MODELLING

Before any stock is added to or adjusted in the portfolio, Vinva checks how it would affect the portfolio’s overall exposures to sectors, countries or investment styles relative to its benchmark, so keeping the portfolio balanced rather than skewed towards any one bias. This step is what allows the portfolio to stay broadly style-neutral and diversified as it evolves.

STEP FOUR: PORTFOLIO CONSTRUCTION

The rankings, risk analysis and expected trading costs are brought together to build the final portfolio, typically comprising hundreds of holdings. The portfolio is then reviewed and rebalanced on an ongoing basis as new information emerges, rather than being set and left for long periods.

WHY IT’S A CONTINUOUS PROCESS, NOT A ONE-OFF

It’s worth stressing that these four steps aren’t a one-time exercise performed when the fund launches. New data arrive every day, so research is ongoing, rankings are refreshed, risk exposures are rechecked and the portfolio is adjusted accordingly. This continuous cycle is what allows the portfolio to keep reflecting current information, rather than a view formed at a single point in time and left unchanged.

WHAT THIS MEANS FOR YOU

Each of these four steps acts as a check on the others: research generates the ideas, ranking prioritises them, risk modelling keeps the portfolio balanced and construction brings it all together efficiently. No single stage operates in isolation. The process aims to maintain discipline at every stage, not just at the point of buying a stock.

Important Information: Units in the fund referred to herein are issued by Magellan Asset Management Limited ABN 31 120 593 946, AFS Licence No. 304 301 trading as Magellan Investment Partners (‘Magellan’). This material is issued by Magellan and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation. This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) and consider obtaining professional investment advice tailored to your specific circumstances before making a decision about whether to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to the relevant Magellan financial product may be obtained by calling +61 2 9235 4888 or by visiting www.magellaninvestmentpartners.com.

Past performance is not necessarily indicative of future results and no person guarantees the future performance of the fund, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Magellan or the third party responsible for making those statements (as relevant). Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. This material may contain ‘forward-looking statements’. Actual events or results or the actual performance of a Magellan financial product or service may differ materially from those reflected or contemplated in such forward-looking statements. This material may include data, research and other information from third-party sources. No guarantee is made that such information is accurate, complete or timely and no warranty is given regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Magellan will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Magellan.

Further information regarding any benchmark referred to herein can be found at www.magellaninvestmentpartners.com/funds/benchmark-information/. (080825-#W14)

Insights