Investing in a winner takes all world
Hyperion Asset Management’s Guide to Successful Long-Term Investing
In 2020, we find ourselves living through extraordinary times. The COVID-19 crisis has exposed the fragility of our interconnected financial system and this may be the most significant economic event that many investors will experience in their lifetimes.
The COVID-19-triggered recession is the latest factor negatively impacting global economic growth. High levels of debt, declining monetary tailwinds, rising wealth inequality, climate change and massive disruption are some of the existing factors which will not be disappearing anytime soon.
This is why we expect economic growth to remain stagnant for at least the next decade. While the economic pie is not growing, we believe that the best way for investors to find outperformance is to identify the small group of winners that will continue to take market share and grow in challenging market environments. These companies have low debt levels, competitive advantages, strong management teams and large addressable markets to name just a few of the qualities we analyse for, and that are explored in this guide.
We believe that in such a challenging economic environment, it is becoming more difficult for investors to find these winners. A winner-takes-all environment means that returns will be concentrated in a small number of winners and our investment process is focused on identifying these businesses along with the key themes which will deliver alpha.
We hope that you find this guide both insightful and useful and that you can take these principles and concepts with you on your investment journey.
Australian and global equity portfolios constructed with a long term mindset.
Hyperion Asset Management exists to help our clients protect and grow their capital over the long term. When we invest capital in listed companies on our clients’ behalf, we have the mindset of long-term business owners, not short-term traders. The average holding period for the companies in our portfolios is 10 years and long-term sustainability of the businesses we invest in is core to our philosophy.
Sustainability is essential because over long time periods, the value proposition to all relevant parties associated with the business needs to be sufficiently attractive for the business to grow and thrive. In the very long term this includes the wider community, society and the environment. Long term capital preservation is a core part of our investment philosophy as we see risk as permanent loss of capital, not short-term market price volatility.
Our mindset is centered on achieving attractive long-term absolute positive real (inflation adjusted) returns on our clients’ portfolios. Our investment philosophy and process are designed to compound our clients’ capital at rates of return that are not only positive in absolute (inflation adjusted) terms but also materially above the relevant passive benchmarks over long time horizons. Compounding returns on capital are core to how we invest and how we have been able to grow our clients’ capital.
Since Hyperion was established in 1996, we have achieved our goal of producing attractive positive absolute real returns (preserving capital) whilst also achieving long-term returns significantly above the relevant benchmarks (after fees).
This guide is aimed at sophisticated investors looking to learn directly from Hyperion Asset Management's investment specialists.