Interview with Angus Baxter, Investment Director of Valu-Trac Investment Management Limited
Valu-Trac’s investment philosophy is that an investment in bonds or equities is essentially an exercise in buying future income streams. Valu-Trac systematically measures, projects and values those future income streams using objective assumptions on a globally consistent basis. They are then compared to price, which gives the “Intrinsic Value Yield” which is a measure of the potential income generation expressed as a compound annual real rate of return. The measurement of “Intrinsic Value Yield” is at the heart of the investment management process and allows comparison of assets on a globally consistent basis. The aim is to buy high Intrinsic Value Yield and hold it while it falls, and to avoid low and rising Intrinsic Value Yield. The Intrinsic Values for non-income producing assets and currencies are made by reference to central banks monetary base. Experience and analysis shows that investment according to the level and behaviour of Intrinsic Value Yield leads to superior investment returns.
Valu-Trac Investment Management Ltd (VIML) has US$604 million of assets under management and direct advice in long-only and long/short strategies. Among the portfolios managed, VIML manages two private label open-ended funds (where VIML is the appointed investment manager). The first, managed on behalf of a European bank, is primarily an equity fund with the ability to diversify into bonds and/or “alternatives” (by which we mean gold mining and precious metal stocks). The fund has outperformed the MSCI World Equity Index by an annualised 11.27% over the last three years. The second is an equity-only fund domiciled in Australia and has outperformed the MSCI World Index (ex Australia) benchmark by an annualised 9.0% over the last three years (all figures as at end August 2006).