Auscap’s case for active investing and where they’re finding value

LiveWire09-29

The debate between passive and active investing is not likely to be settled anytime soon. However, if you listen to Tim Carleton of Auscap Asset Management, a Sydney-based fund manager that focuses on...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAuscap’s case for active investing and where they’re finding value\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-09-29 07:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/auscap-s-case-for-active-investing-and-where-they-re-finding-value><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The debate between passive and active investing is not likely to be settled anytime soon.\nHowever, if you listen to Tim Carleton of Auscap Asset Management, a Sydney-based fund manager that focuses on...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/auscap-s-case-for-active-investing-and-where-they-re-finding-value\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK7046","symbol_name":"综合性资本市场","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/auscap-s-case-for-active-investing-and-where-they-re-finding-value","article_id":"2571878200","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/auscap-s-case-for-active-investing-and-where-they-re-finding-value","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2571878200","pubTimestamp":1759102202,"columns":[],"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"The debate between passive and active investing is not likely to be settled anytime soon.However, if you listen to Tim Carleton of Auscap Asset Management, a Sydney-based fund manager that focuses on quality and value, perhaps it is not a question about which is better, but what is best for a particular environment.According to Carleton, it all comes down to what you are investing in.When you invest in an index, you’re going to be biased or overweight towards the largest companies in that index. He argues that if those are the companies that are delivering the best earnings growth, then this is a great market to be passively invested in.When Auscap looks at the All Ordinaries Index, they are not seeing a market that is good for passive investing.According to Carleton, the All Ordinaries is dominated by low-growth companies that are facing structural, cyclical, or other challenges.Once something investors feared, GLP-1 medications, such as Ozempic, are reportedly increasing the diagnosi","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7046":"综合性资本市场","BK7124":"保健护理服务","BK7501":"新冠治疗股","SHL.AU":"SONIC HEALTHCARE LTD","XAO.AU":"标普/澳交所 普通股指数","HDN.AU":"HOMECO DAILY NEEDS REIT","XJO.AU":"标普/澳交所 200指数","BK7007":"医疗保健设备","XKO.AU":"标普/澳交所 300指数","BK7005":"零售业房地产投资信托","APE.AU":"Eagers Automotive Ltd","IEL.AU":"IDP EDUCATION LTD","MQG.AU":"Macquarie","NCK.AU":"NICK SCALI LTD","BK7143":"汽车零售","RMD.AU":"Resmed DRC","BK7107":"家庭装饰零售","BK7511":"ESG概念","BK7162":"零售房地产信托","BK7132":"教育服务"},"translate_title":"Auscap的主动投资案例以及他们在哪里发现价值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"MQG.AU":1,"APE.AU":1,"SHL.AU":1,"XAO.AU":0.9,"RMD.AU":1,"NCK.AU":1,"XJO.AU":0.9,"XKO.AU":0.9,"HDN.AU":1,"IEL.AU":1},"content_text":"The debate between passive and active investing is not likely to be settled anytime soon.\nHowever, if you listen to Tim Carleton of Auscap Asset Management, a Sydney-based fund manager that focuses on quality and value, perhaps it is not a question about which is better, but what is best for a particular environment.\nAccording to Carleton, it all comes down to what you are investing in.\nWhen you invest in an index, you’re going to be biased or overweight towards the largest companies in that index. He argues that if those are the companies that are delivering the best earnings growth, then this is a great market to be passively invested in.\nHowever, the inverse is also true.\nActivating outperformance\nWhen Auscap looks at the All Ordinaries Index, they are not seeing a market that is good for passive investing.\nAccording to Carleton, the All Ordinaries is dominated by low-growth companies that are facing structural, cyclical, or other challenges.\n“More than 50% of the market is in the financials and materials space and most of that is in the big four banks and the big iron ore companies,\" he says.\nSuch concentration is not an attractive proposition for Auscap.\n\n\n\n\n\n\n\n\n\nThe average PE ratio of the big four banks. (Source: Auscap presentation)\n“The big four banks have struggled to grow earnings over the last decade” observed Carleton.\nWith increased competition in the mortgage market, specifically from Macquarie Bank (ASX:MQG) who are increasingly writing a larger share of Australian loans, and elevated valuations, Auscap doesn't see the environment for the big four getting any better.\n\n\n\n\n\n\n\n\n\nBreakdown of steel production by country. (Source: Auscap presentation)\nIn iron ore, Auscap believes that the development stage has peaked and expects demand from China to decline for the next couple of decades which has been “the only game in town” given how much they dominate global demand. At the same time, large mines continue to open up leading to an environment of reduced demand and increased supply which is not good for the iron ore price.\nSo, Auscap are not seeing a positive environment for passive investing in Australia and instead preach an active approach.\nCarleton even offered a prediction:\n“We suspect we’re going to be sitting here in a decade’s time and every genuinely active manager is going to have outperformed by some margin”\nIf they aren’t optimistic about the largest businesses on the ASX, where are they seeing opportunity? Mostly in Australian mid-caps.\nResMed (ASX: RMD)\nAccording to portfolio manager, Will Mumford, ResMed is likely to benefit from multiple trends that should lead to increased diagnosis and treatment of sleep apnoea. Which is a big deal as sleep apnoea is significantly underdiagnosed. \nOnce something investors feared, GLP-1 medications, such as Ozempic, are reportedly increasing the diagnosis of sleep apnoea with many patients choosing to use CPAP machines whilst also using the drugs for weight loss. Also, with the likes of Apple and Google rolling out sleep apnoea detection features on their wearables – with others likely to follow – it has never been easier for someone to be made aware that they potentially suffer from the condition.\nSonic Healthcare (ASX: SHL)\nAuscap believes Sonic’s leadership in complex pathology, gives it an advantage over peers as it is less beholden to GPs and there for benefits from processing a significant share of premium priced, high-complexity, tests. \nHowever, after a couple of years of headwinds, including the hangover from covid and increased competition, Mumford believes that Sonic is now trading “at a discount to the broader ASX” despite it being a defensive healthcare leader that is set to benefit from an aging population and increased complex, high margin testing.\nHomeCo Daily Needs REIT (ASX: HDN)\nAuscap told a simple story about HomeCo Daily Needs REIT, an investment trust that invests in neighbourhood and large-scale retail properties. \nIts properties are in high-demand metro locations; however, their tenants are paying below market average rents. This means tenants are happy for their rents to keep growing leading to sustainable income growth of around 3.5% which when added to a 6.5% distribution yield, Auscap believes offers compelling value.\nLower interest rates are also likely to benefit HomeCo. Firstly, lower borrowing costs should help it increase its distributions paid to unitholders. Secondly, it should lead to lower capitalisation rates which should lead to the value of the properties it owns increasing. \nEagers Automotive (ASX: APE)\nEagers is the number one dealer in 13 of Australia’s top 20 automotive brands. However, it was the growth in hybrid and electric vehicles which got Auscap’s attention.\nAccording to Will Mumford, when a customer decides to buy a hybrid or electric vehicle, they tend to follow a similar thought process, either looking at buying from a trusted brand who has been selling hybrids for a long time, such as Toyota, or they gravitate towards an brand that has been selling more electric vehicles than anyone else around the world, and at an attractive price – BYD.\nEager’s is the leader when it comes to both brands including operating two-thirds of all BYD dealerships in Australia. Given how EVs have grown from 1% of cars sold in 2020 to 12% in the last six months, this is a growing area that is likely to benefit Eagers given its leadership.\nNick Scali (ASX: NCK)\nNick Scali is one of the favourite stocks of chief investment officer, Tim Carelton and has been a holding in the fund for a long time calling it “Australia’s number one furniture company”.\nAuscap believes that Nick Scali should continue to benefit from margin expansion as it continues to work through its recent, UK-based, Fabb Furniture where only around half of the stores have been rebranded to Nick Scali with the rest expected in the current half and where margins have improved. As the company increases investment in advertising, Auscap believes sales per store should also improve.\nDespite its success in Australia and international expansion, Carleton observes that Nick Scali still trades below that of its peers. \nIDP Education (ASX: IEL)\nFinally, Carleton discussed IDP Education.\nIDP’s English language test, known as IELTS, is widely recognised as the best in the industry and is used by over 12,500 organisations around the world. It also operates a placement business that helps place students looking to study overseas.\nTesting and placements have both dropped dramatically as many governments pushed back against migration levels. However, Auscap are seeing signs this could be shifting and as a result, IDP should benefit from both increased testing and placements in the future. Earnings should also benefit from management’s focus on lowering costs.\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.10","shortVersion":"4.35.10","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2571878200","isCrawlerRequest":true}