“I think the more speculative end of the market could be challenged this year (2022), if we don’t see inflation falling away quickly.
“That leaves you focusing your portfolio again on these stocks that we think are more predictable in terms of their earnings. They have a business model that can generate free cash flow, are able to return a lot of capital to shareholders.
“That is the area we think is good protection in this probably more uncertain policy environment.
“Telstra is a good example of this. This is a telecom industry where there has been historically quite low returns in Australia, but you’re now getting a much more disciplined market structure.
“No one’s been making enough money. There’s quite a lot of debt in some of the other companies.
“And so you’re seeing more discipline, better pricing, higher returns. That’s translating into much higher cash flow and it’s a company that’s able to return a lot of that to shareholders.”
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Pendal Focus Australian Share Fund
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Crispin Murray is Pendal’s Head of Equities. He has more than 27 years of investment experience and leads one of the largest equities teams in Australia. Crispin’s Pendal Focus Australian Share Fund has beaten the benchmark in 12 years of its 16-year history (after fees), across a range of market conditions.
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