Foresight Australian Ex-Top 20 Factor Report

The Australian X20 (outside top 20 companies by market cap) segment of the market represents a strong value and growth (GARP) opportunity according to our latest market factor report. Value factors that stand out relative to the broader market include shareholder yield (3 standard deviations higher,) EBITDA to EV (2 standard deviations higher) and book yield (1.6 standard deviations higher). Growth factor that look very attractive include 5-year earnings growth (5 standard deviations higher) gross profit margin (3.6 standard deviations higher) and sales growth (3.6 standard deviations higher). Importantly, the growth of this segment is not financially levered. That said, volatility risk (both 1 and 3 years) continues to be much higher than the broader share market.

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