Zenith’s review of the Australian large cap sector had an initial universe of 187 funds, of which nine were rated ‘highly recommended’, 51 ‘recommended’ and 28 ‘approved’.
Zenith head of research Bronwen Moncrieff said that much of the earnings per share (EPS) growth since the start of 2013 stems from a focused effort from company management to “reduce the operating costs” within their business.
“If current market valuations are to be supported and the Australian equity market is to sustain its recent strong share price performance, continued improvement in the economy and underlying company earnings are essential,” she said.
Ms Moncrieff said that given the size and efficiency of the large cap segment of the Australian equities market, one of Zenith’s key considerations was the ability of active managers to “generate excess returns”.
“Zenith believes the argument for active management within the Australian large cap segment of the equities market remains strong,” she said.
“Investors may choose to take a passive investment approach for reasons such as costs and simplicity, but active large cap managers have generated respectable excess returns over the short, medium and long term,” she added.
