Alex Leyland, Portfolio Manager at Leyland Asset Management. says that the economy is transitioning away from mining as smoothly as could be expected. “People are finding jobs, new car sales are up, everything seems to be ok.” Despite this, wage growth remains at recession levels and confidence remains low. In this environment, he says it’s important to look further than the top of the market to find attractive opportunities. “If you track an index, you are buying 20 reasonably low growth businesses, and they’re ripe for competition.” Woolworths is susceptible to competition from Aldi, BHP is exposed to commodity prices, and the banks are exposed to housing, should that start to fall. With 35% of the index in the big 4 banks, he sees concentration risk inherent in holding the index. “If you’re going to manage your portfolio prudently, you have to look outside index tracking.” Watch the video below for the full interview.
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