For the majority of investors the big four are the cornerstone of their portfolios

For the majority of investors the big four are the cornerstone of their portfolios. With a prospective earnings per share growth rate higher than the broader market (currently at a miserable 3%), and fully franked yields over 5%, there is no reason for this love affair not to continue. We believe that the Murray Inquiry will not change the status quo for the banks in any way, shape or form. As some have already noted, increasing capital requirements will simply be passed onto consumers. While we think the risk of the banks severely underperforming is low, we do not think that the strong outperformance relative to the rest of the index will continue similarly to the last 24 months. The weight of the big four banks is at a multi-decade high, which we think at best will be maintained not increased. Within the banks, in recent times, CBA has had the strongest eps growth rate, with the trajectory of the 12 month forward eps mirroring that which occurred during the bull market leading into the GFC. (VIEW LINK)