How to find quality ASX companies for the next five years

There are many sayings about the importance of buying quality. I personally quite like this one from fashion doyenne Vivienne Westwood: “Buy less. Choose well. Make it last. Quality, not quantity.”

You can apply this concept equally to your investments—you want them to last, so you had better make sure they tick the 'quality' box. This is particularly important in times like today when valuations are running hot and it’s harder to find good value opportunities.

Matthew Haupt, Lead Portfolio Manager for WAM Leaders (ASX: WLE), has his eye on options that haven’t participated in the market rally – some might be more contrarian in nature, like Orora Group (ASX: ORA), while others are going to ride the AI wave, like Megaport (ASX: MP1).

That’s not to say Haupt is bullish – he’s currently adding more defence to the positioning of WAM Leaders.

“I’d say a cautious approach is probably warranted at this point in time. We’re putting a little bit more defence in the portfolio, using consumer staples as a sector to give us a bit more stability. Then companies with utility-type properties,” he says.

In this episode of Fund in Focus, Haupt discusses WAM Leaders’ investment strategy, what opportunities he is currently watching, and his defensive positioning. He also shares two stock picks for the next five years.

• Name of the fund and ASX ticker: WAM Leaders Limited (ASX: WLE)
• Asset Class: Australian equities
• Investment objective: To deliver a stream of fully franked dividends, to provide capital growth over the medium-to-long term and to preserve capital by investing in large-cap undervalued companies.
• Link to Fund page: (VIEW LINK)

This interview was filmed on Tuesday, 13 March.

Timestamps

• 0:00 - Introduction and the philosophy behind WAM Leaders
• 1:23 - The benefits of a LIC structure
• 2:04 - The opportunities in the market
• 2:57 - Stock examples with potential for the next five years
• 4:14 - How to use the strategy in a portfolio