Australian Equities Growth

This is no ordinary team

With one of Australia’s largest and most experienced investment teams, we analyse and uncover Australian companies that are growing strongly and generating superior returns on capital.  We do not take short cuts by ignoring stocks trading at a given valuation metric or because their businesses are too new or complex.

We go the extra mile so you don’t have to

Meet Dushko Bajic

From bustling city streets to a slice of solitude on Sydney’s harbour, Dushko Bajic takes us on a run through the factors that help him uncover growth opportunities across Australia.

There is no substitute for doing all of the work yourself – from engaging directly with management through to researching the products, competitors, assets and customers.
Dushko Bajic
Head of Australian Equities Growth

Opportunities in sectors old and new

Many world class Australian companies have the potential to compete strongly with global giants. With an open mind, we explore stalwart mining companies through to complex businesses emerging in the information technology and health care industries.

We have overweight positions in sectors with global growth opportunities and have significantly increased our exposure to the IT and consumer sectors during the past three years

Source: First Sentier Investors. Sector exposures are for the Colonial First State Wholesale Australian Share Fund as at 30 June 2019, 30 June 2016, 30 June 2014 and 30 June 2009 adjusted for cash holdings.
The CFS Wholesale Australian Share Fund name will be changed to reflect the new brand name in mid-2020. It will be referred to as the Fund on this webpage.

The advantage of a growth investment style

Value of a $10,000 investment

Value of a $10,000 investment
Source: Factset and First Sentier Investors. Past performance is not indicative of future performance. Performance is net of fees as of 31 July 2019.

Value of a $10,000 investment

Disrupting the milk market is the recipe for growth

A2 Milk has the highest compound annual growth rate of an ASX-listed company with a significant exposure to China.

Revenue Growth 2015-2019

Source: Factset and First Sentier Investors estimates

Demand for high quality international products by Chinese consumers is growing – and there are several Australian companies looking to meet this demand.

We analysed several stocks positioned to benefit from this industry dynamic.

High cash flow

We prefer companies that can generate high levels of cash flow that can be reinvested in their business to fuel further growth. Last financial year, A2 Milk was the top-performer across its China-exposed peers with an impressive return on equity of 49%.


Following success in the Australian and New Zealand markets, A2 Milk developed infant formula for the Chinese market. In Australia, the infant formula market is worth A$800 million, but that’s dwarfed by China, where a A$25 billion market opportunity remains.


A2 Milk has developed two pathways to Chinese consumers. While competitors rely on personal shoppers, A2 Milk has also activated digital and direct retail channels. Direct sales now represent over 12% of infant formula sales. A2 Milk is set to double its number of store fronts.


We first invested in A2 Milk at a price of $1.60 in 2016. Today, we continue to see further upside potential and are now their largest shareholder.

We approach investing with an open mind and remain continuously inquisitive. We do not take short cuts by ignoring stocks trading above or below a given valuation metric or within a sector that we broadly dislike.
Dushko Bajic
Head of Australian Equities Growth

An open mind to next generation software

Years since company founded
In USD. Source: presentation to annual investor update, October 2018. These are expected returns based on forecasts. They are predictive in nature and therefore not guaranteed to occur. Known or unknown risks and uncertainties and inaccurate assumptions may result in them differing materially from results ultimately achieved.

Software as a Service (SaaS) is disrupting “on-premise” desktop software and is rapidly growing sales.

Companies like, Workday and Adobe are disrupting traditional desktop software with SaaS, offering greater convenience, functionality, reliability and lower usage-based pricing.

Many of these companies are enjoying rapid uptake and attractive returns for their shareholders. Despite our distance from Silicon Valley, Australia and New Zealand are producing world-class companies including Atlassian, Xero and Wisetech.

From Xero to Australia and beyond!

Xero is globally recognised as the pioneer of cloud accounting. It has followed a well-defined playbook to establish clear market leadership in New Zealand, Australia, South East Asia and the United Kingdom.

While Xero is a distant #2 player in North America, this market is vast and still represents a great opportunity.

Xero’s success comes from their ability to reduce the “pain points” suffered by small business managers – freeing their time to focus on running their business.

Xero is applying its success in this region to larger markets overseas

Source: Xero Results Announcements from FY12 to FY19.

A different take on markets in 2019

Head of Australian Equities Growth Dushko Bajic shares his economic outlook and the potential drivers of performance in the CFS Wholesale Australian Share Fund.

Deputy Head of Australian Equities Growth David Wilson shares his economic outlook and the potential drivers of performance in the CFS Wholesale Geared Share Fund.