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I am keen to understand the factors that have driven CGF’s spectacular hockey stick growth in share price post-GFC, where it was at AUD$0.87, to its spectacular rise between 2012 and 2017, from AUD$5 to AUD$11.
What could possibly drive the growth/appreciation in share price of Challenger Growth Fund (CGF)?
Do you think in the current/short term low interest rate environment, this growth could possible still have legs? Or, would it be a Domino Pizza, Blackmore or REA story, where too much growth, and shifting of assets results in share price tumble?
Kind Regards
A: Thanks for the question.
CGF is Challenger Limited, not Challenger Growth Fund. Challenger Limited has two main businesses – a life insurance company (Challenger Life Limited) that is the leading provider of annuities in Australia to retirees and others – and Challenger Funds Management, a funds management business which manages money for others. The life insurance (annuities) business accounts for more than 80% of its revenue.
The rise in Challenger’s (CGF’s) share price has been due to its spectacular success in developing its annuities business. It is the market leader.
Does its growth still have legs? Yes. This is why it is a member of our growth oriented model portfolio.
