redpoint Australian Industrials
Why Industrials ?
•The low interest environment is a major challenge for those in retirement as well as those saving for retirement
•Traditional “safe” income sources such as terms deposits don’t provide the cashflow they once did
•Bonds are equally unattractive due to very low yields
•Investors have turned to the equity market seeking income (dividends) and growth - but where should they invest?
•Companies listed on the ASX are categorised across different sectors that they operate in.
•Resources: Mining and Energy
•Industrials: broad range of sectors including Banking, Manufacturing, Consumer, IT, Healthcare, etc
•Different sub groups have different characteristics
•Larger Industrials have delivered double the dividend income and half the price volatility of Resource focused companies
•Resource companies can be susceptible to commodity price movements
•Mining enterprises carry the risk of large scale, long term capital investment with little control over global commodity prices
•Industrials provide exposure to a range of different business activities across the broader Australian economy
Larger Australian Industrial companies are an attractive investment for many investors:
•Wide range of sectors providing goods and services to businesses and consumers both in Australia and overseas;
•While there is a large banking exposure this sector is a key player across almost all business activities in the Australian economy;
•A diversified exposure to better quality industrial companies can deliver valuable cash dividends and franking credits over the long terms
•Diversified exposure to better quality companies
oProfessionally managed with direct ownership (SMA) or fund structure
oIndustrials focus for higher cash yield and lower volatility*
oExposure to all GICS sectors (diversified not concentrated)
oRisk managed vs benchmark to mitigate relative drawdowns
•Low turnover, long horizon perspective
oMaximise personal tax efficiency of SMA structure / fund distributions
•Effective capture of dividend yield & capital growth
•Better value
oDirect ownership is not without cost
oManagement fee is 0.4%pa (SMA Model Portfolio), 0.6%pa (Unit Trust)
•The low interest environment is a major challenge for those in retirement as well as those saving for retirement
•Traditional “safe” income sources such as terms deposits don’t provide the cashflow they once did
•Bonds are equally unattractive due to very low yields
•Investors have turned to the equity market seeking income (dividends) and growth - but where should they invest?
•Companies listed on the ASX are categorised across different sectors that they operate in.
•Resources: Mining and Energy
•Industrials: broad range of sectors including Banking, Manufacturing, Consumer, IT, Healthcare, etc
•Different sub groups have different characteristics
•Larger Industrials have delivered double the dividend income and half the price volatility of Resource focused companies
•Resource companies can be susceptible to commodity price movements
•Mining enterprises carry the risk of large scale, long term capital investment with little control over global commodity prices
•Industrials provide exposure to a range of different business activities across the broader Australian economy
Larger Australian Industrial companies are an attractive investment for many investors:
•Wide range of sectors providing goods and services to businesses and consumers both in Australia and overseas;
•While there is a large banking exposure this sector is a key player across almost all business activities in the Australian economy;
•A diversified exposure to better quality industrial companies can deliver valuable cash dividends and franking credits over the long terms
•Diversified exposure to better quality companies
oProfessionally managed with direct ownership (SMA) or fund structure
oIndustrials focus for higher cash yield and lower volatility*
oExposure to all GICS sectors (diversified not concentrated)
oRisk managed vs benchmark to mitigate relative drawdowns
•Low turnover, long horizon perspective
oMaximise personal tax efficiency of SMA structure / fund distributions
•Effective capture of dividend yield & capital growth
•Better value
oDirect ownership is not without cost
oManagement fee is 0.4%pa (SMA Model Portfolio), 0.6%pa (Unit Trust)
Fund Description
The redpoint Industrials strategy is a diversified portfolio benchmarked to the S&P/ASX 100 Industrials Accumulation Index. The portfolio seeks to deliver a return in line with the
benchmark (after fees) while holding less than half the stocks in the investible universe. Turnover is expected to be low with the portfolio tilted towards holding better quality companies while also carefully managing risk.
Investment Objective
To provide a total return in line with the benchmark after fees, over a rolling 5 year period.
Investor Profile
The strategy may be suitable for investors who:
Investment Approach
redpoint employs a structured (rules-based) management strategy, which seeks to construct a representative portfolio of better quality companies that provides a return broadly comparable to that of the benchmark on an after fees basis.
The approach is designed to provide a model portfolio with low turnover, appropriate risk controls relative to the benchmark, and comparatively lower costs.
redpoint's selection bias towards quality companies is expected to give the portfolio a slight defensive tilt. This is anticipated to provide a modest outperformance during periods of market stress but marginal underperformance when speculative stocks are in favour. This slight bias is redpoint's preferred method for sensibly allocating capital given the strategy is constrained to holding less than half the stocks in the benchmark universe.
Responsible Entity
The funds responsible entity is Equity Trustees (ABN 46 004 031 298 AFSL 240975), a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), which is a public company, listed on the Australian Securities Exchange (ASX:EQT).
The redpoint Industrials strategy is a diversified portfolio benchmarked to the S&P/ASX 100 Industrials Accumulation Index. The portfolio seeks to deliver a return in line with the
benchmark (after fees) while holding less than half the stocks in the investible universe. Turnover is expected to be low with the portfolio tilted towards holding better quality companies while also carefully managing risk.
Investment Objective
To provide a total return in line with the benchmark after fees, over a rolling 5 year period.
Investor Profile
The strategy may be suitable for investors who:
- Are seeking both income and capital growth
- Are seeking access to a tax efficient dividend stream
- Have an investment horizon of at least 5 years and a moderate to high risk tolerance
- Are seeking diversified exposure to Australian listed industrial companies with low turnover
Investment Approach
redpoint employs a structured (rules-based) management strategy, which seeks to construct a representative portfolio of better quality companies that provides a return broadly comparable to that of the benchmark on an after fees basis.
The approach is designed to provide a model portfolio with low turnover, appropriate risk controls relative to the benchmark, and comparatively lower costs.
redpoint's selection bias towards quality companies is expected to give the portfolio a slight defensive tilt. This is anticipated to provide a modest outperformance during periods of market stress but marginal underperformance when speculative stocks are in favour. This slight bias is redpoint's preferred method for sensibly allocating capital given the strategy is constrained to holding less than half the stocks in the benchmark universe.
Responsible Entity
The funds responsible entity is Equity Trustees (ABN 46 004 031 298 AFSL 240975), a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), which is a public company, listed on the Australian Securities Exchange (ASX:EQT).