Investing for strong, long term capital growth requires a strategy that invests in stocks that are fundamentally healthy, that can ride out short term volatility and deliver strong capital appreciation over the long-term. We do this by investing in the numbers – applying our quantitative methodology to construct a portfolio of liquid Stock Doctor Star Growth Stocks. These are among the most financially healthy, high quality growth stocks on the ASX that deliver strong long-term capital returns – a great outcome for investors and SMSFs.
By Tim Lincoln Managing Director and Chief Investment Officer
As of 19 August 2024
The Lincoln Australian Growth Fund has employed a tactical position to reduce risk/volatility in our managed fund portfolio. Our defensive strategy was executed in August 2023, which involved the Fund hedging its equity exposure with the Beta Shares Australian Bear ETF (BBOZ). Our decision neutralises the impact of market fluctuations on the unit prices for our investors.
This means that we have removed broad market moves from our total return profile. Therefore, our unitholders won’t fully participate in market rallies, but they will not be impacted by market corrections. The unit prices are now solely determined by how well the stocks we invest in perform relative to the broader market. If our stocks outperform, this will translate to an increasing unit price regardless of the direction in which markets are trading.
Many of our clients who know me personally are surprised by my bearish view and the tactical portfolio positioning, as I am usually 100% invested and block out the noise. But this time, I truly believe that market behaviour has been irrational and entirely driven by momentum and excessive optimism for a soft economic landing. The current price to forecasted earnings multiple for the Australian market is trading well above historical levels, and we believe this is a dangerous price level when combined with our expectation that earnings for 2024 will be revised downwards. Thus, we believe that positioning our portfolio defensively is the responsible path.
The extraordinary rally to the end of 2023 has impacted our relative returns to the ASX All Ordinaries Index. The Fund team is prepared to endure short-term underperformance because we believe capital preservation tactics are prudent in a highly uncertain economic environment. When the pricing environment better reflects the underlying risks & fundamentals of the market, we fully intend to deploy capital back into the market.
Market volatility picked up markedly during August. The funds are well positioned to minimise drawdown risk over a volatile period, and strong outperformance is expected if volatility persists.
For more information, please contact our Fund Team on 1300 676 333
All Lincoln Indicators Managed Funds are established to provide investors with maximum peace of mind about the security of their investments. Not only do we invest in financially healthy companies that have a low risk of failure, but we also hold all client investments in a segregated trust with our custodian J.P. Morgan Chase Bank. Furthermore we are regulated by the Australian Securities and Investment Commission (ASIC) in Australia with strict regulatory requirements which govern exactly what we can and can’t do.
| Investment Type | Wholesale | Retail |
|---|---|---|
| Minimum suggested timeframe | 5 years | 5 years |
| Minimum initial investment | $250,000 | $5,000 |
| Minimum additional investment | $5,000 | $1,000 |
| Management fee (p.a) | 0.76% | 1.40% |
| Performance fee (p.a.) | 20% of outperformance of the benchmark | 20% of outperformance of the benchmark |
| Entry/exit fee | Nil | Nil |
| Minimum withdrawal | $1,000 | $1,000 |
| Minimum balance | $250,000 | $5,000 |
| Minimum savings plan contribution (optional) | $250 per month | $250 per month |
| Buy/sell spread | 0.25% / 0.25% | 0.25% / 0.25% |
| Distribution frequency | 6 monthly | 6 monthly |
| Commencement date | January 2005 | June 2007 |
No, the Growth Fund has no minimum investment timeframe and you will not be penalised if you decide to redeem your funds within a short period of time. But we suggest a minimum of 5-years to allow an adequate timeframe for the Fund to deliver on its long-term objectives.
The performance fee is 20% of the amount by which the Fund’s performance exceeds the All Ordinaries Accumulation Index. A high-water mark ensures investors do not pay fees until periods of underperformance are fully recouped.
No, our Growth Fund have no up-front or exit fees. This does not take into account buy-sell spreads, which represent the estimated transaction costs incurred when buying or selling underlying assets in relation to investment options. The difference between the investment option buy prices and the sell prices is the total buy-sell spread for that option.
To discuss the future of your investments in detail, book in a free consultation with a Lincoln representative.
To discuss the future of your investments in detail, book in a free consultation with a Lincoln financial expert.
