Investing for income requires both the company and the dividends to be strong and sustainable. This will allow you to generate a consistent and dependable income stream over the long-term. Since launching in 2012, our Lincoln Australian Income Fund has been applying our quantitative methodology to invest in a portfolio of Stock Doctor Star Income Stocks, an elite group of ASX companies prized for their Financial Health, high quality and exceptional yield. The fund aims to provide income above the market average which is a positive outcome for retirees and SMSFs in preservation phase.
By Tim Lincoln Managing Director and Chief Investment Officer
As of 25 October 2024
For over 12 months now, the Lincoln Australian Income Fund has employed a tactical position to reduce portfolio volatility for our high-yield investment product. This defensive approach has coincided with an extraordinary risk rally, which has seen equity markets globally push through all-time highs.
The basis for our defensive positioning was predicated on the Fund team’s assessment that earnings in 2024 were unlikely to experience any meaningful growth in the face of sticky inflation, tight monetary policy and sluggish economic growth. Even though all these conditions have endured throughout the year, the Australian equity market has ignored the weak earnings landscape and bid up shares to a point now where the price-to-earnings multiples for the major Australian equity indices are at all-time highs.
We are observing a situation where valuations have almost never been more stretched and major geopolitical tensions are looking likely to escalate further. The Fund team therefore believe that the prudent approach is to continue holding some protection in the portfolio and mitigate significant drawdown risk for our unitholders if events in the Middle East deteriorate further. However, there has been progressive improvement for the inflation outlook whereby most global central banks have begun an easing cycle for monetary policy. If inflation continues to trend towards target, this should foster a more balanced environment for corporate earnings growth in the year ahead. So, the Fund team intend to progressively reduce protection and increase market exposure over the next six months to be fully invested in early 2025.
For more information, please contact our Fund Team at 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.
| Wholesale | Wholesale | Retail |
|---|---|---|
| Entry | 0.8952 | 0.8521 |
| Exit | 0.8890 | 0.8461 |
| Date | 01 May 20 | 01 May 20 |
| 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) | 0.95% | 1.75% |
| Entry/exit fees | 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 | Quarterly | Quarterly |
| Commencement date | 2 April 2012 | 2 April 2012 |
No, the Income 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 buy and sell spread is the difference between the net asset backed value of the units and the price to which you can purchase or sell those units. Similar to brokerage costs, when you transact in financial assets there are facilitation costs incurred. The buy/sell spread are implemented to recoup facilitation costs, so as not to disadvantage existing unitholders. It is important to note that the buy/sell spread is not a ‘fee’ and the spread itself is retained within the unit trust, it does not benefit the fund manager or any of the other service providers.
The purpose of the buy and sell spread is to ensure that investors entering or leaving a fund bear the costs of the transaction. For example, if you invest $100,000 into a fund, the fund manager will incur transaction costs which include brokerage, bid-ask spreads, settlement and clearing costs. Likewise, if you withdraw from a fund, the manager will incur transaction costs if he/she need to sell assets to provide the cash for withdrawal.
You are likely to pay a buy spread whenever you either make an investment or withdrawal from the fund. However, there are some exceptions. For example, when distributions are reinvested into more units, a buy spread is not usually payable. This is because no money enters or leaves the fund, so no assets are required to be bought or sold.
If you are a long-term holder of a fund, then a buy sell spread will make less difference to your overall returns.
Distributions are paid quarterly, with the option to reinvest or receive cash directly in to your nominated bank account.
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.
