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 19 August 2024
The Lincoln Australian Income Fund has employed a tactical position to reduce portfolio volatility for our high-yield approach. Our defensive strategy has included redeploying capital down the risk curve by investing 30% of the portfolio in floating and fixed corporate bonds whilst reducing our equity market volatility by introducing a hedge in the form of the Beta Shares Australian Bear ETF (BBOZ).
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. With current price-to-earnings multiples for the Australian market well above historical levels and an increasing probability that earnings expectations for 2024 will be revised downwards, we believe that positioning our portfolio defensively is the responsible path.
The extraordinary rally in equity markets that has transpired to the end of 2023 and into 2024 has impacted our relative returns to the ASX 200 Accumulation Index. The Fund team is prepared to endure short-term underperformance relative to the market because we are highly convicted capital preservation tactics while maintaining a highly attractive yield profile, which is the most prudent strategy for our investors in a highly uncertain economic environment.
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.
| 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.
