Having helped DIY investors successfully invest in the Australian share market for over 30 years, we know the value of a well diversified portfolio.
Using the foundations of our quantitative financial health methodology, we spent two years optimising our trusted methodology for the U.S. market. Using a multi-factor model and our Financial Health overlay we have been able to identify a portfolio of financially healthy stocks that are ideal for long term growth.
The end result is our Lincoln U.S. Growth Funds, a Hedged and Unhedged Fund designed for Australian DIY investors who are looking to capitalise on long-term growth in the U.S. market.
By Tim Lincoln Managing Director and Chief Investment Officer
As of 20 December 2024
Please note an important strategic update for the Lincoln U.S. Growth Fund.
In August 2023, the Fund team decided to significantly reduce portfolio volatility by introducing hedging instruments to the portfolio. The decision was predicated on our view that rampant inflation and the ensuing rate hiking cycle would create a negative environment for the economy and earnings growth. Our concerns for the global economy were further exacerbated by the deteriorating geopolitical situation in East Europe and the Middle East. Our position was intended to be tactical and ultimately be unwound when conditions become more conducive for corporate earnings growth.
Over twelve months later, while the U.S. market has experienced a weaker-than-average earnings cycle, what we didn’t anticipate was that investors would largely ignore the current environment and push past all-time highs. That said, we believe global inflation pressures appear better contained, and the Federal Reserve has begun reversing its restrictive monetary policy with two successive rate cuts. This monetary stimulus, along with pro-growth fiscal initiatives with a changing government, should support accelerated earnings growth in 2025.
With downside risks fading and a very strong desire to get back to managing a fully invested stock portfolio, the Fund team have actively been reducing its hedging instruments throughout the quarter. This effectively means that the portfolio is no longer market neutral, and unit prices will now better reflect market returns in the months ahead. And pleasingly, since the team made this decision, the unit prices have experienced a solid move higher and is outperforming its benchmark over this period.
Whilst we acknowledge that share prices appear extended relative to current underlying earnings, investors are ultimately prepared to look past some of these signals and as an investment team we must accept these conditions and get back to managing our portfolio on a bottom-up, fundamental quantitative approach. This means fully divesting of the hedge over the ensuring weeks and months.
For more information, please contact our Fund Team at 1300 676 333
All Lincoln Indicators Managed Funds are carefully structured to offer investors peace of mind regarding the security of their investments. While the value of investments can fluctuate, we focus on investing in financially stable companies with a low risk of failure. Additionally, we ensure that all client investments are held in a segregated trust with our trusted custodian, J.P. Morgan Chase Bank. As a further safeguard, we are regulated by the Australian Securities and Investments Commission (ASIC), and we adhere to stringent regulatory requirements that clearly define our operations and limitations.
| Investment Type |
Lincoln U.S. Growth Fund Unhedged Exposed to currency risk |
Lincoln U.S. Growth Fund Hedged Protected from adverse currency fluctuations |
|---|---|---|
| Minimum Suggested TF | 5 Years | 5 Years |
| Minimum Initial Investment | $5,000 | $5,000 |
| Minimum Additional Investment | $1,000 | $1,000 |
| Management Fee (p.a) | 1.0% | 1.0% |
| Performance Fee (p.a.) | 20% of outperformance of the benchmark | 20% of outperformance of the benchmark converted to AUD |
| Entry/exit Fees | nil | nil |
| Minimum Withdrawal | $1,000 | $1,000 |
| Minimum Balance | $5,000 | $5,000 |
| Buy/Sell Spread | 0.25% / 0.25% | 0.25% / 0.25% |
| Distribution Frequency | Annual | Annual |
| Date of inception | 1 July 2020 | 1 July 2020 |
If you invest in the Unhedged fund, you are exposed to fluctuations in the Australian dollar. This can be a good thing if our dollar falls relative to the US dollar. For example, if you were invested in the Lincoln U.S. Growth Fund Unhedged and the value of the Australian dollar decreased relative to the US dollar, then the value of your portfolio would increase. Of course it can also work the other way around.
If you invest in the Hedged fund, we use strategies to offset the impact of currency fluctuations. This means if you invest in the Lincoln U.S. Growth Fund Hedged you are protected from the adverse impact of a rising Australian dollar. But equally, you don’t get to benefit from situations where the Australian dollar is falling.
If you have a strong view on where the Australian dollar is heading, you could favour one approach over the other.
Distributions are paid annually, with the option to reinvest or receive cash directly in to your nominated bank account.
No, the Lincoln U.S. 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.
Lincoln U.S. Growth Fund Hedged: The performance fee is 20% p.a. of outperformance of the S&P 500 Accumulation Index (USD).
Lincoln U.S. Growth Fund Unhedged: The performance fee is 20% p.a. of outperformance of the S&P 500 Accumulation Index converted to Australian Dollars.
Equity Trustees Limited (“Equity Trustees”) (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Lincoln Australian Growth Fund, Lincoln Australian Income Fund, Lincoln U.S. Growth Funds (“the Fund”). Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT).
This website has been prepared by Lincoln Indicators to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Lincoln Indicators, Equity Trustees nor any of its related parties, their employees or directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.
Lincoln’s Fund’s Target Market Determination is available here. A Target Market Determination is a document which is required to be made available from 5 October 2021. It describes who this financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors. It also describes the events or circumstances where the Target Market Determination for this financial product may need to be reviewed.
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.
