Equity Income - The benefits of long-term equity investing with smoother returns and an additional source of income
- Seeks to generate returns from fundamental stock insights across a broad universe of stocks, regardless of the dividend yield of each stock, and an active options strategy
- Options strategy extends fundamental insights and seeks to provide a smoother return profile than the broader share market (lower volatility) and a higher income stream over the long term
- Highly experienced team with a 14 year track record
Strategies designed with a genuine long-term focus
Our equity income strategies combine income generation with some downside protection. We offer investors who have a long-term investment horizon a more conservative exposure to Australian shares, which seeks a better balance between the need for higher income, volatility management, and total return. The design of objectives-based investment strategies requires a solution that addresses the short term objectives without compromising long term objectives.
Solutions for investors seeking lower volatility and higher income
We offer tailored, well-designed, low volatility equity strategies built to provide a smoother return profile than the broader share market. Our fundamentally different approach to traditional equity income funds seeks to maintain exposure to the equity risk premium while enhancing the level of income generated and limiting the degree of capital volatility. The approach can provide an added layer of risk management beyond what can be delivered through traditional asset allocation alone.
We offer a fundamentally different approach to traditional equity income funds
Adopting a full coverage approach, we use fundamental stock analysis to search the entire investible universe for stocks likely to outperform the broader share market, regardless of each stocks’ dividend yield. Our focus on total returns targets strong risk adjusted returns and maximises income generation over the long term. This approach is in contrast to many of our peers who only focus on the traditional definition of ‘yield stocks’ to generate a higher income portfolio. No screening or tilting towards yield is carried out as we believe this type of investment process can adversely impact the investor’s total return over the long term. We believe that by extending the analyst’s research to selectively implement option positions on the underlying stocks, our strategy can address near-term challenges to increase the proportion of returns delivered as income and provide a smoother return profile while maintaining a long-term mindset to stock selection.
Our corporate RI strategy is based upon three strategic pillars of quality, stewardship and engagement.
The Equity Income team works in partnership with other investment teams within the company to deliver objectives-based investment strategies to our clients. As part of this approach, the team draws upon the analyst research from various investment teams as inputs into the stock selection process. This will usually incorporate the identification of any relevant ESG issues identified by the teams, which is typically based on a rigorous company meeting program.
Performance and Documents
Source: First Sentier Investors 2020
Performance returns exclude franking credits. Performance returns are calculated net of management fees and transaction costs. Performance returns for periods greater than one year are annualised. Past performance is not a reliable indicator of future performance.
Our specialist team have managed equity income funds together for over a decade
Our equity income team comprises three dedicated portfolio managers who each have specialised derivatives expertise – and undertake derivatives related research in the equities market – as part of their portfolio management responsibilities. The portfolio managers are supported by a large group of equity analysts with a proven track record of fundamental bottom-up stock research.
The team has an established track record in managing tailored strategies and offer a range of equity income, low volatility, cash-plus multi-strategy income, tax aware and customer-based equity strategies.
Rudi established the Equity Income capability in 2004 and has built a strong track record in the management of objectives-based investment strategies. Rudi has more than 18 years’ investment experience. He is co-Portfolio Manager for the Equity Income Fund and the Target Return Income Fund and is responsible for investment strategy, stock selection, portfolio construction, investment process enhancement and management of the Equity Income investment team. Rudi was part of the Australian Equities, Core team from January 2000 until January 2018 in roles including Senior Portfolio Manager, Equity Analyst and Senior Quantitative Analyst. Rudi has completed a Bachelor of Commerce degree (Actuarial Studies) and a Bachelor of Applied Finance from Macquarie University. Rudi earned the CFA charter in 2003 and is a graduate of the Australian Institute of Company Directors.
Jason’s main responsibilities include co-portfolio management of the Equity Income Fund and managing the listed equities, equity derivative strategies and capital notes investments within the Target Return Income Fund. Both of these strategies were established by Jason more than ten years ago. This role is focused on the implementation and management of equity options strategies and the development of specialist options portfolio management systems. Jason has been with the company since 1998 as a Portfolio Manager within the Australian Equities, Core team and an Investment Systems Manager. Jason’s investment and quantitative systems experience also includes roles with Prudential and Westpac Investment Managers. Jason has completed a Bachelor of Agricultural Science, majoring in mathematics, computing and research statistics.
Marlon manages the listed equities, equity derivative strategies and capital notes investments for the Equity Income Fund and the Target Return Income Fund. Marlon is a specialist in equity portfolio risk analysis and derivative pricing theory in addition to his portfolio management responsibilities. Marlon was part of the Australian Equities, Core team from 2009 until January 2018 as a Portfolio Manager and Quantitative Analyst. Marlon worked with the Asian Fixed interest team in Hong Kong and undertook investment analysis for the Hedge Funds and Global Property Securities teams. Marlon has completed a Bachelor of Commerce degree (Actuarial Studies and Finance) from the University of New South Wales. He has completed all three levels of the CFA exam and holds a Fellow of the Institute of Actuaries Australia accreditation and lectures the Investment Management and Finance specialist stream for the Actuarial qualification program.