Private Credit & Mortgage Markets

Australian Equities – Australian Leaders

The Mainstreet Australian Share Income Model Portfolio is an actively managed concentrated portfolio with an absolute return and a tax-effective income focus. Its principal objective is capital preservation and to achieve an above average market income through a tax-effective income stream via franked dividends and tax-effective deferred distributions.

Portfolio Objective

While there is no orientation to a benchmark for portfolio construction purposes, the objective of this model portfolio is to outperform the S&P/ ASX200 Industrials Accumulation Index.
Designed for investors with a long-term investment objective who:

  • seek an average market income yield, primarily through fully franked dividends,
  • and expect a level of capital growth in line with market performance, and;
  • are prepared to accept the risk of price fluctuations.

This Model Strategy may utilise from time to time, a core and satellite approach in its construction, depend on investment market conditions. When this is the case, the core component of the model comprises the SPDR S&P/ASX 200 Fund to achieve performance broadly in line with the S&P/ASX 200 Accumulation Index. Stocks held within the satellite component of the model are a selection of stocks that are expected to provide an above- average dividend/distribution yield and an above- average growth profile with potential for growth over time.

Investment strategy

The stock selection process has a strong quantitative discipline and focuses on buying quality companies at reasonable prices and prefers companies that have high and sustainable dividend capability through strong cash earnings, and reliable earnings growth. Additionally, Companies that generate franking credits are given high preference.
We define quality companies as being those companies with the following five attributes:

  • Strong management
  • Superior industry positioning
  • A sound balance sheet
  • Earnings strength (particularly improving return)

Cumulative Returns (since inception)

•A high ‘Safety Margin’ – trading at a discount to its ‘Intrinsic Value’ We are focused on a growing, sustainable above market dividend yield. Where we are satisfied that a company possesses quality characteristics, it is then eligible for inclusion but, it must also represent value and sit comfortably within our portfolio construction requirements.
The portfolio construction process is influenced by a top-down economic appraisal and considers the risk characteristics of the portfolio, such as stock and sector correlations.

Portfolio Overview

  • Model Inception:
  • 01/01/2017
  • Benchmark:
  • S&P/ASX 300 Accumulation
  • preservation with an after-tax high-income focus
  • Investment objective:
  • To deliver
  • higher levels of income over a rolling 3-year period while outperforming the Benchmark
  • Number of Holdings:
  • 15 - 25
  • Investment Horizon:
  • 5 Years
  • Authorised Investments:
  • ASX listed securities

Investor Profile

Mainstreet’s ‘Australian Leaders’ equities portfolio is designed for investors with a lower risk appetite, seeking capital preservation whilst providing a stable stream of income. SAIP offers exposure to quality Australian listed companies with higher yields. The portfolio currently has a high exposure to the financials, materials and industrial sectors. SAIP aims to outperform the S&P/ASX 300 accumulation index, a goal so far achieved since inception.