Real Estate Investment Trusts

home

/ Real Estate Investment Trusts

Australian Equities - Smaller Companies Portfolio

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 above average market income yields, primarily through fully franked dividends, with some capital growth, and;
  • are prepared to accept the risk of price fluctuations.

Stocks held within the Australian Income Portfolio are stocks that have been identified as having an above-average dividend/ distribution yield with potential for growth in both dividends/ distributions and capital over time. It is anticipated the turnover of this model strategy will be low to moderate.

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)
  • 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.

Investor Profile

Mainstreet’s Australian Smaller Companies Portfolio is designed for investors with a higher risk appetite, seeking capital growth and who are prepared to accept higher risk and lower levels of income in return for higher capital growth potential. This portfolio offers exposure to quality Australian listed smaller companies. The portfolio has an absolute focus and aims to outperform the S&P/ASX Small Ordinaries Index.

Portfolio Overview

  • Model Inception:
  • 01/01/2017
  • Philosophy:
  • Capital
  • preservation with an absolute return focus
  • Investment Objective:
  • To deliver higher
  • levels of growth over the investment horizon while outperforming the benchmark
  • Benchmark:
  • S&P/ASX Small Ordinaries
  • Number of Holdings:
  • 10 - 15
  • Investment Horizon:
  • 3 - 5 Years
  • Authorised Investments:
  • ASX listed securities

Cumulative Returns (since inception)