DNR Capital has announced the launch of its Australian Equities Income fund to offset the current low interest rate environment.
The new fund, which would be managed by the firm’s chief investment officer Jamie Nicol and portfolio manager Scott Kelly, would target companies that provide sustainable and growing dividends and which meet six ‘quality’ factors.
These were superior industry position, a sound balance sheet, strong company management, earnings strength, income sustainability and growth, and low environmental, social, governance (ESG) risk.
Kelly said that the fund, focused on sustainable and growing income generation, would aim to increase the compound total return over time and helps retirees achieve their income goals.
Income-generating companies were classed as:
Growers – high-conviction stocks that may be paying a below-market dividend yield, however we see a clear path towards delivering a sustainable and growing income profile in the medium term – REA Group (REA), SEEK (SEK).
• Compounders – quality stocks operating within a robust industry structure that have a strong competitive position, underpinning attractive and sustainable income growth – Amcor (AMC), IPH (IPH).
• Cows – stocks with a solid balance sheet and capital management potential that are being undervalued on traditional earnings-based metrics – Aurizon Holdings (AZJ), Wesfarmers (WES).
• Yielders – quality companies at attractive valuations that are delivering sustainable and cash-backed dividends, however with little growth – Suncorp Group (SUN), BHP Group (BHP).
According to DNR, the fund generated strong performance since its recent inception in March 2020 to 31 July 2020, having outperformed the S&P/ASX 200 Industrials Accumulation index by 8.26%.
