Contango Income Generator (ASX: CIE) March 2016

Transcription

1 Contango Income Generator (ASX: CIE) March 2016

2 Disclaimer Contango Asset Management Limited (ABN ) holds an Australian Financial Services Licence (AFSL #237119) restricting it to providing financial products and services to wholesale clients only. This presentation has been prepared for the consideration and use of wholesale investors, as defined by the Corporations Act (Cwlth 2001), and may contain information that assumes a level of knowledge and expertise particular to such investors. If you do not meet the criteria of a wholesale investor, you should disregard this information and seek advice from a licensed financial advisor. Forecasts in this presentation are predictive in character, based on numerous assumptions including the forecast outlook for key variables and may be affected by various factors including inaccurate assumptions, risks and unforeseen events. Accordingly, actual results may differ materially from those forecasted. Contango Asset Management Limited ( CAML ), its officers, employees and agents believe that the information in this document is correct at the time of compilation but do not warrant the accuracy of that information. Performance information is historical. Performance returns may vary. Past performance is not indicative of future performance. Performance has been calculated based on cumulative daily returns excluding any allowance for fees, expenses and taxes. Save for statutory liability which cannot be excluded, CAML disclaims all responsibility for any loss or damage which any person may suffer from reliance on this information or any opinion, forecast, conclusion or recommendation in this document whether the loss or damage is caused by any fault or negligence on the part of CAML or otherwise. 2

3 Contents 1. Contango Income Generator Fund - Portfolio Review 2. Summary 3

4 1. The Contango Income Generator (ex 30) Fund

5 A lower volatility and higher yielding equity income fund that diversifies away from the top-30 Offers a portfolio of lower volatility and higher yielding Australian listed shares outside of the top-30 Provides diversification away from large cap banks and telcos Actively managed portfolio of Australian listed shares on the ASX/S&P 300 ex-30 with: Higher than market dividend yield (targeting 100bps) High franking Lower volatility and balance sheet strength Stable earnings and solid dividend growth Fund facts Size is $75 million Inception wholesale fund Dec 2012 / inception LIC is August 2015 Max cash is 25% wholesale / 50% LIC 5

6 The investment process screens for suitable high quality ex-30 stocks for sustainable income ASX300 ex-30 market cap Higher than market yield Sustainable dividend growth and payout ratio Lower than market beta Low earnings volatility Balance sheet strength 6

7 Lower cash rates leads to greater demand for dividends 7

8 The Income Generator Fund s active weights are a product of the investment process Diversified Financials Miscellaneous Services Utilities Real Estate Durables & Apparel Retailing Media Construction Materials Pharma, Biotech & Life Science Information Technology Capital Goods Chemicals Paper & Packaging Gold Insurance Energy Telco Services Consumer Staples Transport Healthcare Equipment & Service Metals & Mining (Ex Gold) Banks Futures Cash Relative to the ASX 300 Index F ebruary Income Generator Fund Active Weights: Contango Industry Sectors % 21.5

9 The Income Generator Fund s stock positions are a product of the investment process Code Stock WGT % ASX ASX LTD 6.4 CQR CHARTER HALL RETAIL REIT 3.1 VCX VICINITY CENTRES 3.1 PTM PLATINUM ASSET MANAGEMENT 2.6 GUD G.U.D. HOLDINGS LTD 2.4 AGL AGL ENERGY LTD 2.2 BOQ BANK OF QUEENSLAND LTD 4.8 CHC CHARTER HALL GROUP 2.0 AHG AUTOMOTIVE HOLDINGS LTD 2.0 SGP STOCKLAND 2.0 February 2016 Contango AM, Bloomberg 9

10 The Income Generator Fund s active risk positions are consistent with the fund s objectives February 2016 All Ordinaries ASX300 Top-30 ASX300 ex-30 Contango Income Generator Average Market Cap ($M) Price to Earnings Ratio Earnings Growth Dividend Yield (Net) Dividend Yield (Gross) Return on Equity Beta to ASX Source: Contango AM, 12 month forward consensus forecast, Factset 10

11 The Income Generator Fund has delivered strong performance since inception in August 2015 February 2016 Contango Income Generator All Ordinaries Accum Index Added Value Inception (Aug 2015) pa 1.0% -3.1% 4.1% Defensive ex30 income strategy below has delivered strong consistent performance since 2012 February 2016 Contango Ex30 Dividend Fund All Ordinaries Accum Index Added Value 1 Year -2.0% -12.2% 10.3% 2 Years pa 8.7% -0.2% 8.8% Inception (Dec 2012) pa 14.8% 6.5% 8.2% Gross Performance Wholesale fund Source: Contango AM,Iress, net of fees 11

12 A blend of top-30 and ex-30 income stocks is a more efficient portfolio allocation Return Optimal portfolio allocation Optimal Portfolio or Efficient Frontier curve Ex-30 income fund Large cap portfolio Concentrated large cap portfolio Sub-optimal portfolio allocation Risk 12 For illustrative purposes only

13 The Income Generator Fund s performance has been less volatile than the market Monthly Returns: Contango Income Generator vs All Ordinaries 13 Source: Contango AM, Iress, gross of fees

14 What does Contango Income Generator Limited offer? Feature Diversified exposure to ex-30 income securities Dividend policy of 6.5% of NTA Targeting capital growth over time Targeting lower volatility Maximise franking where possible Complements existing income portfolios Contango Income Generator Limited 14

15 Who is the Contango Income Generator Limited suitable for? Suitable investor SMSFs Retirees Yield focused investors High Net Worth (HNW) investors Investors over-exposed to large cap stocks including the Banks and Telstra Contango Income Generator Limited 15

16 16 5. Summary

17 Summary Do you know the only thing that gives me pleasure? It s to see my dividends coming in John D Rockefeller Investors are searching for yield in the equity market but generally only focus on large cap stocks This is a sub-optimal portfolio allocation that increases risk and limits an investors opportunity set The solution is to blend a portfolio of large cap high yield stocks with an actively managed ex-30 income fund Contango Income Generator Limited (CIE) provides a diversified exposure to this ex-30 high yield segment of the market The demand for an ex-30 income product is expected to be strong and continue to grow over time 17

18 Contact details George Boubouras Chief Investment Officer Contango Asset Management Limited Tel: +61 (3) Mobile: +61 (0) Shawn Burns Senior Portfolio Manager Contango Asset Management Limited Tel: +61 (3) Mobile: +61 (0) Alistair Drummond Senior Portfolio Manager Contango Asset Management Limited Tel: +61 (3) Mobile: +61 (0)