Atlas Australian Equity Income Fund

The Fund is designed to deliver consistent quarterly income, which is seen as being suitable for pension phase investors and self-managed superannuation funds and for those who want to retain an exposure to listed property in their portfolio and may be concerned about market falls, and yet still need to maintain income being generated from their portfolio.

The minimum suggested investment time frame is 5 years. This seeks to reduce the losses incurred by the Fund from falling security prices or Index levels.

The aim is to deliver returns higher than the RBA Cash Rate plus 3% over rolling 5 year periods, after management fees and before taxation. However, the returns from the Fund are not guaranteed. 

The Fund utilises a detailed quantitative and qualitative analysis to create a concentrated portfolio of ASX200 listed securities.

The objective is to build a portfolio of high-qualityASX200 securities that:

• Offer recurring and growing earnings;
• Pay funded and consistent dividends to share holders; and
• Have a liquid listed options market.

The investment style for this fund is based on quality investing.  It aims to run a concentrated portfolio of 20-30 stocks with high quality earnings which pay higher than market dividend yield.  This income is further enhanced through the selling of call options over the portfolio.  This effectively converts a portion of tomorrow’s uncertain gains into certain income today.

The Fund is seeking to deliver an annual yield of 7%.

You must be aware, however, the returns from the Fund are not guaranteed. This investment objective is not intended to be a forecast and is only an indication of what the investment strategy aims to achieve over the medium to long term. Please note that while Atlas aims to achieve the objective, the objective and capital of the Fund are not guaranteed and may not be achieved. If the Fund has insufficient net income in a given quarter to fund the distribution, investors may receive a partial (or full) return of capital.

The Fund will invest in ASX listed property securities (A-REIT). To reduce the risk that investors will not receive increasing regular income, the Fund will implement a covered call option selling (‘writing’) strategy. This will involve selling call options over a portion of the securities held by the Fund. Additionally, a proportion of the income received from selling the call options may be used to purchase put options to protect the Fund’s capital.

The Fund aims to provide investors with income primarily through the acquisition of securities in the ASX A-REIT 200 Index. There will be an overlay of an active strategy of selling call options over a portfolio of ASX-listed property securities. A portion of the additional income may be used to purchase put options to reduce capital risk.

Atlas will use its quantitative and qualitative analysis to identify property securities within the ASX-listed  property sector that can be expected to:

• Deliver a consistently higher-than-average distribution yield; and
• Allow the fund manager to generate additional income via writing call options over the property securities held.
  

Additionally, between 40-85% of the securities held (by value) will be subject to an overlay strategy of selling call options.

These options will be security specific over-the-counter or exchange-traded options or index options. Additionally, Atlas will look at buying put options either specific security exchange-traded options or index options to protect capital.

In determining the call and put option positions, Atlas has regard to reducing portfolio risk whilst also capturing incidental income opportunities.

Atlas may use derivatives instruments to reduce risk when deemed appropriate. Atlas will not use derivatives speculatively, and when they are used Atlas will make sure that all of the associated obligations which come with them can be paid from the investments of the Fund.

Atlas will actively adjust the investment mix within the investment guideline ranges below: