Pentalpha Income for Life
Protected Equity Yield Optimisation (PEYO).
Investment Highlights
The strategy’s projected before-fees total investment return is 10.0%. The return is primarily via a cash yield (distributed Quarterly) plus Franking Credits (distributed annually). The underlying capital is expected to remain stable with maintaining continuous and cost-effective downside insurance against significant share price declines.
A portfolio of well-priced Australian shares, optimised for dividend yield, and protected against major price declines by an exchange traded derivative strategy.
The strategy is a protected yield-centric Australian share strategy delivering a tax-effective high-income stream which is insured against major share price declines.
The 3 key components of Pentalpha’s protected high pre-tax yield plus protection delivers a unique retirement income solution:
- Protection via Exchange Traded Share Options which are:
- Effective:
- Protection is at individual share level minimising tracking error.
- Put price and the related share’s pricing are directly linked minimising hedge slippage.
- The options with the strategy's Collar strategy are traded daily on the Australian Options Exchange. Therefore:
- Pricing is efficient and transparent.
- Counter-party risk is low.
- Protection is constant – Put protection is always in place.
- Low cost – the selling of share Call Options at higher than purchase price levels reduces Put protection cost and allows for upside price capture.
- Effective:
- High pre-tax yield:
- Pentalpha’s rolling quarterly dividend harvesting delivers above Index pre-tax yields.
- Pentalpha are experts in maximising the Franking Credits entitlements of stocks within a hedged equities portfolio.
- Fundamental stock valuations plus a trading discipline drive portfolio construction and when combined with dynamic hedging deliver a unique derisked equity income solution.
The defensive nature of the Fund may result in its cash holding (or its derivative equivalent) being up to 100% of the portfolio. The Fund can take positions in instruments from several asset classes including, but not limited to:
- Securities listed on the Australian Securities Exchange (0 - 100%)
- Derivatives including, but not limited to, Exchange Traded Options which are cash and/or asset backed (0 - 100%)
- Cash and cash equivalent instruments (0 - 100%)
The Fund invests in assets located in Australia and where the Fund assets are held by a Custodian appointed by Pentalpha and that Custodian will be domiciled in Australia.
Over a decade ago, Pentalpha's founder faced the same issue facing many Australians today. To be financially independent, requires being both Asset Rich and Cash Rich. Traditioanl wealth-accumulation approaches have limited application when it comes to the optimising this wealth for cash generation.
Given the founder's Australian Equities heritage, Pentalpha naturally began investigating how to best optimise for wealth utilisation. Our guiding philosphy was to deliver high equity income with low equity risk. What evolved is today's Pentalpha's Income for Life stratagy which has a derisked 10.0% per annum equity income target objective.
Denis is an investment manager with over 35 years of funds management experience. Previously, he was Head of Australian Equites at 2 of Australia’s premier investment managers.
More than a decade ago, Denis was surprised at the lack of investment options for transitioning a healthy accumulated weatlh balances into an equally healthy income stream that were sustainable in real terms. This led to the establishment of Pentalpha Investment Management and the derisked equity income strategy on offer today.
Ewan brings more than 40 years of investment experience within the Australian funds management industry to his role at Pentalpha.
Ewan commenced with Pentalpha Investment Management in June 2016 as Head of Research, chiefly responsible for stock research and recommended buy and sell decisions. Ewan is also the Alternate Portfolio Manager for the Pentalpha Income for Life Fund, supporting the Head of Investments in their capacity as Lead Portfolio Manager.
Prior to joining Pentalpha, Ewan spent 22 years at RACQ where he was responsible for the portfolio management of $0.5 billion across both equity and fixed interest portfolios. As Investment Manager, Ewan reported directly to the RACQ Board, providing macro-economic and financial analysis supporting the recommendation of asset allocation decisions.
Prior to RACQ, Ewan spent more than 12 years at Suncorp Investment Management, a period coinciding with Denis Donohue where they first met. Ewan’s early years at Suncorp was as an Investment Analyst where he developed his equity research skills. He then progressed to Fund Manager where he became involved in Investment Committee asset allocation recommendations alongside the direct portfolio management of both equity and fixed interest portfolios.
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