Protected Equity Income + Growth Fund
The Protected Equity Income + Growth Fund generates attractive income with growth at a fraction of the normal share market volatility by combining stock selection with cost-effective stock hedging. (For Wholesale Investors only).
The strategy’s projected before fees total investment return is 10.0% to 15.0% with two thirds being pre-tax yield (including Franking Credits) and one third capital gains while always maintaining downside insurance against significant price declines.
A portfolio of well-priced Australian shares, optimised for dividend yield, and protected against major price declines.
The strategy is a protected yield-centric Australian share strategy delivering a high-income stream which grows over time and is insured against major share price declines. In effect, the Pentalpha strategy is a hybrid of growth assets and a protected high-yielding annuities which we call a “Grannuity”.
The 3 key components of Pentalpha’s protected high pre-tax yield plus growth 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.
- Collar’s options are traded daily on the Australian Options Exchange:
- 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 levels reduces Put protection cost.
- Effective:
- High pre-tax yield:
- Pentalpha’s rolling dividend pursuit programme delivers above Index pre-tax yields.
- Franking Credit preservation for hedged stocks is a key benefit of utilising the Pentalpha strategy.
- Fundamental stock valuations drive portfolio construction and dynamic hedging to deliver capital growth.
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, that Custodian will be domiciled in Australia.
A decade ago, we began to think about retirement income, an issue facing many Australians at they reach the end of their working lives and realised that we were unable to find an investment option where a healthy accumulated superannuation balance would transition to an equally healthy income stream that was sustainable in real terms.
Thinking about this gap in the market led to the establishment of Pentalpha in 2014. What evolved is a protected yield-centric Australian share strategy delivering a high-income stream which grows over time and is insured against major share price declines.
Denis is an investment manager with over 30 years of funds management experience. Previously, he was Head of Australian Equites at 2 of Australia’s premier investment managers.
A decade ago, Denis was surprised at the lack of investment options for transitioning a healthy accumulated superannuation balance into an equally healthy income stream that was sustainable in real terms. This led to the establishment of Pentalpha Investment Management and the retirement income strategy on offer today.
Ewan brings more than 35 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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