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Global Shares / Funds for Income

Discussion in 'Other Asset Classes' started by austing, 7th Jul, 2016.

  1. austing

    austing Well-Known Member

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    An increasing number of Australian investors have been seeking International diversification in recent years. And in this low interest rate and potentially low growth environment the search for yield is also increasing dramatically. Hence I thought it worthwhile starting a Thread on this that can be added to over time.

    I'll kick it off with some ideas. Note I don't necessarily agree with all these but it would be good to get a variety of views.

    1. PMC - Platinum Capital LIC

    In part an absolute return LIC which pays reasonably reliable higher dividends. Good performance earlier on but not as successful in more recent years due to higher exposure to Asia.

    http://www.asx.com.au/asxpdf/20160415/pdf/436k2zrcq7ms7g.pdf

    Platinum Capital Limited

    2. FGG - Fund of Funds LIC

    A more recently listed LIC with the likes of Geoff Wilson behind it. The focus is to generate fully franked dividends, capital growth and with capital preservation. Fund managers forgoe their fees and the LIC donates 1% of NTA to selected charities. It would cost a lot more in fees to directly invest in the underlying funds some of which are not available to retail investors.

    Future Generation Investment Fund

    http://www.asx.com.au/asxpdf/20160614/pdf/437wpxqqcrv55d.pdf

    3. WDIV - Global yield focused ETF

    This Smart Beta rule based ETF focusses on growing and sustainable dividends over a ten year period plus other rules. It has received good reviews here and internationally but my personal view is the usual concerns about Smart Beta such as turnover etc.

    WDIV: SPDR S&P Global Dividend Fund, ETF | SSGA SPDR Australia

    http://us.spindices.com/documents/methodologies/methodology-sp-global-divarist.pdf

    4. UK Listed Investment Trusts (LICs)

    Some excellent dividend growth LICs are available in the UK such as CTY. These have been discussed on the forum recently. But the problem that arose was finding a suitable broker for an infrequent trading retail investor that didn't require too much messing around.

    The City of London Investment Trust plc

    The Bankers Investment Trust PLC
    https://az768132.vo.msecnd.net/documents/8331_2016_06_23_06_19_25_517.pdf

    Lowland Investment Company plc

    Performance and company information (Murray Int)

    Find and compare investment companies | The AIC

    Listed Investment Companies (LICs) (Read onward from here)

    International equities - slightly more complicated foreign exchange question

    5. ALF, WMK & CDM - Long / short LICs

    Hold both local and international stocks.

    ALF has experienced very strong performance over the longer term with an excellent dividend. More recently listed WMK a market neutral version of ALF appears to be off to a good start.

    http://www.asx.com.au/asxpdf/20160525/pdf/437gj5n7stcjwn.pdf

    Watermark • Funds Management

    CDM has been around about the same time as ALF but performance has been patchy.

    http://www.asx.com.au/asxpdf/20151123/pdf/43366ywgq620hv.pdf

    CADENCE CAPITAL LIMITED — Cadence Capital Limited (ASX:CDM)

    6. Direct Shares - Dividend Growth Focused

    @The Falcon is into this with excellent holdings in his portfolio a number of which are in the Consumer area.

    Some examples he has mentioned on the forum are:

    International holdings ;

    Nestle, Phillip Morris

    International watchlist ;

    Unilever, Johnson and Johnson, British American Tobacco

    8. Other ETFs

    I haven't looked into these as yet:

    ANZ ETFS S&P 500 High Yield Low Volatility ETF

    BetaShares - S&P 500 Yield Maximiser

    9. DJRE - Listed Property ETF

    Yield on the lower side but hey it's a Property Forum.

    DJRE: SPDR Dow Jones Global Real Estate Fund, ETF | SSGA SPDR Australia

    10. IXI - Consumer Staples ETF

    This is currently experiencing a low yield due to huge strength in the sector. However I thought it worthwhile including it as there are some exceptional dividend growth stocks in the index. A number of the major holdings are those @The Falcon tends to favour. Perhaps an option for those not wanting to take the direct stock route.

    iShares Global Consumer Staples ETF | IXI | SYD


    I will add further ideas as I find them but would appreciate if others could also add to this remembering that International dividends / income is the focus. Sorry for the erratic ordering of the above but I basically typed the ideas as they popped into my head.
     
    Last edited: 7th Jul, 2016
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  2. The Falcon

    The Falcon Well-Known Member

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    @austing , just a note; Markel is not a dividend payer but a compounder like Berkshire Hathaway.

    IXI is a great ETF and if I had to own just one International ETF that would be it (fee a concern though!). BUT, Global Consumer staples (like all defensives) have been very strongly bid and the index is trading at 24x currently. Hard to buy at that level for mine.
     
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  3. austing

    austing Well-Known Member

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    Oops meant to delete Markel along with BRK. Will do now. Thanks.

    Agree with comment on IXI.
     
  4. BingoMaster

    BingoMaster Well-Known Member

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    Excellent list mr @austing !

    I wonder what you think of the Global Value Fund, GVF? I haven't mentioned it before since it's pretty new, and assumed you would want a longer track record. It's an LIC that buys other undervalued LICs and uses passive and active (activist) methods of "capturing this discount". Geoff Wilson and Chris Cuffe from "Cuffelinks" are on the board.

    Global Value Fund

    There are some pretty significant pros the way I see it:
    - International exposure at a lower risk profile. This is the whole point of the LIC. They get their lower risk profile via investing in things other than just equity - a fair bit of fixed interest, some hedge funds, etc.
    - Their "alpha" is an arbitrage mentality - buy cheap, with a catalyst to change, sell. Repeat
    - Good income - currently at a 6% fully franked yield with the ability to pay more due to a large profit reserve, and the intention to pay out all the profits as a stream of fully franked dividends

    ...and some pretty significant cons:
    - Metage, the underlying manager, is a "hedge fund" and hence trusting them might be hard hehe
    - Hasn't been around that long. Metage has been around a while and apparently succesful, but its hard to find data
    - the big one. HIGH FEES. 1.5% plus a performance fee over a lowish benchmark. High watermark thankfully. They are based in London, and perhaps alternative strategies over there are priced similarly. But yeah, the fee situation is a bit rich.

    I bought some a while back, but sold half my position once I started to feel a bit more critically towards high fees and alternative strategies. Still have done reasonably well vs the index.
     
  5. wombat777

    wombat777 Well-Known Member Premium Member

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    Looking at this list and researching LICs on fund websites last night, one thing that irks me is that some of the fund managers don't publish the typical 1-year, 3-year, 5-year performance tables ( covering both growth and distribution returns). It does make comparing difficult.

    It would be helpful if there was standardisation and regulation of the way the information should be presented and reported. Risk information never seems to be reported in the summary sheets either. I'm sure the regulators could also look at other information that should be presented in a standard way.
     
  6. austing

    austing Well-Known Member

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    Page 12 in the following Research Report is useful for longer term NTA performance. You will find other useful information in the report such as yield as well.

    http://naos.com.au/wp-content/uploads/2016/05/LIC-201603.pdf
     
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  7. austing

    austing Well-Known Member

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    Must admit I hadn't really looked into that one. Appears to be doing a bit of the stuff Wilson does eg LIC Activism and arbitrage etc as you pointed out.

    At first glance probably not something I would invest in. Fee certainly up there. From Bell Potters recent research report:

    Benchmark: BBSW 1Year Rate + 4%
    Indirect cost ratio with perf. fee: 4.81% :eek:
    Indirect cost ratio w/out perf. fee: 2.33%

    What I'd like to see is an International LIC something similar to our older LICs. That is, low fee with long term focus on quality dividend companies. A fund of quality companies producing real dividends, not some fund manager creating manufactured dividends. Investors have been pushing ARG and AFI to do something like this for years. And what have we ended up with to date, ARGO's useless Infrastructure LIC for my purpose that is.

    I'm not a fan of unlisted managed funds but just as an exercise I might look into what is available on mFund. At least this is a painless way (no application forms etc) for those interested in investing in unlisted managed funds:

    mFunds Fund information

    If it wasn't for my and my wife's desire for simplicity and not wanting to get back into direct stocks I would just buy the damn dividend stocks directly. NABtrade is very good, easy and cheap for this and I'm already with them. Dividends (currency converted) paid directly into your local trading account.

    For all the effort I'm putting into finding a FUND equivalent I could probably have spent the energy in just selecting and buying the stocks directly. The sort of stuff that @The Falcon is buying (eg large consumer staple companies) is essentially the same as I want in that we are both dividend focused investors. And these well established stocks are highly likely to long outlive me! So still very low maintenance. Perhaps at times what we initially consider the difficult path might turn out to be the easier one:confused:. Struth I think I need some home brew to get my head straight:cool:.
     
  8. Newfast

    Newfast Well-Known Member

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    Great source of information.

    Thanks guys.
     
  9. austing

    austing Well-Known Member

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    Others for the list are LICs HHV (Oz and Int) and TGG which are trying to become progressively more dividend focused. Bit hard not too with Geoff Wilson agitating, a good thing in this case though.

    I personally don't invest in these.
     
  10. SouthBoy

    SouthBoy Well-Known Member

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    Great post! I hold ALF and CDM for their dividends, great yields. I was advised to invest in some global funds when the Aussie dollar started its downward slide against the US dollar around 4 years ago. I bought some VTS, IVV & IJH. They pay negligible dividends and naturally no franking credits. But Boy, they rose as the Aussie dollar slid. I made a handsome profit selling them after holding them for over 2 years. Would I buy them now? Probably No, as the Aussie Dollar seems to have found its place at around the current mark of 70c-75c against the US Dollar. @austing what's your take on PTM? Once again I love this one for its high yields and franking credits.
     
  11. austing

    austing Well-Known Member

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    I generally don't invest in direct shares nowadays. PTM and MFG are favourites of a few here who know their stuff. These shares have been discussed on the forum at times. When it comes to property and managed funds there's a rule of thumb that suggests that one is better off investing in the manager NOT the physical asset / product!
    Best chance of getting a decent franked dividend is through the mgr.

    FGG (fund of funds) is off interest to me at this time. Great Mgrs at a relatively low fee. From an investors view the aim is to provide an increasing franked income steam. A brainchild of Geoff Wilson so hopefully this LIC achieves its goal of income for both the charities and investors. As an Australian based Trading LIC profits from trading will be available as franked dividends. One way of getting franked dividends which from International investing!

    http://www.futuregeninvest.com.au/Global/160718_FGG_NTA-June-2016.pdf
     
  12. SouthBoy

    SouthBoy Well-Known Member

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    Thanks @austing , it does look like an interesting fund. Though I have a huge aversion for Hunter Hall after being burnt by their flagship fund VGT a few years back. Peter Hall started this fund as an ethical fund, and it did quite well leading up to the GFC. For years after the GFC, the fund did not pay any dividends, and strongly under performed the index. These days I am very careful as to which manager I trust my money with. I have to say Magellan and Platinum are the stand outs for me now.
     
  13. austing

    austing Well-Known Member

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    I've never invested directly in Hunter Hall. Performance in HHV was terrible for a time like you said. But it has significantly improved in recent times with a strong dividend payment.

    I hold Platinum's LIC (PMC). They have been underperforming of late but outperformed prior to that.

    Magellan's MFF LIC has done just the opposite to PMC and outperformed in recent years. But can we be sure it will continue to do so going forward?

    So there in lies the problem. Consistency is not guaranteed!

    Hence my interest in FGG. Apart from getting a decent franked dividend (hopefully) through investing in International shares I like the fund of fund structure. As indicated above it is rare for active Mgrs to consistently outperform. And when they do the high fee structure can negate much of this at times. FGG because of the combination of styles may not shoot the lights out but hopefully there will be less downside volatility as well. Even if I only get similar to index growth but greater income (through trading activity) I won't complain. Although it could turn out to be a dud. In which case I can save face by saying it's my contribution to charity:).
     
  14. VB King

    VB King Well-Known Member

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    I like direct share investment.

    Similar to British American Tobacco, I hold imperial Brands. Regular 10% dividend growth and has had great capital growth too.

    I also hold GSK, which is a bit of a punt given the new product pipeline, but dividend is committed and has done well also capital growth wise.

    .... I'm aware of the irony of holding tobacco and pharmaceutical...
     
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  15. SouthBoy

    SouthBoy Well-Known Member

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    I am not comfortable investing directly in global shares, as every world event and currency fluctuation can impact your return. Plus I don't have the time nor the inclination to follow world affairs 24x 7. I like set and 'mostly' forget investments like LIC and ETFs through a good manager, but as @austing pointed out earlier, almost no fund manager will have a continuous good run. I have bailed out of many fund managers over the last 20 years, mostly after incurring capital loss. They include BT, Colonial, ING (OnePath), Maquarie, HunterHall..... Boring as it may sound, but for me Vanguard ETFs have done a better job in preserving my capital than the aforementioned Fund managers and given me decent yields over the last few years.
     
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  16. austing

    austing Well-Known Member

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    Thanks to his persistence @The Falcon has finally gotten it into my stubborn thick head that one of the best ways of getting US exposure in particular is through MFG. A big thanks for your patience mate. MGF available on the ASX, excellent franked dividend growth and no currency risk.

    Too stupid to follow my own long held belief as stated above in an earlier post. That is, with property and managed funds it is often better to invest in the manager not the assets.

    I suppose the same thing could be said of PTM. Want some exposure to Asia invest in the mgr, not the product.

    @SouthBoy, excellent comment on PTM above. Thank you.

    MFG seems to have every thing going it's way at this time and it is priced accordingly. I suppose if one takes the view fund Mgrs generally go through good and bad periods PTM from a value perspective might be worthy of consideration. One thing I do admire about PTM is that despite the pain in recent times they're determined to stick with their investing approach. A true contrarian. Something I read from Howard Marks in the AFR yesterday has me thinking that it may not be wise to write off Platinum just yet.

    But I'm no stock analyst. Certainly not advice.

    If I get tempted to purchase either of these they will be grouped under our International Asset Allocation in the SMSF along with FGG, PMC and VGS.

    So in summary, as an indirect way of getting international exposure, excellent franked dividend growth without the currency risk I think PTM and MFG are very worthy of being added to the list here.
     
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  17. Newfast

    Newfast Well-Known Member

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    I have read the comments from all of you guys and everyone share their knowledge and experience. So i would like to share something and would like your opinion.....not advise. ..Opinion , i know advise can hold many of you back....

    I use Commsec, i started my portfolio atound 2011-2012. I was a beginner (still i M) and was excited about investment shares etc...i went into shares with the mindset of long term investment -buy hold, yes to divident reinvestment etc.

    I didn't have any strategy about getting fully franked divident or find a good manager, check their fees etc.

    I have been reading about Platinum group, CDM and vanguard alot. But after reading this post and other lic and etf related posts.....i need some guidance...

    Time is a big constrant for me, i work full time and have young family and very limited resources for research in theae matters. I thought about finicial advisor but some charge alot of money .....i think one of the member here aldo mentioned that cant keep in traxk 24×7 where is happening what.

    Please share your opinion about what is the benefit of fully franked divident (ofcorse no tax other than that) compared to takinh divident reinvestment plan.

    Secondly, if someone (I) wants to invest in international shares what is the procedure? Through commsec ?any fees or broker?

    Finally, what strategy one should adapt in relation to investing Good Chunk of Money on long term,(10-20 years) so that security be there, investment will grow and tax, votality and risks can be managed? Less fees...and less headche....

    I hope to see your opinions and many thanks in advance to

    @austing @The Falcon @SouthBoy @pinkboy

    And all other respected members......
     
  18. Anne11

    Anne11 Well-Known Member

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    I think it might help for you to re-read the posts under this Other Asset Class section. Most if not all of the answers are in there, you might need to make connection between posts though. It would take a day or so, but it will be time well spent, and still way cheaper than paying for advice.

    For example, one of the posts mentioned about investing in International shares: you use Comsec and they do have the option, pls log on and check your Comsec account ( or search on their site ) to find out. From memory, the fees are higher than trading domestic shares.
     
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  19. Newfast

    Newfast Well-Known Member

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    Hi @Anne11 , thanks for the reply.

    Regarding commsec and international shares, i knew i can do via commsec, but I didn't write it properly - I meant to ask if there are other cheaper options to buy.

    I will read it again.

    But my main concerns are still there, regarding the strategies of choosing shares,etf's, lic's with fully frankeddividents or divident reinvestment plans, how do you select a portfolio manager....for long term 10-20 year 0lan , no one can fircast that far. But to reduce the votality and increase the potential or capital growth of portfolio what should I aim for....

    I do like bendigo bank as their share price has increased since i have bought and they give fully franked divident.

    So if I am looking for a share or group of shares etfs and lics which gives fullyfrankef dividents and the share price goes up so that I can cash in future is a good strategy or....buy cheap shares like CDM who claim to outferporm the market and have divident reinvestment plan. ...
     
  20. Hodor

    Hodor Well-Known Member

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    It is my opinion that unless you have lots of time, experience a willingness to do so and other key characteristics then you should be looking at avoiding individual shares. Making ETFs and LICs key holdings and avoiding those with high fees further reduces a number of risks.

    For international exposure my opinion is VGS is the best (risk vs reward for average punter) bet over 20 years, low fees, eliminate key person risk which an actively managed fund has to some extent and will have to be monitored over 20 years. I favour VGS over VEU and VTS as it automatically balances and is domiciled in Australia so even less to think about.

    Franking has nothing to do with dividend reinvestment plans and vice versa. They are two separate things that have zero impact on each other.

    It is my opinion that there are all kinds of things wrong with the above statement and that it shows you should learn a lot more before looking at individual stocks.

    Guidance is too near advice for my liking. Anyway, re read the Boglehead, LIC and ETF threads, there are numerous approaches to investing throughout those threads which the pros and cons of are discussed at length.

    The more I learn the more distant my idea of managing a portfolio of individual shares becomes.
     
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