Investors concerned about market volatility should look at equities in a different way – as an excellent yield proposition, advises Mr Warwick Cumming, deputy head of equities at Tyndall.
“Careful selection of individual stocks can provide a very tax-effective income stream as well as long-term capital growth, satisfying the two major considerations of most investors.
“Current equity prices on the ASX mean many companies are providing yields that are as attractive as those from other asset classes traditionally favoured for providing income – indeed, when franking credits are taken into account, they are extremely competitive.
“At the same time, there are stocks offering excellent growth potential at current prices,” he said.
Mr Cumming said that a very disciplined approach is needed in the twin search for yield and growth and recommends that investors who don’t have the time or expertise themselves to use a fund dedicated to providing share income.
“There is more involved than selecting three or four high dividend paying shares as companies paying dividends at the top end are not necessarily the ones who have the best growth prospects in the present, and predicted, economic circumstances,” he said.
Mr Cumming co-manages the Tyndall Australian Share Income Fund which is designed to provide both a tax-effective income stream as well as capital growth.
He said that a number of safeguards and disciplines have been built into the fund designed to ensure it is true-to-label so that it offers a less volatile and more tax effective investment proposition than those of typical managed share funds.
“For example, we invest in stocks that provide franking credits, or tax-deferred income, as well as having capital structures likely to provide off-market buy-backs or capital returns.
“These selections take research and judgement to reduce capital risk and maximise after-tax returns,” he said.
Tyndall offers Australian equities and Australian and global fixed interest funds to retail and institutional investors in Australia. It has over A$22 billion in funds under management (as at 30 September 2011).
Tyndall is a wholly owned subsidiary of Nikko Asset Management Co., Ltd., the largest regional asset manager headquartered in Asia with approximately AUD$165 billion in funds under management (as at 30 September 2011).
For further information please contact
Warwick Cumming – 02 8072 6331
12 October 2011