Switzer Dividend Growth Fund monthly update for December 2018

Investment Objective

SWTZ is an income focussed exchange traded managed fund, with a mix of yield and quality stocks. The objective of the fund is to generate an above market yield while maximising franking where possible and to deliver capital growth over the long-term. We select companies that, in aggregate, generate sustainable dividend income. The fund is characterised by a strong and diverse portfolio of companies that exhibit good cashflows and strong business models.

Performance Summary

Over the 2018 calendar year, the Switzer Dividend Growth Fund (SWTZ) paid a distribution yield of 6.0%, or 7.7% including franking credits. Distribution yield is calculated as the distributions received over the 12 months to 31 December 2018 relative to the closing unit price of $2.61 at the beginning of the period.

Given its focus on income and capital preservation, over the long term we expect SWTZ to marginally underperform in rising markets and marginally outperform in falling markets. The decline in the banks in December 2019 resulted in the fund underperforming this month with a return of -1.74%, against a market return of -0.12%.

Portfolio Commentary

The targeted cash level in the fund is usually run at 1.5-2%. At the end of the month cash was higher at around 4.1%, due to fund inflows. Cash will be invested as opportunities arise and value emerges following the recent market falls. The fund went ex-distribution of 3.37 cents per unit (fully franked) on the 2nd of January 2019, which reduced cash by about 1.5%.

SWTZ Recent Distributions

SWTZ Recent distributions
SWTZ Recent distributions

A new position was established in AusNet Services in December 2018. AusNet operates a gas distribution business as well as an electricity distribution and transmission business, all in Victoria. Regulatory returns for the company have just been set, creating more certainty around an already reliable income stream.

The fund participated in the Sonic Healthcare placement which, while not a large position, was sold soon after at a profit. Positions in Woolworths and Caltex were added to over the month.

The fund participated in the Rio Tinto and BHP buybacks. These transactions are negative for pre-tax performance but positive post tax, especially for low or zero tax payers.

Market Commentary

Over the month global equity markets deteriorated significantly. The falls were led by the markets that had been the strongest, such as the US. Australia was also lower but less so, as the domestic index had lagged.

The falls in global equities appear to be liquidity and technically driven, as there was no significant deterioration in traditional fundamentals. Momentum-based strategies now comprise a large part of global trading. Momentum has clearly been broken in many indices which has triggered further selling.

The continual withdrawal of liquidity by central banks is causing increased volatility in markets. Whether the lack of liquidity leads to a decline in economic activity is the question on which the market is focussing. So far, leading indicators are showing economic growth slowing to sustainable levels – not a recession. It is likely liquidity will be withdrawn until economic growth is threatened, then the authorities may pause the tightening. Monitoring the state of credit markets may be instructive at this stage of the cycle.

Sector performance was mixed with the best sectors being Materials, Utilities and REITs. The positive performance of both REITs and Materials is unusual given Materials usually rely on strong world growth and REITs are a haven in times of low or declining growth. The fund is overweight REITs but not Materials, having sold into both RIO Tinto and BHP buybacks. The worst performing sectors included Banks and Diversified Financials. The fund has a significant stake in these sectors given their higher yield characteristics.

Volatility in equity markets is expected to continue. During rallies the fund will work to upgrade the portfolio from its already strong position.

The best performing stocks in the portfolio were BHP (sold into buyback), Charter Hall, AGL, Rio Tinto (also sold into buyback), and Dexus.

Diversified Financials was one of the poorer performing sectors. Despite having pristine balance sheets and cash flows, these companies derive a large proportion of earnings from the level of the stock market which has fallen.

The banks were also weaker over the month, as potential regulatory change in New Zealand may require them to retain more capital which will restrict dividend increases if enacted.

PORTFOLIO OUTLOOK

The decline in the equity market over the last couple of months has offered up relatively attractive investment opportunities for SWTZ and we have invested most of the excess cash.
The underlying earnings (and dividend) outlook for the companies in the fund remain positive. Balance sheets of the companies held remain very good, a positive sign of the health of the portfolio.
Interest rates remain low and economic activity, although slowing, remains positive. While volatility in equity markets is expected to continue, indications of inflation remain largely benign giving confidence that the investment outlook remains favourable.

[sc name="post-disclaimer-swtz"]

http://damai.balikpapan.go.id/assets/css/scatter-hitam/ https://scatterhitam-slot.com https://tth.com.tc/ https://gna.university/ https://guiqac.gnauniversity.edu.in/ http://tourism.gov.eg/ powergaming88 http://e-office.utu.ac.id/asset/assets/plugins/gacor/ powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 slot zeus nolimit city sv388 https://pariamantimur.pariamankota.go.id/assets/ https://sipatudia.bpsdm.sumbarprov.go.id/assets/mahjong/ slot jepang http://46.250.237.148:8005/ http://simokata.tabanankab.go.id/dist/img/thailand/ scatter hitam slot thailand link slot thailand 777 slot powergaming88 slot luar negeri slot gacor maxwin slot gacor hari ini slot gacor terbaru mahjong ways 2 slot thailand jp slot slot bni slot bri slot bsi slot danamon slot gopay slot server korea slot malaysia slot amerika slot rusia fan tan monopoly live lightning roulette mega ball sweet bonanza candyland mega sic bo mega baccarat andar bahar sbobet88 ktm303 slot dubai slot qris powergaming88 Slot Thailand Slot Zeus Pg Soft Starlight Princess Slot Gacor Maxwin Joker123 Sv388 Slot Thailand Slot Thailand Slot Qris slot thailand joker123 mahjong ways 2 888slot slot jepang slot thailand slot mahjong ways slot qris slot deposit dana slot dana nolimit city slot thailand sv388 slot888 slot kamboja http://labse.ce.undip.ac.id/sejarah/gacorx/ Slot Thailand Starlight Princess Mahjong Ways 2 Slot Maxwin slot thailand slot filipina slot88 slot thailand slot mahjong NEW SLOT POLA GACOR https://mandiri-gacor.angkolatimur.tapselkab.go.id/ jp slot slot ganas https://cheat-gacor.angkolatimur.tapselkab.go.id/ crazy time live slot qris https://sqris.angkolatimur.tapselkab.go.id/ slot akurat qris https://pragmaticplay.dharmasatyasarana.co.id/ https://dana.sidamaju.skom.id/ https://joker123.putramuko.co.id/ https://akun-pro-rusia.mariyadl.sch.id/ slot zeus server thailand server hongkong slot ovo slot gopay slot linkaja joker123 nolimit city sv388 starlight princess mahjong ways pg slot slot zeus sv388 idn slot https://joker123.elearningmansatuokit.sch.id/ slot server thailand slot thailand https://slot-thailand.itr.ac.id/ https://pn-watansoppeng.go.id/media/jui/server-thailand/ https://dinkes.hsu.go.id/wp-content/uploads/server-thailand/ nolimit city slot ovo slot gopay pragmati play starlight princess slot pg soft slot mahjong slot zeus digmaan slot mania slot zeus server thailand ying77 slot thailand judi bola live casino sv388 pg soft slot dana mahjong ways slot mania slot x500 ladangtoto slot server kamboja digmaan digmaan slot88 scv388 sabung ayam online slot live casino sicbo online slot thailand ladangtoto sv388 ladangtoto powergaming88 66kbet powergaming88 slot thailand ladangtoto slot thailand server thailand slot thailand slot thailand slot thailand slot gacor ladangtoto2 ying77 bet server thailand slot thailand ying77 slot88 ladangtoto ladangtoto slot maxwin sv388 sv388 slot gacor 66k bet slot dana sabung ayam inline slot mahjong slot toto slot server thailand slot gacor slot server thailand slot thailand situs slot wwg slot slot daftar judi slot online indonesia slot gacor slot mawin slot gacor slot thailand slot gacor slot gacor demo slot pragmatic sv388 slot88 pgsoft Daftar Judi Slot Online Indonesia Paling Gacor di Indonesia Daftar Situs Judi Slot Online SLOT88 lucky neko slot gacor slot88 slot kakek slot maxwin slot thailand Slot Mahjong Ways 2 Mudah Jackpot Paus di PG Soft Hari ini 2023 Lucky Neko Situs Slot Gacor Pgsoft Hari Ini SITUS SABUNG AYAM SV388 ONLINE DAFTAR LINK LOGIN APK AGEN SV388 slot gacor slot gacor hari ini slot gacor sbobet gtr303 https://windizupdate.com/ slot online gtr303 slot thailand situs slot gacor slot toto scatter hitam crazy time crazy time casino online slot gacor gtr303 situs judi bola terpercaya gtr303 gtr303 gtr303 slot thailand ktm303 casino online togel online situs togel crazy time slot gampang menang slot gacor slot gacor ktm303 joker123 https://dinkes.hsu.go.id/scatter-hitam/ https://pmb.itsnupekalongan.ac.id/vendor/bin/scatter-hitam/ https://jurnal.univa-labuhanbatu.ac.id/public/site/scatter-hitam/ https://lpm.univa-labuhanbatu.ac.id/wp-content/themes/jnews/scatter-hitam/ https://scatterhitam-slot.com https://tth.com.tc/ https://gna.university/ https://guiqac.gnauniversity.edu.in/ http://tourism.gov.eg/ powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 Slot Thailand Starlight Princess Mahjong Ways 2 Slot Maxwin https://sipatudia.bpsdm.sumbarprov.go.id/assets/mahjong/ scatter hitam powergaming88 sv388 idn slot https://slot-thailand.itr.ac.id/ https://pn-watansoppeng.go.id/media/jui/server-thailand/ slot mania slot zeus ying77 judi bola live casino sv388 mahjong ways slot mania slot server kamboja digmaan slot88 slot live casino slot thailand powergaming88 powergaming88 slot thailand ladangtoto slot thailand server thailand slot thailand slot thailand slot thailand slot gacor powergaming88 ladangtoto sv388 slot toto slot server thailand slot thailand situs slot wwg slot slot gacor slot mawin slot gacor slot thailand slot gacor slot gacor slot88 pgsoft Daftar Judi Slot Online Indonesia Paling Gacor di Indonesia Daftar Situs Judi Slot Online SLOT88 lucky neko slot gacor slot88 slot maxwin slot thailand Slot Mahjong Ways 2 Mudah Jackpot Paus di PG Soft Hari ini 2023 Lucky Neko Situs Slot Gacor Pgsoft Hari Ini SITUS SABUNG AYAM SV388 ONLINE DAFTAR LINK LOGIN APK AGEN SV388