Welcome to the first issue of our investor newsletter.
I would like to personally thank you for the trust you have placed in us by investing in our fund. We listed on the 24th of February and were overwhelmed and grateful for all the support from our investor base. We raised over 50 million dollars in the initial offer and the inflows have continued since trading on the ASX.
This email is the first of a regular communication we will be sending to our investors. The purpose is to give you insights as to how we’re investing your money, as well as share our views on the market and what is interesting from an investment perspective. We will also provide a monthly video and note from the CIO of our Investment Adviser, George Boubouras.
In today’s video, George and I will talk about how the fund has been investing since we listed and some of the technical features.
Market wrap from our Investment Adviser
The recent Australian reporting season delivered with the expected – and well overdue – earnings rebound following two years of earnings contraction. The earnings recession of the past two fiscal years has well and truly passed.
The very strong acceleration in headline earnings growth for the market implies we are on target for a 20% spike in the current FY17, following a negative 9% from the previous FY16.
The anticipated bounce in earnings has been delivered. There have been consistent upgrades coming through since the December quarter 2016 that have been driven predominately from the resource sector following a strong rebound in commodity prices over the past nine months. This recent windfall in resource-led earnings has been a good opportunity for these companies to repair their balance sheet, pay down debt levels and deliver special dividends where possible.
Outside the resource sector, the banks have been a good contributor. Going forward, they will continue to offer a very reasonable dividend, but will face challenges to their margins. I would expect to see the major banks continue to exit non-core business units that have a higher cost income ratio and higher regulatory capital requirements. An overweight position to the banking sector remains the core view.
Outside the resource and banking sectors, the contribution to earnings is somewhat lower. The key take out from the reporting period is that the momentum is improving, and the foundations have improved.
Now, we simply have to watch the dividends drop in March and April. As John D Rockefeller famously said “Do you know the only thing that gives me pleasure? It is to see my dividends coming in”.
Sounds very appropriate.
Portfolio disclosure
A number of investors have asked how they can see the portfolio. As part of being a listed managed fund we are required to make the portfolios available quarterly in arrears. We will notify you of the date that the portfolio can be viewed in the coming months.
Distribution
The first distribution for the Switzer Dividend Growth Fund will be paid in April. The exact date will be confirmed in the coming weeks.
Thanks again for your support and if you have any questions please email us at invest@switzer.com.au or call us on 1300 794 893.
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