The Ausbil Active Dividend Income Fund – Active ETF (ASX: DIVI) has been admitted to trading on the ASX, with AU$967 million in funds under management as at 31 August.
Launched in June 2018, DIVI – an actively managed exchange-traded fund (ETF) – holds 25 to 50 Australian companies listed on the ASX, chosen for their consistent, inflation-linked dividends and franking credits, providing investors with regular monthly income.
Speaking to InvestorDaily, Michael Price, portfolio manager of DIVI, said the active approach was a deliberate choice, offering investors the potential for higher income and total returns than a passive portfolio.
“[Getting] that extra income with the active method is, I think, a superior way to both get income and also improve the total performance,” Price said. “We’re certainly not asking people to give up some total return in order to get the extra income, which sometimes you might have to do with a passive portfolio.”
The firm, he said, has believed in active management for almost 30 years.
“By having the right investment philosophy in such a big team, I think we’ve shown that active management can work,” Price said.
Since its June 2018 inception, DIVI has returned 9.18 per cent p.a. (net of fees), delivering steady income and capital growth versus the S&P/ASX 200 Accumulation Index’s 9.38 per cent to 31 August.
Price highlighted that the fund differentiates itself from a crowded dividend ETF market through its “active dividend investing” process.
“The key here is we’re trying to get more dividends over the year, rather than just higher dividends. We take advantage of the fact that not every company pays their dividends on the same day to get more dividends, rather than higher dividends.”
Moreover, Price told InvestorDaily that the ASX listing, seven years after the fund became available, reflects investor preferences as demand for active ETFs has grown over time.
He added: “One of the reasons I really wanted to set up this fund was I want to make life better for retirees, at least financially in retirement. And I think an equity income fund plays a role there.”
Asked whether the firm is considering introducing global exposure to DIVI, Price said: “Not at the moment, the fund’s been able to meet [its] objectives just using the domestic market … about 40 per cent of solicited earnings are offshore.”
He added that this provides sufficient exposure to global growth while retaining the advantage of franking credits.
Price further explained that DIVI’s active management diversifies beyond major banks and resource companies, targeting high-quality firms.
“With a handful of large banks and resource companies paying the majority of dividends each year, relying solely on these sectors can expose investors to risk if dividends are cut,” he said.
“DIVI’s active management approach allows us to diversify beyond the biggest players, targeting high-quality companies with sustainable dividend growth, and offers the resilience to maintain income through changing market conditions.
“This ensures our investors are well-placed to be exposed to quality income opportunities in any market environment,” he said.
Ultimately, DIVI’s launch marks a “significant step” in creating the firm’s income-focused strategies “more accessible to more investors”, Ausbil CEO Mark Knight said this week.
“By offering an active ETF, we’re meeting the requests of brokers, financial advisers, SMSFs and mum and dad investors for a more convenient and efficient way to generate regular monthly income from equities, with the potential for additional capital growth,” Knight added.
