Investment house Ausbil has established its new Active Dividend Income Fund, with an aim to generate higher dividend income that is paid to investors in monthly distributions.
The fund invests primarily in S&P/ASX200 companies which are expected to generate growing dividend streams supported by revenues, earnings and free cash flows.
Ausbil says the fund actively invests in Australian securities to generate dividend income through a number of ways including sustainable earnings upgrades, cyclical opportunities, sentiment-driven mispricing, dividend imputation and franking credits and tactically allocating to dividend paying securities.
“In this low-rate environment, and with people living longer in retirement, investors need diversified and higher income sources, with the potential over the long term for capital to grow,” said Michael Price, portfolio manager.
He added that strategies, such as tactical allocation to dividend paying securities and opportunistic investment in cases of temporary mispricing of yield, can generate additional active income.
“With an active dividend approach, we are able to generate monthly distributions rather than half-yearly,” he said.
“This benefits investors seeking regular income who used to hesitate at the traditional half-yearly structure of distributions.”
Mark Knight, head of distribution at Ausbil called the dividend income market “transforming”.
“Income investors like SMSFs, retirees, and investors approaching retirement can diversify away from traditional sources of income like fixed income and term deposits for a longer-term approach diversified across high-quality Australian companies,” he said.
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