lower for longer - pinnaclemasterclass.com · lower for longer re-evaluating the norm. rethinking...

1

Lower For LongerRe-evaluating the norm. Rethinking income.

BRISBANE - MARCH 3

MELBOURNE - MARCH 4

SYDNEY - MARCH 5

PERTH - MARCH 10

ADELAIDE - MARCH 11

2 3

Across the world there Across the world there are now more than are now more than 600,000 publicly 600,000 publicly traded companies. traded companies.

From New York to the From New York to the Nordics, opportunities Nordics, opportunities are abundant. But so are abundant. But so are threats. are threats.

How can investors gain How can investors gain an edge? an edge?

In Australia and across the world investors are facing an income dilemma.

A dilemma that would have seemed inconceivable just a few years ago.

So, where should they turn and what must be considered with rates now likely to remain lower for longer?

4 5

Why invest with Plato?

Managed to optimise

after-tax returns

Global and domestic

income strategies

Attractive yield

opportunities

Dr Don Hamson MANAGING DIRECTOR

• Plato Australian Shares Income Fund

• Plato Australian Shares Core Fund

• Plato Global Shares Income Fund

• Plato Global Market Neutral Fund

• Plato Income Maximiser Limited (ASX:PL8)

Opportunity set:

Ratings

Plato Global Shares Income Fund

Plato Australian Shares Income Fund

Plato Income Maximiser Limited (LIC)



Plato Income Maximiser


6 7

At Plato Investment Management we build solutions with the income needs of our investors, particularly retirees, front of mind.

Right now for the first time in almost two

decades we are faced with negative real inter-

est rates. If an investor’s retirement savings

are in overnight cash, 1-year term deposits or

10-year bonds, the interest generated on those

savings is less than the rate of inflation of goods

and services.

To be frank, by holding cash or investing in

cash-backed assets, you will have less buying

power in a year, than you do now.

Many income-related products, like income

securities or bank hybrids are priced at a

margin to bank bill rates, and we have already

seen 90-day bank bill rates fall below 1%.

We are still anticipating another rate cut which

will drive these real rates further into the red.

This situation would have seemed almost

inconceivable to many investors who, just a

few years ago, were earning healthy returns

on term deposit and other cash investments.

If there was ever a time to re-evaluate the

income norm, it’s now.

What is the solution? We believe diversification

is the only free lunch and dividends from care-

fully selected equities, here in Australia and

across the world, continue to help Plato in our

aim of delivering superior returns to enable our

investors maintain their quality of life in these

extraordinary low-yield times.

Here’s a summary of our investment solutions.


The Global Shares Income Fund is an opportunity

for Australian investors to diversify their income

through high yielding global shares.

Using Plato’s proprietary divided rotation model,

the Global Shares Income Fund seeks to identify

high quality stocks across the world which perform

strongly in the period prior to the ex-dividend date.

The Fund is actively positioned to achieve superior

income for low tax investors, whilst maintaining

full equity capital exposure and diversification to

both global developed countries and sectors.

Since inception1 the Fund has delivered a yield of

6.1% per annum2.

By Dr Don Hamson, Managing Director,

Plato Investment Management.

Income generated since inception1

(per annum)

Fund’s income earned relative to the benchmark

Benchmark Fund

PLATFORM AVAILABILITY

AMP North Asgard BT Panorama BT Wrap

ClearView Health HUB24 IOOF Portfolio Service IOOP Pursuit Select

Solutions mFund MLC Wrap MLC Navigator

Macquarie Wrap Praemium uXchange Premium Choice

Netwealth

¹ Inception date 1 March 2016. 2 Distributed income, net of withholding tax.Source: FactSet, Plato Investment ManagementAll data is as at 31 December 2019 unless indicated otherwise. Fund returns are after applicable fees, costs and taxes.


A diversified portfolio of Australian equities,

managed to deliver superior yield specifically

for pension phase investors and SMSFs.

The Australian shares income fund looks beyond

Australia’s traditional income paying stocks to

capture superior yield for investors. The fund

is actively managed to deliver after-tax alpha,

specifically to benefit retirees. In 2019 the

Australian Shares Income Fund delivered a yield

of 12.2% including franking credits and special

dividends. Since inception the fund has deliv-

ered a yield of 9.7% per annum including frank-

ing credits and special dividends.

TOP 10 HOLDINGS TOP 10 YIELDING YIELD % p.a.1

BHP Group Fortescue Metals Group 15.2

Commonwealth Bank BHP Group 12.2

CSL Westpac 10.3

Macquarie Group National Australia Bank 9.6

National Australia Bank Wesfarmers 9.6

Transurban Group ANZ 8.9

Wesfarmers AGL Energy 7.8

Westpac Commonwealth Bank 7.7

Woodside Petroleum Woodside Petroleum 7.5

Woolworths Super Retail 7.1

PLATFORM AVAILABILITY

AMP FS BT Wrap

Colonial First Wrap mFund

Macquarie Wrap Wealth Solutions

AMP North Netwealth

HUB24 uXchange

One Vwue MLC Wrap

Asgard

Cash rate* 1yr ASX200** 1yr Fund*** 1yr Cash rate* Since Inc. p.a.

ASX200** Since Inc. p.a.

Fund*** Since inc. p.a.

Total 1.2% 5.8% 12.2% 2.2% 5.9% 9.7%

Franking 0.0% 1.6% 3.5% 0.0% 1.5% 2.7%

Cash 1.2% 4.2% 8.7% 2.2% 4.4% 7.0%

Realised Yield

Plato Income Maximiser (ASX:PL8)

The Plato Income Maximiser is the first and only

Australian Listed Investment Company with a

target of paying monthly dividends. Based on

the investment strategy of the Australian Shares

Income Fund, PL8 aims to be a solution for

investors who want a dependable, regular income

stream from their investment portfolio.

Investor can buy and sell PL8 just like any share on

the ASX. In 2019, PL8 distributed a yield of 11.8%

including franking credits.

1 Including franking credits and special dividends. 2 Inception date 9 September 2011. 3 Including franking credits and special dividends. 4 Distributed income including franking credits. 5 NTA calculations exclude Deferred Tax Assets relating to capitalised cost deductions and carried forward tax losses of $0.005. The Franking Account Balance (not reflected in NTA) is $0.015 per share. 6 Pre-tax NTA includes tax on realised gains or losses and other earnings, but excludes any provision for tax on unrealised gains or losses. * RBA cash rate. ** S&P/ASX 200 Franking Credit Adjusted Daily Total Return Index (Tax-Exempt) *** Plato Australian Shares Income Fund. All data is as at 31 December 2019 unless indicated otherwise. Fund returns are after applicable fees, costs and taxes.

PORTFOLIO PERFORMANCE2 1 MTH 3 MTHS 1 YR

INCEPT. P.A.

Total return3 -1.7% 0.7% 24.2% 10.5%

Income4 0.6% 1.8% 11.8% 8.1%

Benchmark total return3 -2.2% 0.9% 25.4% 10.8%

Excess total return3 0.5% -0.2% -1.2% -0.3%

Excess income4 0.4% 0.9% 6.0% 2.3%

Excess franking4 0.2% 0.4% 1.9% 0.9%

Share Price Pre-tax NTA

PL8 Share price vNTA5,6

10 11

Access a specialised

asset class and supply-

constrained market

We aim to deliver attractive

regular income

An experienced

investment team with a

unique skillset

• MCP Master Income Trust (ASX:MXT – a diversified portfolio of Australian corporate loans)

• MCP Income Opportunities Trust (ASX:MOT – a portfolio of private credit opportunities)

• Several unlisted wholesale investment funds offering investors a differentiated investment choice based on their preference for risk/return and investment liquidity.

Investment opportunities

Andrew LockhartMANAGING PARTNER

“Subscribe” MCP Income Oppportunities Trust

“Recommended Plus” MCP Master Income Trust

MCP Master Income Trust

Ratings

“Subscribe” MCP Master Income Trust

Why invest with Metrics? MCP Master

Income Trust

MCP Master Income Trust

MCP Income Opportunities Trust

12 13

Further, equity markets have experienced a

10-year bull run, and in January this year the S&P/

ASX 200 broke through the 7000 barrier for the

first time. Against a backdrop of sliding economic

growth, equity markets are arguably looking well

priced, which is leading many to take an increas-

ingly cautious outlook on equities as an ongoing

source of income.

An alternative to traditional asset classes

Against this backdrop, many investors are looking

beyond traditional assets classes for sources of

income, which explains the growing interest in

alternative assets like corporate loans.

A subset of fixed income, corporate loans are

made to businesses of scale (ie not SMEs) for a

specific purpose, such as working capital, real

estate, capital expenditure and acquisitions.

Corporate loans were traditionally provided to

companies by banks. However, this has changed

in recent years as regulation has driven up the

cost of bank funding, providing opportunities for

non-bank lenders.

Searching for sources of income and capital

stability in a record low interest rate environment

is a significant challenge for investors.

With the Reserve Bank of Australia (RBA) cash rate

currently sitting at just 0.75%, banks have slashed

interest from cash accounts, term deposits and

savings accounts.

In bond markets investors are paying higher

prices for declining yields. Australian 10-year

Government Bonds are delivering yields of

around 1% and in corporate bond markets, yields

have continued to fall.

Finding sources of income in a low-rate worldWith risks increasing in equities markets

and a low yield environment for bonds and

cash, the corporate loan market is offering

investors a crucial source of income, writes

Andrew Lockhart, Managing Partner, Metrics

Credit Partners.

This source of non-bank capital also has import-

ant economic benefits, with companies seeking

growth capital. According to a recent report, 8 in

10 (82%) mid-market firms in the Asia Pacific region

say they will seek financing from non-bank lenders

in the year ahead, while two thirds (68%) say this

source of financing is critical to their business.

This trend is certainly evident in Australia.

According to the Australian Bureau of Statistics

(ABS), the corporate loan market is already over

20 times the size of the domestic corporate bond

market, at around $963 billion.

For investors, the corporate loan market is provid-

ing the opportunity to tap into a growing oppor-

tunity-set, while benefiting from the stable returns

and income on offer.

Lenders in the market typically undertake rigorous

due diligence before lending and ongoing engage-

ment with borrowers is maintained throughout the

loan term to assess risks. In addition, loans are also

often secured by a borrower’s assets, offering a

greater degree of investor protection than equi-

ties, and floating rates protect against the effects

of inflation.

As a result, investors can expect to receive regular

yields of anywhere between 4-10% per annum.

The drivers of these attractive returns are an illi-

quidity premium (corporate loans are not traded,

and generally held to maturity with 3-10 year

tenors), complexity of transactions which are indi-

vidually negotiated on a case by case basis, and

the manager’s skill in being able to originate trans-

actions via existing networks and relationships

plus having superior risk management capability.

In addition to superior yield, alternative fixed income

also offers diversification benefits. Managers with

strong networks and relationships can put together

portfolios that spread loans across a broad range

of industry sectors and loan types, to optimise risk

and return for investors.

Ways to access the corporate loan market

Traditionally corporate loans were only available to

wholesale investors, shutting out investors such as

retail or self-managed superannuation fund inves-

tors in the Australian market. To address this issue,

Metrics Credit Partners was the first non-bank

corporate lender in Australia to list an investment

trust (LIT) on the ASX in October 2017.

Today Metrics offers two LITs, which provide

access to a diversified portfolio of corporate loans.

The first, MCP Master Income Trust (ASX:MXT)

targets stable capital values and attractive monthly

income. The second, MCP Income Opportunities

Trust (ASX:MOT), targets a higher return with the

opportunity for the investor to participate in poten-

tial upside capital gains.

Closed-ended listed structures such as these

provide investors with access to private and illiquid

assets via a structure that also offers daily liquidity.

While a closed ended structure for Metrics LITs

provides investors with liquidity options in an

otherwise private and illiquid asset class, astute

investors question whether the listed structure is

necessary for certain other LITs which invest in

publicly traded fixed income securities. Those

securities already provide investors with market

liquidity making the need for a listed vehicle less

necessary.

With the right management team in place, the

current high demand for funding from the corpo-

rate sector will continue to present opportunities

for investors seeking sources of regular and attrac-

tive income in a low interest world.

14 15

Notes:

16 17

Get in touch

Ramsin Jajoo— HEAD OF RETAIL DISTRIBUTION

+61 2 8970 7756 [email protected]

Mark Cormack— DIRECTOR, RETAIL DISTRIBUTION


Gerald Willeston— DIRECTOR, RETAIL DISTRIBUTION

NSW


Matthew Dell— DIRECTOR, RETAIL DISTRIBUTION


Ed Reekie— DIRECTOR, RETAIL DISTRIBUTION


Simon McIlwaine— ASSOCIATE, RETAIL DISTRIBUTION

NSW, WA & SA


Amelia McKinnon— ASSOCIATE, RETAIL DISTRIBUTION

NSW & ACT


Chris Meyer, CFA— DIRECTOR, LISTED INVESTMENTS


Darcy Graham— BUSINESS DEVELOPMENT MANAGER

VIC


Chloe Tilley— ASSOCIATE, LISTED INVESTMENTS


David Batty— DIRECTOR, RETAIL DISTRIBUTION

NZ

+64 (0) 21 288 0303 [email protected]

Andrew Reidy— BUSINESS DEVELOPMENT MANAGER

VIC


Jolon Knight— BUSINESS DEVELOPMENT MANAGER


18 19

DisclaimerThis communication is for general information only and was prepared for multiple distribution. Whilst Pinnacle believe the information contained in this communication

is reliable, no warranty is given as to its accuracy, reliability or completeness and persons relying on this information do so at their own risk. Subject to any liability which cannot be excluded under the relevant laws, Pinnacle disclaim all liability to any person relying on the information contained in this communication in respect of any loss or damage (including consequential loss or damage), however caused, which may be suffered or arise directly or indirectly in respect of such information.The information is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. The information in this communication has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice before doing so. The issuer is not licensed to provide financial product advice. Please consult your financial adviser before making a decision. Any opinions and forecasts reflect the judgment and assumptions of Pinnacle and its representatives on the basis of information at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future. The information is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment.Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this communication is prohibited without obtaining prior written permission from Pinnacle. Pinnacle and its associates may have interests in financial products and may receive fees from companies referred to during this communication.

Pinnacle Fund Services Limited (ABN 29 082 494 Pinnacle Fund Services Limited ABN 29 082 494 362 AFSL 238371 (‘Pinnacle’) is the product issuer of the Plato Australian Shares Income Fund (ARSN 152 590

157) and Plato Global Shares Income Fund (ARSN 608 130 838) (‘Funds’). Plato Investment Management Limited ABN 77 120 730 136 (‘Plato’) AFSL 504616 is the Investment Manager of the Funds. A copy of the most recent Product Disclosure Statement (‘PDS’) of the Funds can be located at www.plato.com.au/retail-funds/. Pinnacle Fund Services Limited is not licensed to provide financial product advice. You should consider the current PDS in its entirety and consult your financial adviser before making an investment decision.Plato Income Maximiser Limited (ASX:PL8) (ABN 63 616 746 215) is the issuer of the shares in the Company under the Offer Document. Plato is the investment manager of PL8. Any offer or sale of securities are made pursuant to definitive documentation, which describes the terms of the offer (‘Offer Document’) available at https://plato.com.au/lic-overview/Pinnacle and Plato believe the information contained in this communication is reliable, however its accuracy, reliability or completeness is not guaranteed and persons relying on this information do so at their own risk. Subject to any liability which cannot be excluded under the Competition and Consumer Act 2010 and the Corporations Act. Pinnacle and Plato disclaim all liability to any person relying on the information contained in this communication in respect of any loss or damage (including consequential loss or damage), however caused, which may be suffered or arise directly or indirectly in respect of such information.Any opinions or forecasts reflect the judgment and assumptions of Plato and its representatives on the basis of information at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future. The information is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. This communication is for general information only. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice relevant to their particular circumstances, needs and investment objectives.Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this document is prohibited without obtaining prior written permission from Plato. Plato and their associates may have interests in financial products mentioned in the presentation.

The information provided in this communication is of a general nature only, is not intended for retail investors, does not constitute financial product

advice and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of any of the funds managed by Metrics Credit Partners Pty Ltd (Metrics) ABN 27 150 646 996 AFSL 416 146 (each a Fund), you should consider the current offering document of the relevant Fund and assess whether that Fund is appropriate given your objectives, financial situation or needs. If you require advice that takes into account your personal circumstances, you should consult a licensed or authorised financial adviser. Neither the responsible entity or the trustee of a Fund nor Metrics guarantees repayment of capital or any particular rate of return from that Fund. Neither the responsible entity or trustee of a Fund nor Metrics gives any representation or warranty as to the reliability, completeness or accuracy of the information contained in this communication. To the maximum extent permitted by law, Metrics disclaims all and any responsibility or liability for any loss or damage which may be suffered by any person relying upon any information contained in or omission from this communication. Past performance is not a reliable indicator of future performance.

Ratings DisclaimerThe Zenith Investment Partners (“Zenith”) ABN 60 322 047 314 ratings (Plato Australian Shares Income Fund, assigned June 2017) (Plato Global Shares Income Fund, assigned November 2018) (PL8, issued 9 March

2017) (MOT, issued February 2019) (MXT, issued May 2019), referred to in this document is limited to “General Advice” (as defined by the Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Zenith usually charges the product issuer, fund manager or a related party to conduct Product Assessments. Full details regarding Zenith’s methodology and regulatory compliance are available on our Product Assessment’s and the Zenith website.

The Lonsec Ratings presented in this document are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is limited to

“General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product(s). Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold Plato Investment Managements product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria.

BondAdviser has acted on information provided to it and our research is subject to change based on legal offering documents. This research is for informational purposes only. This information

discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as investment advice. The content of this report is not intended to provide financial product advice and must not be relied upon as such. The statements and/or recommendations on this Report are our opinions only. We do not explicitly or implicitly recommend or suggest an investment strategy of any kind. Neither the accuracy of that data nor the methodology used to produce the report can be guaranteed or warranted. We have taken all reasonable steps to ensure that any opinion or recommendation is based on reasonable grounds. The data generated by the research is based on methodology that has limitations; and some of the information in the reports is based on information from third parties. Full details regarding BondAdvisers methodology and regulatory compliance are available on our website at https://www.bondadviser.com.au/documents-and-links

The rating contained in this document is issued by SQM Research Pty Ltd ABN 93 122 592 036 AFSL 421913. SQM Research is an investment research firm that undertakes research on investment products

exclusively for its wholesale clients, utilising a proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to change at any time. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme.

The Independent Investment Research (‘IIR’) ratings ascribed in this document need to be read together with the IIR disclaimer and the full report at www.independentresearch.com.au.Australia Ratings (AFSL 346138) makes every effort to ensure the reliability of the views and rankings expressed in its reports and those published on its websites. Australia Ratings research is based upon information known to it or which was obtained from sources it believed to be reliable and accurate at time of publication. However, like the markets, it is not perfect.

This report is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore discuss, with their financial planner or advisor, the merits of each rating for their own specific circumstances and realise that not all investments will be appropriate for all subscribers. To the extent permitted by law, Australia Ratings and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information within the report whether or not caused by any negligent act or omission. If the law prohibits the exclusion of such liability, Australia Ratings hereby limits its liability, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply.

lower for longer - pinnaclemasterclass.com · lower for longer re-evaluating the norm. rethinking...

Documents