Subscribe to get our latest investment news and insights straight to your inbox.

[recaptcha]

EIGA April Monthly Report & Update

Overview
  • Global equity markets were up strongly in April, with the S&P500 +3.9%, FTSE 100 +1.9%, Nikkei 225 +5.0% and Shanghai Composite -0.4%.
  • The Australian market was also strong, finishing the month +2.5%, bringing the total return for the last 12 months to +10.3%.
  • Consumer Staples (+7.3%), Consumer Discretionary (+5.5%) and Financials (+4.4%) sectors led the market higher, while Resources (-3.9%) and REITs (-2.3%) lagged.
  • The market is currently trading close to its long-term average, with a FY20 P/E ratio of 15.5x and offering an attractive gross dividend yield of 5.8%, presenting many very good value opportunities available for investors with a longer-term time horizon.
Month (%)Quarter (%)FYTD (%)1 Year (% p.a.)Since Inception* (%)
Income Distribution0.41.44.3-4.4
Capital Growth1.98.0-1.4-1.2
Total Return2.39.42.9-5.6
Franking Credits*0.20.61.9-1.9
Income Distribution including Franking Credits0.62.06.2-6.3
Benchmark Yield* Franking Credits0.02.05.1-6.3
Excess Income to Benchmark*0.60.01.1-0.0

^Since inception May 2018. Fund returns are calculated using net asset value per unit at the start and end of the specified period and do not reflect the brokerage or the bid ask spread that investors incur when buying and selling units on the ASX. Benchmark yield is calculated based on the difference between the return of the S&P/ASX300 Franking Credit Adjusted Daily Total Return Index (Tax Exempt) and return of the S&P/ASX300 Index. #Franking credits are an estimate only as tax components will only be known with certainty at the end of the financial year. Past performance is not a reliable indicator of future performance.

Distribution

In order to provide a regular income stream, the Fund pays monthly distributions. We will aim to pay equal cash distributions each month, based on our estimate of the income to be generated over the year. Franking credits and any realised capital gains will then be distributed, as per usual, with the June distribution. This aims to give investors more certainty over their income payments.

EIGA Review

Globalequity markets were stronger again in April. The Australian market consolidated the gains from the first quarter, finishing the month up 2.5%.

The Information Technology (+7.4%), Consumer Staples (+7.3%), Consumer Discretionary (+5.5%) and Financials (+4.4%) sectors led the way, while the Resources (-2.5%) and REIT (-2.3%) sectors lagged.

The Federal government budget was announced earlier in the year than usual due to the pending federal election. The budget announcement, together with the announcement of election commitments, provided a boost for companies exposed to the domestic economy. This saw both Coles (+6.4%) and Woolworths (+4.8%) perform well, with both having now reported slightly better than expected March quarter sales.

Gaming stocks also performed strongly, with Crown Resorts (+15.5%) rallying after it was reported that they were in discussions to be acquired by US operator, Wynn Resorts. Star Entertainment (+8.6%) also rose on speculation of broader industry corporate activity.

Other stocks which performed well included Seven Group (+11.3%),which upgraded earnings guidance on strong performance in the Westracmining equipment business, Platinum Asset Management (+8.5%), Amcor (+5.3%), Macquarie Group (+4.1%) and the major banks, which rose by an average of +4.1%.

Stocks which detracted from performance included Flight Centre (-8.7%) which downgraded earnings due to weakness in its Australian leisure business, Event Hospitality (-3.8%) and Suncorp (-3.1%). EIGA was also impacted by not holding a number of expensive growth stocks such as Treasury Wines (+15.2%) and Cochlear (+8.1%).

EIGA Activity

During the month we took profits and reduced our position in Amcor and sold out of Magellan Financial Group. At month end, stock numbers were 33 and cash was 7.7%.

Outlook

The market is currently trading close to its long-term average, with a FY20 P/E ratio of 15.5x and offering an attractive gross dividend yield of 5.8%.

Within the overall market, we are currently finding many good value, high-yielding investment opportunities. Across both the industrial and resources sectors, we are seeing many quality companies trading on attractive valuations which should deliver solid returns to investors from these levels.

By contrast, there remain large pockets of expensive growth and momentum style stocks which present significant de-rating risks if the lofty growth rates implied in their valuations are not able to be met. We do not hold these types of stocks as they do not meet our value criteria.

EIGA continues to offer a higher forecast gross yield than the overall market and, as always, our focus will continue to be on investing in quality companies which are offering attractive valuations  and have the ability to deliver high levels of franked dividend income to investors. Further, we believe the current very low interest rates highlight the relative attractiveness of financially-sound, high  dividend yielding equities.

To read more about eInvest Income Generator Fund (Managed Fund) ASX: EIGA, click here.

Past performance is not a reliable indicator of future performance. Please read the PDS prior to investing. This information is general in nature and is subject to the terms and conditions outlined here.