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27 January 2017

Three funds for Australia Day

By Sam Slator, Communications Director

Yesterday the ‘Aussies’ celebrated their national day. As my Australian colleague in the office reminded us (at regular intervals), the day should have been spent lying in the sun, cracking open a few ‘cold ones’, and popping some shrimps on the barbie.

That option not being available to us, however, we’ve settled for popping a few funds with Aussie exposure in the spotlight. Being all the way ‘down under’, Australia is a market that not many UK investors would probably ever think about – yet it has been one of the best performing developed economies since the global financial crisis.

A commodity boom fuelled by Chinese demand helped Australia sail comfortably through most of the past decade and, although the country has recently struggled to maintain its rate of growth, its stock market nonetheless returned 33% in sterling terms (12% in local currency) in 2016.

So how could you gain access to the region? In fact, Australian and New Zealand equities and bonds are held in many Asia Pacific-focused funds – particularly those with an income bias, given Australian companies’ strong dividend paying track record.

Here are three Elite Funds that offer some Australian exposure.

Schroder Asian Income

As the name suggests, the Schroder Asian Income fund focuses on income-paying stocks in the Asia region, and currently has just over 20% of the portfolio invested in Australia and New Zealand. Its manager looks for companies that he believes are not overvalued and have the ability to make sustainable dividend payments.

Stewart Investors Asia Pacific Leaders

Stewart Investors Asia Pacific Leaders has around 10% of the fund in Australia and among its ten largest holdings are CSL Limited, a large-cap Australian biotech firm, and Brambles, a logistics and packaging firm. The boutique team behind this fund have reaped enormous rewards for their investors over the years by investing in sustainable, high quality companies across the region.

Jupiter Strategic Bond

This flexible bond fund can invest anywhere around the world, but its manager takes a cautious approach, with a focus on preserving investors’ capital over chasing yield. That said, the fund currently has an annual historic income at 4.4%. Both Australian and New Zealand government debt feature among its top ten holdings, comprising around 12% of the fund.

Where to next?

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Sam's views are her own and do not constitute financial advice.

©2017 FundCalibre Ltd. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete, or accurate. FundCalibre, shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use.