Australian Leaders Fund Posts Solid H1 Profit

Australian Leaders Fund

Australian Leaders Fund (ASX:ALF), an investment company focusing on companies in Australia and overseas and managed by Watermark Funds Management, announced a solid, half-year profit in fiscal year 2017 of $4.2 million.

With the announcement, Australian Leaders Fund also declared an interim dividend of 4 cents per share, 50% franked, according to the company’s disclosure at the Australian Securities Exchange (ASX).

Last year presented several challenges for investors, with shock election results in Europe and the US and even less predictable reactions thereto from share markets globally, the company said.

Australian Leaders Fund’s portfolio has been set conservatively for some time, in recognition of the risks that continue to loom large for expensive equity markets.

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“With the portfolio largely hedged, the company’s capital is protected as we move through the later stages of this bull market. This protection comes at a cost, however, whereby the company has not participated in the rally,” said Australian Leaders Fund chairman Justin Braitling.

The company’s international portfolio outperformed the domestic through the period, providing valuable diversification of returns while conditions in the domestic market proved more challenging to navigate.

International investments added 2.7% to fund returns on a gross basis while the domestic portfolio detracted 0.6% from performance.

The company said its ability to hedge share market risks has proven its worth over time, with the portfolio outperforming its benchmark over the longer-term, while retaining an average net exposure to the share market over the last five years of just 23%.

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The board has declared an interim dividend of 4 cents per share, 50% franked. Unlike long only strategies, which can stream franked dividends from the portfolio through to shareholders, ALF’s dividend paying capacity is more heavily dependent on capital returns generated by the Manager as most of the Company’s capital sits in the bank earning low interest. –