Merlon Australian Share Income Performance Review | News

What is the Merlon Australian Share Income fund?

Merlon Australian Share Income Fund aims to provide a higher level of tax-effective income with a lower level of risk than the S&P/ASX 200 Accumulation Index, whilst also providing the potential for capital growth and inflation protection over the medium to long term.

The Fund is intended to be suitable for investors who are happy to invest for at least five years, are seeking high levels of return, with a large proportion of returns coming from income (predominantly via franked dividends) and who are comfortable with moderate volatility including the possibility of periods of negative returns.
The portfolio is builded of undervalued companies with high levels of sustainable free cash flow.
Cash allocation is maximum 10%

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Latest News & Updates For Merlon Australian Share Income

Merlon Australian Share Income Fund Commentary September 30, 2023

The Fund underperformed the Benchmark by 1.2% (including fees and franking credits) during the quarter. Key performance drivers for the period were from the following positions:

Positive contributors:

• CSL (underweight): continued to decline off its COVID peaks, as it struggles with the impact of elevated donor fees on margins, and as it continues to lose share to key rival Takeda.

• AMP (overweight): outperformed following its full year result announcement, with banking and investment platform earnings higher, and with the company noting an ambitious cost-out target.

• Treasury Wine Estates (overweight): benefited from the thawing of geopolitical tensions between Australia and China, with the barley tariff removals viewed by the market as increasingly the likelihood of the wine tariff removal.

• News Corporation (overweight): benefited from its full year result showing strong earnings growth, in particular in its Dow Jones and News Media divisions.

• CSR (overweight): outperformed as the downturn in the Australian housing market has proven less severe to date than expected, following aggressive RBA interest rate hikes.

Negative contributors:

• Star Entertainment Group (overweight): continued to struggle as the company attempt to navigate an increasingly restrictive regulatory environment aimed at curbing problem gaming.

• Alumina Limited (overweight): was impacted by disruptions to its planned mining activities following a referral to the Environmental Planning Agency by the WA Forest Alliance.

• Coles Group (overweight): underperformed as the market was the company reported a slower than expected unwind of COVID costs, coupled with a higher capex program to increasingly automate its warehouse capabilities.

• Healius (overweight): was impacted by pathology volumes remaining weak in the face of an expected recovery, flowing through to continued low margins from elevated fixed costs and higher interest costs.

• A2 Milk Company (overweight): underperformed as market expectations for China births in 2023 deteriorated, albeit offset by market share gains. The risk reduction overlay contributed positively during the quarter, insulating the Fund from some of the falls in the underlying share portfolio.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

Performance Review
Product Overview
Peer Comparison
Product Details

Performance Review

Fund Name	Last Month ? Returns after fees in the most recent (last) month).	3 Months Return ? Returns after fees in the most recent 3 months.	1 Year Return ? Trailing 12 month returns.	3 Years Average Return ? Average Annual returns from the last 3 years.	Since Inc. Average Return ? Average (annualised) returns since inception	1 Year Std. Dev. (Annual) ? The standard deviation (or annual volatility) of the last 12 months.	3 Years Std. Dev. (Annual) ? The average standard deviation (or annual volatility) from the last 3 years.	Since Inc. Std. Dev. (Annual) ? The average standard deviation (or annual volatility) since the fund inception.	1 Year Max Drawdown ? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.	3 Year Max Drawdown ? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.	Since Inc. Max Drawdown ? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Merlon Australian Share Income	1.58%	2.93%	13.06%	9.2%	6.92%	8.89%	9.71%	11.23%	-3.37%	-7.42%	-39.94%

Product Overview

Fund Name	APIR Code ? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.	Structure ?	Asset Class ? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.	Asset Category ? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.	Peer Benchmark Name ? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.	Broad Market Index ? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.	FUM ? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.	Management Fee ? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.	Performance Fee ? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.	Spread ? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Merlon Australian Share Income	HBC0011AU	Managed Funds	Domestic Equity	Australia Derivative Income	Domestic Equity - Derivative Income Index	ASX Index 200 Index	399.55 M	0.95%	0.00%	0.4%

Peer Comparison

Fund Name	Peer Index Name ? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.	12 Months Excess Return ? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.	Excess Return Annualised Since Inception ? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.	12 Months Alpha ? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.	Alpha Annualised Since Inception ? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.	12 Months Beta ? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).	Beta Annualised Since Inception ? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).	12 Months Tracking Error ? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.	Tracking Error Since Inception ? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.	12 Months Correlation ? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.	Correlation Since Inception ? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Merlon Australian Share Income	Domestic Equity - Derivative Income Index	-3.08%	-0.62%	NA%	NA%	NA%	0.96	4.37%	3.72%	0.88	0.94

Product Details

Fund Name	Verifed by SMSF Mates	Manager Address	Phone	Website	Email
Merlon Australian Share Income	Yes		-	https://www.challenger.com.au/personal	-

Product Due Diligence

What is Merlon Australian Share Income

Merlon Australian Share Income is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Derivative Income Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Merlon Australian Share Income has Assets Under Management of 399.55 M with a management fee of 0.95%, a performance fee of 0.00% and a buy/sell spread fee of 0.4%.

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Historical Performance Commentary

Performance Commentary - August 31, 2023

Sustainable income: Paid monthly and majority franked. As the Fund’s name suggests, sustainable above-market income is a targeted outcome of our investment approach and a key objective of the Fund.

Proven Investment Philosophy: We believe people are motivated by short-term outcomes, overemphasise recent information and are uncomfortable having unpopular views.

Portfolio Diversification: The benchmark unaware approach to portfolio construction is a key structural feature, especially given the concentrated nature of the ASX200 index.

Downside protection: In addition to placing a heavy emphasis on capital preservation through our fundamental research, we use derivatives to reduce the Fund’s market exposure and risk by 30% whilst still retaining all of the dividends and franking credits from the portfolio.

Integrated ESG Approach: We believe deep consideration of governance, social as well as environmental issues – coupled with active ownership – enhances investment, business and community outcomes.

Performance Commentary - July 31, 2023

Performance Commentary - June 30, 2023

Performance Commentary - May 31, 2023

Performance Commentary - April 30, 2023

Performance Commentary - March 31, 2023

Performance Commentary - February 28, 2023

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Merlon Australian Share Income (HBC0011AU) Report & Performance