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Diversified Portfolios - Intelligent Investor Equity Income - 30 April 2016

Intelligent Investor Equity Income Portfolio April Report



The main feature of April was the continued rally in commodity prices, which saw crude oil and iron ore prices up over 20%. It was enough to spark a sharp recovery in BHP Billiton and South32, which rose 23% and 13% over the month. This emphasises how important it is to stand firm when negative sentiment latches onto a stock, as BHP has now risen 46% since its January low, while South32 has almost doubled. This means that the 30% gain from South32 since its purchase in November now more than offsets the 20% fall in BHP since it was bought in July.

Origin Energy also recovered 8% in April, although that leaves it down more than 50%since our purchase in April 2013. It’s one of the happy truisms of investing, though, that your successes get bigger while your headaches get smaller, and Origin now accounts for only 1.5% of the portfolio. We haven’t topped this up yet, but with its retail business performing strongly and management responding sensibly to the crisis, it remains under active consideration.

Other positive performances came from Ansell, which gained 15% in the month and is now up 28% since we purchased the stock in February, and Virtus Health, which added 7%.

Only a handful of stocks fell over the month, with the biggest declines coming from fund managers, including Perpetual – down 2% – and Macquarie Group, which dropped 4%.

The banking sector began the month on the back foot and we were able to add to our holdings in Commonwealth Bank and Westpac, taking our combined exposure to the big four from about 3.2% to about 5.2%. That’s still a long way short of our recommended maximum weighting for the sector of 20%, so it allows plenty of room for top-ups if they fall further. By the end of the month, however, CBA had risen 4%and Westpac had risen 7%, taking them away from our Buy price for the time being.

Overall, the portfolio managed to sneak ahead of the market for the month, with a return of 4.1% compared to 3.2% for the All Ordinaries total return index. Since 1 July 2015, when the portfolio began accepting money for investment, it has returned 13.9%compared to 1.3% for the All Ords. Since inception in July 2001, the portfolio has returned 13.5% a year compared to 7.7% a year for the All Ords.


The investment objective is to achieve an income return of 5% from a portfolio of high yielding shares selected from the All Ordinaries Index per annum.

GROWTH OF $10,000

Income Reinvested


Source: Praemium, RBA. Returns are before expenses and fees. Returns are shown as annualised if the period is over 1 year. * Since Inception (SI) date is 1 July 2015.

Intelligent Investor Equity Income Portfolio 3.96% 7.73% 7.78% 12.91%
ASX All Ordinaries Accumulation Index 3.24% 6.54% 2.76% 1.26%
Excess to Benchmark 0.73% 1.20% 5.02% 11.56%

Important Information

While every care has been taken in preparation of this document, InvestSMART Financial Services Limited (ABN 70 089 038 531, AFSL 226435) (“InvestSMART”) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and see professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided. This document has been prepared for InvestSMART by InvestSense Pty Ltd ABN 31 601 876 528, Authorised Representative of Sentry Asset Management Pty Ltd AFSL 408 800. Financial commentary contained within this report is provided by InvestSense Pty Ltd. The information contained in this document is not intended to be a definitive statement on the subject matter nor an endorsement that this model portfolio is appropriate for you and should not be relied upon in making a decision to invest in this product. The information in this report is general information only and does not take into account your individual objectives, financial situation, needs or circumstances. No representations or warranties express or implied, are made as to the accuracy or completeness of the information, opinions and conclusions contained in this report. In preparing this report, InvestSMART and InvestSense Pty Ltd has relied upon and assumed, without independent verification, the accuracy and completeness of all information available to us. To the maximum extent permitted by law, neither InvestSMART, InvestSense Pty Ltd or their directors, employees or agents accept any liability for any loss arising in relation to this report. The suitability of the investment product to your needs depends on your individual circumstances and objectives and should be discussed with your Adviser. Potential investors must read the PDS, Approved Product List and FSG along with any accompanying materials. Investment in securities and other financial products involves risk. An investment in a financial product may have the potential for capital growth and income, but may also carry the risk that the total return on the investment may be less than the amount contributed directly by the investor. Past performance of financial products is not a reliable indicator of future performance. InvestSense Pty Ltd does not assure nor guarantee the performance of any financial products offered. Information, opinions, historical performance, calculations or assessments of performance of financial products or markets rely on assumptions about tax, reinvestment, market performance, liquidity and other factors that will be important and may fluctuate over time. InvestSense Pty Ltd, InvestSMART Financial Services Limited, its associates and their respective directors and other staff each declare that they may, from time to time, hold interests in Securities that are contained in this investment product.

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