Transcription of Finance News Network Interview with Antares Dividend Builder Fund Portfolio Manager, Glenn HartLelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from the Antares Dividend Builder Fund, is Portfolio Manager, Glenn Hart. What is the Company’s benchmark and what process do you employ to determine which companies provide solid sustainable yields and dividend growth?
Glenn Hart: The benchmark for the product is the ASX 200 Industrials. It doesn’t mean we can’t invest in resource companies, but it goes to the profile of what company we’re looking for. We want companies to have really stable revenue streams, to be able just to keep grinding out dividends year after year. And improving them, we want companies to have strong balance sheet, good cash flow, strong market position. So, there are a number of things that we look at to diversify the risk. And, just to make sure that the high yield company we get is not a yield trap, that it will generally be able to grow the yield as well, over the long term. Because, we understand that although it is primarily a yield product, that people expect and want capital growth out of equities as well, over the long term.
Lelde Smits: With a focus on dividends, how much are you expecting in terms of capital growth?
Glenn Hart: We think with the market where it is, it’s about a little bit higher than long term average. So capital growth over the long term, total return for Australian Equities, has been nine or 10 per cent and of that, the majority comes from dividends. So we’re expecting dividends to be 5/5.5 per cent. So, you can expect capital growth from a market of maybe, four or five per cent on top of that and hopefully through outperformance, you might get a little more on top of that.
Lelde Smits: Which sectors have you favoured over the past year and which are looking most prospective to you now?
Glenn Hart: As a yield product, generally you find most of the areas that give you the highest yield tend to be infrastructure, utilities, financials, telcos, those sorts of areas. So they’re still the areas coming up as the highest prospective yield. So within those sectors, we try and focus on quality and growth and discount to valuation, to maximise the opportunities.
Lelde Smits: What environment is the most favourable for solid yields and dividend growth, and what factors will you be paying the most attention to over the coming quarter?
Glenn Hart: The best environment to be investing for yield in equities is when interest rates are low elsewhere. So when bond rates and cash rates are low, that’s really when people tend to favour a high yield from equities. And that’s when they’re going to perform the best. And likewise, if you have very high interest rates from cash or bond rates, well then it’s going to be harder to be more attractive for equities. So at the moment, the global low yield environment remains an attractive one for this type of strategy. So going forward - although our overall strategy is to present a high yield - we’re still looking at individual stocks and each individual stock has to stack up.
Lelde Smits: Glenn Hart, thank you for the update from Antares Dividend Builder Fund.
Glenn Hart: Thank you.
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