Investment strategy

The DNR Capital Australian Equities Income Fund delivers higher levels of tax effective income and capital growth through our quality investment philosophy.

 

 

The Fund invests in large-cap, quality companies that have sustainable and growing income capabilities. We define quality companies as those with earnings strength, income sustainability / growth, superior industry position, sound balance sheet, strong management and ESG risk assessment. Our assessment of a company’s quality is overlaid with a detailed valuation assessment where we are seeking to exploit mispriced, market inefficiencies.  

Income may be derived from dividends / distributions or capital management initiatives, including special dividends and/or share buybacks, and includes after-tax considerations. We categorise companies as: 

  • Growers: A company that is delivering below market income in the short term, however, has the potential to deliver above market income growth over the long term. 
  • Compounders: A company that is currently delivering a below market level of income, with the potential to deliver above market income growth on a sustainable basis.  
  • Cows: A company with a solid balance sheet and capital management potential (i.e. – higher pay-out, special dividends, buybacks) that is being under-valued on traditional earnings-based metrics. 
  • Yielders: A company that is delivering sustainable and cash-backed dividends, however with minimal (or no) income growth. 

The Fund is long-only, “style neutral” and invests over a period of three to five years.