Hi All,

Are there any LICs that invest mainly in Australian A-REITs?

Thanks.

JIT3131 wrote: ... Are there any LICs that invest mainly in Australian A-REITs?

too small a market - in fact LICs tend to screen LPTs out = or managed to pre-GFC

there are two index fund providers (more on this thread - streettracks-listed-funds-stw-slf-sfy-3730.htm)
VAP covering ASX300 A-REITs - with a MER of 0.28%pa
SLF covering ASX200 A-REITs -with an MER of 0.40%pa

or else you would have to use managed funds specialising in them : Property Securities Funds (there are a few without unlisted components and hence liquid - Colonial First State has one from memory. Most of these managed funds operate along these lines - " Pay a manager up to 1% to either include Westfield or exclude it " - essentially)

Thanks benthonic,

I was looking at something to give me more frequent income payments (ie. monthly or quarterly as opposed to semi-annually with LICs), so these ETFs are another option, they seem to do quarterly payments.

For those using LICs for income, what other investments do you use to give you more frequent income payments (monthly/quarterly), asides from cash savings accounts/term deposits/bonds etc.?

I was thinking that apart from the above, a residential property (though the net income here is low), will at least give you a fairly reliable and regular monthly income...

JIT3131 wrote:....For those using LICs for income, what other investments do you use to give you more frequent income payments (monthly/quarterly), asides from cash savings accounts/term deposits/bonds etc.?

I was thinking that apart from the above, a residential property (though the net income here is low), will at least give you a fairly reliable and regular monthly income...

Hi JIT3131,

I can only speak for myself and say what I do. Others have their own way of doing things. The short answer to your question is budgeting. Simple as that for me.

To achieve that I have an off-the-shelf accounting system and use it to set up various notional accounts to cover my living costs, eg, Overheads for rates, car rego, insurances, etc and allocate dividends to those accounts as necessary.

I have a smattering of shares left over when I thought I knew what I was doing: CSL, AGK, the banks, STO, WES and the like, which pay at different times of the year. While I still pick up the odd lot of those shares on occasions my main preference is LICs. I don't check the prices very much, apart from when I have funds to invest, as my objective for investing in the market is dividend income and price fluctuations to me are meaningless.

And the one thing I discovered, despite all the waffle from the 'spurts, the game is it is not what you have but how much you have. I'd rather have $1m in the sharemarket earning 4% than $500k earning 8%.

That's a view of the world from a simpleton - and not a very clever one at that.

JIT3131 wrote:..what other investments do you use to give you more frequent income payments (monthly/quarterly), asides from cash savings accounts/term deposits/bonds etc.?..

unfortunately, the products out there designed for frequent payments are generally poorly structured or faulty - Monthly income funds based on mortgages - and these were brought undone during the GFC. Many are now 'frozen' and/ or suffering redemptions. Perpetual has just announced it was winding up theirs.

Some TDs offer monthly / quarterly interest payments; of course the interest rate offered is lower by 10-20bp

As LICs pay at different times, but generally twice a year, it would be possible to have, say, MIR, AFI, ARG, MLT and others in Aug /Feb and SOL, WHF in Nov /May, and the index funds in Jan/Jul, and get some spread to your income stream this way (plus a bit of budget discipline a la Judd)

JIT - stumbled across this. It is a managed fund. Some elments of it may coincide with your needs

Zurich Investments Equity Income Fund is an income focused Australian equities fund. By investing in blue chip shares and using conservative derivatives strategies it seeks high and regular levels of income and lower volatility than other equity funds.

The fund aims to:
deliver 10% income p.a. in all market conditions
provide some downside protection in falling markets
provide conservative growth over a three to five year cycle.

Investment strategy
The Fund invests in a range of shares listed on the Australian Stock Exchange and maintains a portfolio of exchange traded options over these shares and equity index futures in order to increase income and reduce investment risk...

- holds top50 stocks. doesn't try to be stock pickers but rather looks at the options strategies for the returns
- MER is high at 1.87%pa.
- pays income MONTHLY.... as a managed fund, it must pay out distributions in the FY, hence they try to average out distribs for 11 months then June payout is either feast or famine
- franking is low at 30-40% rather than ff.
- may be a good asset to hold in sideways markets. if market booms, they could have dampened returns
- Their track record is only 5 years
- would treat the 10%pa income with a pinch of salt
- took part in BHP and WOW buybacks
(Not advice)

Thanks Judd, I like your system. Just need to do some planning to get this right for myself.

Judd wrote:

JIT3131 wrote:....For those using LICs for income, what other investments do you use to give you more frequent income payments (monthly/quarterly), asides from cash savings accounts/term deposits/bonds etc.?

I was thinking that apart from the above, a residential property (though the net income here is low), will at least give you a fairly reliable and regular monthly income...

Hi JIT3131,

I can only speak for myself and say what I do. Others have their own way of doing things. The short answer to your question is budgeting. Simple as that for me.

To achieve that I have an off-the-shelf accounting system and use it to set up various notional accounts to cover my living costs, eg, Overheads for rates, car rego, insurances, etc and allocate dividends to those accounts as necessary.

I have a smattering of shares left over when I thought I knew what I was doing: CSL, AGK, the banks, STO, WES and the like, which pay at different times of the year. While I still pick up the odd lot of those shares on occasions my main preference is LICs. I don't check the prices very much, apart from when I have funds to invest, as my objective for investing in the market is dividend income and price fluctuations to me are meaningless.

And the one thing I discovered, despite all the waffle from the 'spurts, the game is it is not what you have but how much you have. I'd rather have $1m in the sharemarket earning 4% than $500k earning 8%.

That's a view of the world from a simpleton - and not a very clever one at that.

benthonic wrote:As LICs pay at different times, but generally twice a year, it would be possible to have, say, MIR, AFI, ARG, MLT and others in Aug /Feb and SOL, WHF in Nov /May, and the index funds in Jan/Jul, and get some spread to your income stream this way (plus a bit of budget discipline a la Judd)

That's a good point, haven't been paying attention to when my dividends have been coming in!

I've got my 5 LIC portfolio setup in my own name (AFI, ARG, MLT, WHF, MIR), and am in the process of doing the same for my SMSF.

benthonic wrote:JIT - stumbled across this. It is a managed fund. Some elments of it may coincide with your needs

Zurich Investments Equity Income Fund is an income focused Australian equities fund. By investing in blue chip shares and using conservative derivatives strategies it seeks high and regular levels of income and lower volatility than other equity funds.

The fund aims to:
deliver 10% income p.a. in all market conditions
provide some downside protection in falling markets
provide conservative growth over a three to five year cycle.

Investment strategy
The Fund invests in a range of shares listed on the Australian Stock Exchange and maintains a portfolio of exchange traded options over these shares and equity index futures in order to increase income and reduce investment risk...

- holds top50 stocks. doesn't try to be stock pickers but rather looks at the options strategies for the returns
- MER is high at 1.87%pa.
- pays income MONTHLY.... as a managed fund, it must pay out distributions in the FY, hence they try to average out distribs for 11 months then June payout is either feast or famine
- franking is low at 30-40% rather than ff.
- may be a good asset to hold in sideways markets. if market booms, they could have dampened returns
- Their track record is only 5 years
- would treat the 10%pa income with a pinch of salt
- took part in BHP and WOW buybacks
(Not advice)

Thanks for that benthonic.

I like the monthly income, but the MER is too high for me, with lower franking credits and short track record, as you point out.

JIT3131 wrote:Thanks Judd, I like your system. Just need to do some planning to get this right for myself.

Glad to be of assistance, if any.

Just to clarify, what I do is not that wonderful or magical. I realised a number of years ago of the need, for me at least, to separate dividend income from day-to-day expenditure if I was to achieve the objective of those funds covering the costs of living in my home.

I simply have an on-line account, linked to a Cash Management Account, and the on-line account receives all divvies. When a bill comes, I just transfer the funds to the CMA a few days beforehand and then BPay or EFT it from there. The CMA is also linked to a fee free account so I can get some cash but that account rarely holds more than $200. It is only a version of the envelope system.

To assist with cash flow, I use a simple accounting package which I haven't upgraded for over five years - why bother when it does the job I need?

It is only a method for me to "hide" funds from my temptation to spend inappropriately. It may not work for anybody else and each person has their own way of doing things.

Any thoughts on corporate bonds, convertible notes and redeemable preference shares... as opposed to cash savings accounts and term deposits for income?

Anyone using these in their SMSFs?

JIT - before you suck the life out of this thread, do yourself a favour and use the search button , to look up and put questions, observations, contributions, 2 way discussion, in the appropriate thread.