The Fund1 returned +0.72% net of fees in the month of April 2019, with volatility since inception falling to 3.45%, this despite overall market volatility having risen in recent times (refer latest Monthly Fund Report for detail).
“In a perfect world, without any variability in month-to-month performance, the Fund might be expected to punch out a minimum return after fees of a little more than 0.4% per month, each and every month. Unfortunately we don’t live in a perfect world and none of us has perfect foresight. However, Pentalpha manages the portfolio to deliver as much certainty of achieving this monthly return as is possible through our active risk management and conservative approach to hedging”, said Pentalpha’s founder, Denis Donohue.
Since the launch of the new Ordinary Class at the beginning of the year, the Fund has comfortably exceeded 0.4% each month, ranging from a low of 0.45% to a high of 1.23%.
Fund Strategy
Pentalpha Income for Life Fund is a capital-protected dividend income fund. The objective of the strategy is to capture the rich dividends that Australian shares offer as a source of tax effective investor income, while participating in the capital growth that equities offer over the longer term. The Fund adopts a prudent approach to limit the downside risk to capital. The strategy delivers certainty by ensuring a defensive line of protection is set under each portfolio stock holding. This is a key differentiator of the Fund.
Pentalpha delivers a risk-managed target return rather than a ‘relative to benchmark’ or return outcome that is materially linked to the performance of the market. In contrast to many other equity-income strategies, every component of the total return is managed, including the risk of that return. Capital stability is delivered by ensuring every share investment is always protected against capital decline below a certain level. This safety net is always in place through the purchase of Put Options, with the protection cost kept low by the sale of Call Options at higher levels over these same stocks.
Some potential upside is forgone if the share price appreciation exceeds these higher pre-determined levels. However, when these higher pre-determined levels are met, the upside captured will ensure capital growth above the rate of inflation such as to maintain the real purchasing power of the investor’s investment in the Fund.
1. All performance data reported herein is sourced or reproduced from the Pentalpha Income for Life Fund Monthly Fund Reports (found at www.pentalpha.com.au)
Denis Donohue
Executive Chairman and Head of Investments
Pentalpha Investment Management
Tel. 1300 155 664