Four star rating to Ausbil Australian Geared Equity Fund
Standard & Poor’s Fund Services has rated the Ausbil Australian Geared Equity Fund, four stars NEW, reflecting Standard &Poor’s positive assessment of the manager’s equity capability.
With the continued success of its Australian-equity offerings, Ausbil Dexia has decided to launch a fund that invests in its Australian-equity Fund, allowing borrowings of up to 55% of the net investment.
According to Standard & Poor’s Fund Services, gearing funds, like margin lending, involves borrowing funds to increase the amount invested, with the aim of yielding high income from the investment relative to the cost of borrowing.
In the lead up to June 30, Ausbil will monitor the fund’s cash flow position, reducing the level of gearing if it believes it could jeopardise a positive cash-flow position.
As current legislation stands, franking credits are only available to unit holders if a positive cash distribution is achieved for the financial year in question.
Ausbil employs a top-down macro-economic investment process to identify sectors it believes will outperform over the forthcoming business cycle. The fund invests in a portfolio of 30-40 listed Australian stocks from within these sectors, being those best placed to achieve positive earnings revisions.
As with many concentrated portfolios, the aim is to outperform over the medium-to-long term, albeit the fund may experience short term relative underperformance.
To ensure a breach of guidelines does not occur, Ausbil may be required to sell units to maintain the fund’s gearing level below the 55% maximum, if sufficient cash flows are not available to the manager. This may be at a time when share prices have fallen.
The fund affected by this announcement is:
- Ausbil Australian Geared Equity Fund- Four stars rating
28-Aug-2007