As investment advisers that specialise in working with retirees, we are acutely aware of the need for superannuation portfolios to produce a consistent income. However, it is becoming more difficult to do so without losing capital as part of the process. Share prices are becoming increasingly dislocated from their intrinsic value and remaining this way for an extended period of time. This is making the buy-and-hold, set-and-forget strategy focused around the dividend paying blue-chips a higher risk proposition. With this in mind, we have spent several months seeking out specialist income strategies that can complement well with direct share portfolios. Whilst there are many investments that claim to specialise in the production of income and franking credits, few have the track record or expertise of the team at Plato Investment Management. Plato is an Australian investment firm that focuses solely on delivering investors sustainable and growing incomes from both Australian and global shares. One of Plato’s greatest differentiating factors is that they have elected to focus solely on what they know, that is investing for dividends. They offer only two core strategies to achieve this, global and Australian income, and dedicate all their resources to delivering on their objectives. Founded in 2006 by Dr Don Hamson, who has a 25+ distinguished career at BT, State Street and QIC, the group now have around $4bn under management and $1.5bn in the Core Australian Share Income strategy. Plato has carved out a niche in the Australian market by identifying something that was missing from the ‘dividend harvester’ and ‘high yield’ funds that receive all the media coverage. What they discovered and have since leveraged off is the fact very few managers run their fund solely for the benefit of those on a 0% (or 15%) tax rate, specifically those receiving a pension from their superannuation assets. By specialising solely in investing for people on a 0% tax rate, the portfolio managers can ignore any capital gains tax implications and trade the portfolio as they see fit. In recent years, this has resulted in a 150-200% turnover of the portfolio over each 12-month period, substantially more than the 50% turnover of the Vanguard alternative. It is also solely the impact of this high level of turnover that has meant the Plato fund has delivered a consistently positive return over the last 12 months during which time the likes of Vanguard and Switzer have been losing investors capital. Investment Philosophy – Why is Plato better than the rest? Plato’s investment philosophy involves a combination of both quantitative and fundamental analysis, implemented by a team of 8 analysts with varying experience in institutional markets, but the majority of whom have direct experience managing similar funds for industry and other major investors. Plato’s competitive edge comes from the extensive experience of their team in running similar quantitative, or data modelling, strategies to identify mis-pricings, dividend run up and buy-back opportunities. These include applying Value, Momentum and Quality screens to their fundamental data they have collected and prepared. Their first-hand experience is supported by academic research and analysis, evidenced by their various PhD’s and white papers focused solely on dividend and franking credit strategies in various global sharemarkets. The fund aims to outperform the ASX 200 index by 3% per annum whilst delivering an income that is also 3% higher; in most cases, the outperformance has been delivered through higher income and franking credits. Plato’s differentiating factor is their proven ability to…

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