Over the years, I’ve had lots of readers, viewers, listeners and people who have come to my office and asked to invest with me. However, I’ve never had a simple vehicle where I could say: this is how I invest, so come along and you can follow me.
And over the years I have definitely told you how I invest. In case you have short-term memory loss or you’re a new reader, it’s pretty simple. I’m quite happy to miss out on the shooting star companies that go sky high but sometimes fall dramatically. If I were a short-term trader, you’d have to play this game of getting in and getting out before the market ruins your picnic but I’ve often said this is like punting.
Recently, I interviewed a very successful fund manager, who had a bad 2016 partially Donald Trump inspired. When Trump won the US election, there was a big chase for resource stocks and the banks and several fund managers sold out of their best-performing stocks to pocket profit to chase these companies.
A lot of small and mid-cap companies saw their share prices fall and many of the stocks I like — the banks and other big cap dividend-payers — shot up. It was great for me but bad for my fund manager buddy.
I hate the big moves in stocks, when they hurt my bottom line, so over the years I’ve chased great dividend payers when the market gives them a right old bollocking.
For the past seven years since the GFC crash, I’ve been telling you to buy the dips in the stock market. I’ve recommended dividend-payers because even when the market decides they want to chase some other sectors or stocks, you still get a nice dividend.
Last year, a guy I know wanted to invest a lot of money with me and so I brought my best financial planner in with me to check out my friend’s situation. As a financial planner, I can’t make recommendations unless we do a plan and know our client.
However, he said: “I read you and watch your show and I simply want to invest in what you invest in.” Unfortunately, I couldn’t do anything for him.
With that in mind, I talked to George Boubouras of Contango Asset Management and asked him if we could create a fund that follows my investment strategy. So we came up with the Switzer Dividend Growth Fund.
George and his team have to find about 50 dividend-paying stocks, with a good history, so we can shoot for a dividend return in the 5-6% region. Then investors will get the benefit of franking credits as well, which should push up the dividend return.
There’s an emphasis to invest in companies that can grow their dividends (based on history) and have a potential to grow their share price as well, though I don’t expect to shoot the lights out in this department. It would be cream on top of the cake.
When I invest, I want to make 7% so my money will double every 10 years. I often do better than 10% because others also chase these companies.
The Switzer Dividend Growth Fund has the ticker code of SWTZ and will be listed on the ASX one week after the offer closes on February 17. It means investors will be able to get in and out of the stock like a share or an exchange traded fund.
In fact, SWTZ is a little unusual innovation. It’s called an ETP — an exchange traded product — because it’s like a passive exchange traded fund or ETF, except it has active management. We will try to beat the index and George Boubouras and his team have that responsibility.
Watching over the investments will be the investment committee including yours truly, my business partner and former founding CEO of CommSec, Paul Rickard, and Charlie Aitken who is regarded as one of the shrewdest stock-pickers in Australia.
Another innovation is that we will pay our dividend quarterly, which I think will be something a lot of retirees will like.
This is no Ferrari fund but would be more like a very reliable but stately Mercedes or BMW, which should stand the test of time and will get you to where you want to go, provided you don’t want to go too fast.
I know you can't expect stock markets to always go up and history says two or three years out of 10 can be scary. However, history shows if you run the course with a good portfolio of stocks, you can pick up 10% per annum over a decade.
And more to my point on dividends, half of that 10% comes from, you guessed it — dividends!
I’ve always maintained that if you build up a buffer of cash during good times for the market and you have a good annual stream of dividends each year, you can manage a market crash and even be in the position to buy great companies at low prices during those scary times. Recall CBA was under $30 during the GFC crash!
If anyone is interested in the fund, you can read all about it here and download all the info you need.
Term deposits will always be safer than investments in the stock market because the Government guarantees your deposit, but provided you invest wisely in stocks, you can manage the downs of the market and enjoy the ups, which outnumber the downs provided you have a reduced-risk investment strategy. My fund aims to do that.
Read the PDS carefully and if you need advice, seek it, so you fully understand what we are doing.
There was an old Remington shaver commercial where the owner said he loved the product so much “I bought the company”. Well, in my case, I love this style of investment, so I created a fund to help others have access to it.
This is an exciting time and is a high point in my life in financial education, but it also provides a chance for many who have followed me over the years to invest with me.
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