Income Fund

The Merlon Australian Share Income Fund is a portfolio of what we consider to be undervalued companies constructed without regard to index weights, delivering monthly income with downside protection.

Differentiating features of the Fund

  • Deep fundamental research. This is where we spend the vast majority of our time and ultimately how we expect to deliver superior risk-adjusted returns for investors.
  • Portfolio diversification with no reference to index weights. The benchmark unaware approach to portfolio construction is a key structural feature, especially given the concentrated nature of the ASX200 index.
  • Downside protection through fundamental research and the hedge overlay. In addition to placing a heavy emphasis on capital preservation through our fundamental research, we use derivatives to reduce the Fund’s market exposure and risk by 30% whilst still retaining all of the dividends and franking credits from the portfolio.
  • Sustainable income, paid monthly and majority franked. As the Fund’s name suggests, sustainable above market income is a key objective but it is an outcome of our investment approach.

Fund Facts

Merlon Australian Share Income Fund

Investment objective The Fund aims to provide a higher level of tax-effective income with a lower level of risk than the S&P/ASX 200 Accumulation Index, whilst also providing the potential for capital growth and inflation protection over the medium to long term.
Benchmark S&P/ASX 200 Accumulation Index
Stocks held in portfolio 25-35
Minimum investment timeframe  At least five years
Investment Universe The Fund’s investment universe is primarily securities listed on the ASX, or those that Merlon expects to be listed within the next six months. The Fund can also invest in cash and over-the-counter derivatives related to securities listed on the ASX.
Investment Parameters*  Securities 90-100%; Physical Cash 0-10%
Management Fee 0.95% p.a.
APIR Code HBC0011AU
mFund ASX Code MLO02

*The Fund targets to be fully invested in shares for the purposes of earning dividend income and uses derivatives to reduce exposure to share market volatility to a typical range of 60%-80%.