InsightsAustralian shares

Plato’s unique approach to generating retirement income

Edited Video Transcript:

Plato does have a unique approach for generating retirement income. We have actually sat back and said we’ve got to build this strategy bottom-up from the perspective of a retiree. And retirees are different, for the first $1.7 million in your superannuation fund, retirees are tax free. So we want to make the most of that tax status, we want to capture franking credits, because you get a refund of those franking credits.

Also because of the zero tax rate, retirees are not paying capital gains tax, so we can quite actively trade the portfolio, we can take advantage of that. It also means we look out for tax effective special dividends and also tax effective buybacks which can make good money for these clients.

We built the Plato Australian Shares Income Fund bottom-up from a retirees perspective, we actively seek stocks that pay good fully franked dividends and we trade around them. We don’t have to hold stocks for the whole year to get the dividend, you don’t have to own the stock for 12 months to get the dividend – you do need to own it for at least 45 days to get the franking credit refund, but you don’t need to hold it for the whole year. And that’s where I think we differ from many strategies which just constantly overweight the high yield stocks, such as the banks and Telstra – and the problem with that strategy is for the last five or six years banks and Telstra have underperformed the markets quite a bit. We think it is important not only to deliver high income to investors, but also to deliver high total return. Because it’s not just about income – you want to grow your capital over time, but you want good income along the way and that’s what we do.

And the other thing is we keep it very simple, we don’t use derivates, we don’t need to use derivatives to generate that income, that means it’s quite a simple product in that respect in that we buy stocks to capture the dividends and the franking credits. We’re not selling call options or doing other things around the edges. It’s a pure long only fund that aims to deliver a high level, and a consistently high level of income for our retirees.

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This document is prepared by Plato Investment Management Limited ABN 77 120 730 136, AFSL 504616 (‘Plato’). Pinnacle Funds Services Limited ABN 29 082 494 362, AFSL 238371 (‘PFSL’) is the product issuer of the Plato Australian Shares Income Fund (‘the Fund’). The Product Disclosure Statement (‘PDS’) of the Fund is available at Any potential investor should consider the relevant PDS before deciding whether to acquire, or continue to hold units in, a fund.

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