News & Insights

Time to review equity income options

There will be no change to the way franking credits are taxed, at least for the next three years, and investors who were considering changing their investment strategies to accommodate the change can relax.

Stocks paying high dividend yield and equity income managed funds will remain mainstays of many investment portfolios, especially for retirees and other investors on low income tax rates.

However, not all equity income strategies have worked well for investors over the past couple of years. Banks and telcos have lost ground, with the result that investors are getting income from those stocks at the cost of little or no capital growth in their equity portfolios. It may be time to review equity income options.

According to the latest Mercer Investment Survey, the top-performing Australian equity income fund is the Martin Currie Australian Real Income Fund, which produced a return of 16.9 per cent over the 12 months to the end of April. The fund has returned 14.7 per cent a year over the past five years.

The Plato Australian Shares Income Fund produced a return of 15 per cent over the 12 months to the end of April and 10.2 per cent a year over the past five years.

Read the full article in The Rub.