Strategy Objective: The Rivkin Australian Defensive Income Strategy aims to produce positive average annual returns while seeking to maintain a level of volatility lower than that of the S&P/ASX 200 Accumulation Index over the same investment period. The strategy focuses on income over capital growth and invests in high dividend paying blue chip stocks, hybrid securities, and takeover arbitrage.

30 September 2020 Equivalent Unit Price – A$0.9329

Welcome investors to the monthly update for the Rivkin Australian Defensive Income Strategy (RADIS) for September 2020. The portfolio ended up rather well in September, with the Equivalent Unit Price (EUP) declining by 0.22% to end the month at 0.9329, considering the broader share market, using the ASX200 Accumulation Index as a proxy, declined by 3.66% for the month.  

Monthly Commentary

For equity markets both locally and in the US, September was the first negative month since March, and follows five months of positive gains as equity markets recover from the pandemic induced decline between February and March. Markets remain rather sensitive to the US political landscape, with the Presidential election now less than one month away. This was evident late on Friday when President Trump confirmed he had tested positive to Covid-19, which led to a sharp sell-off into the close for the ASX. More so, wrangling between the Republicans and Democrats over the next round of fiscal stimulus has come to a standstill, with the size and details of the next package now expected to be confirmed after the election results are known. This will no doubt delay the economic recovery currently underway. In Australia, Treasurer Josh Frydenberg delivered the 2021 Federal budget in Parliament on Tuesday night, which has been largely well received. Cuts to personal income tax, originally scheduled for 2022, will now be backdated to July 2021, and will provide an additional $12 billion to Australian taxpayers. In additional, asset write-offs and a large infrastructure spend will aim to boost investment.

It was another solid month for the Event Strategy investments, with increased offers for Cardinal Resources (CDV) and Opticomm (OPC). The CDV investment is sitting on a paper profit of roughly 70% which, given the low-risk nature of the investment, has been a brilliant result for the portfolio. We have also entered into a new investment in Citadel Group (CGL) and we await completion on the other holdings in the strategy.

Looking to the month ahead, we would not be surprised to see an uptick in volatility throughout October, as we head towards the US election in early November. Nevertheless, it is important at times like this to maintain a longer-term investment focus, as we believe that any sell off in equities as a result of the political cycle will inevitably be short-lived.

If you have any questions regarding the above or your investments with Rivkin in general, please call us on 02 8302 3605.

Performance

NAV Price Chart

Monthly Returns

Portfolio Composition

Sector Breakdown

Top 10 Stock Holdings

Strategy Weighting

Strategy Description & Information

The Rivkin Australian Defensive Income Strategy invests predominantly in listed Australian securities whose characteristics satisfy one or more of the strategies that occupy the portfolio. These strategies include: Blue Chips, being high dividend paying stocks from the ASX50, Hybrids Securities, which as the name suggests are a hybrid between a debt and equity instrument, and Events, which include opportunities such as takeover arbitrage.

Important Disclaimer

The Rivkin Australian Defensive Income Strategy is available to wholesale investors only. Past performance is not a reliable indicator of future performance. The value of your investment may rise and fall, and you may not receive the amount originally invested.

Contact

Thomas Silitonga – Director, Rivkin Asset Management

thomas.silitonga@rivkin.com.au –  +612 8302 3605