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.

31 August 2020 Equivalent Unit Price – A$0.9349

Welcome investors to the monthly update for the Rivkin Australian Defensive Income Strategy (RADIS) for August 2020. The portfolio was relatively flat throughout the month of August, with the Equivalent Unit Price (EUP) ending the month at 0.9349, for a decline of 0.09%.

Monthly Commentary

We have just come to the end of earnings season in Australia, where ASX listed companies report their 2020 financial year accounts, as well as provide guidance on the year ahead. A notable theme this year has been the reduction in dividends from many of the well-established ASX listed companies, with the economic contraction brought on by the Covid-19 pandemic cited as the predominant reason. Given that approximately 40% of the defensive income strategy is invested in Blue Chip companies, this will see a reduction in the income received from this portfolio.

Nevertheless, this portfolio is also comprised of our event arbitrage strategy, which has been sourcing several fruitful trades over recent months. In August, we saw increased bids for Cardinal Resources (CDV) and Zenith Energy (ZEN) and continued progress on the other investments through their deal processes. The CDV position has improved even further in September, with the position now sitting at roughly 50% in paper profit, a great outcome given the low-risk nature of the investment at our entry point. In addition to income generating Blue Chip stocks, the other alternative that many ASX investors will be forced to consider is a shift towards more growth-oriented strategies as returns from dividends reduce.

In regard to the current composition of the portfolio, as of month end, we are currently holding only 8% in cash, a reduction on the prior month at 18.0%. The bulk of this has been added to the Blue-Chip strategy, taking the overall weighting to 42.7% of the portfolio. Hybrid securities currently account 28.8% of the portfolio, while the events strategy accounts for 20.6%.

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