Fund manager Plato Investment Management has taken the unusual step of putting gold mining stocks in the portfolio of the Plato Income Maximiser.
Plato senior portfolio manager Peter Gardner says that three years ago Plato was underweight resources.
“Now we have a big position in the sector. We like gold,” Gardner says.
Plato Income Maximiser, a listed investment company, has around 100 companies in the portfolio and is very actively traded. Plato also has an unlisted income fund, the Plato Australia Shares Income Fund.
Plato managing director Don Hamson says that because capital gains tax is no impediment for the retirees and other low-tax investors who use Plato’s income funds, the manager uses a very active strategy of “rotating” through dividend paying stocks to deliver high income.
Last year was the best year ever for Plato Income Maximiser, thanks in part of a number of special dividends. It produced a return of 16.3 per cent over the 12 months to the end of July, and distributed a yield of 12.2 per cent (including franking).
The S&P/ASX 200 return over the same period was 15.2 per cent, with a yield of 6 per cent.
“We think we can continue to get 8 or 9 per cent from our income portfolio,” Hamson says.
Gardner says the key to Plato’s approach is that it loos for total return and not just high yield. “We want growth plus income,” he says.
“Gold miners have done very well. You would not associate an income fund with gold stocks but with our total return outlook, it fits in.”
The fund’s gold stock holdings include Regis Resources, St Barbara, Northern Star and Evolution Mining.
Gardner says that with Plato’s short-term horizon on stocks, it may be that in six months gold profits will be down and it will reduce its holding or move out of the sector.