Smart Investor: Up to speed – August 2008

Roadtest

Maple Brown Abbott Advance Imputation

The original boutique – and an equity product coming back into vogue

Performance

It’s lost 10.97% in the year to June 30 – but on Morningstar’s numbers that’s one of the best performances by a value-styled Australian equities fund, ranking only behind various forms of the Perpetual Australian equities fund. Longer term, it is up 8.34% over three years (which is about the middle of the pack), and 12.51% over five.

Holdings

When last disclosed on March 31, it was a predictable bunch: BHP, NAB, Westpac, ANZ, Rio Tinto, Telstra. Less obvious big holdings include Lion Nathan and Tabcorp. The fund’s approach – it aims to provide tax-effective quarterly income and long term capital growth – is to hold a wide range of shares, based on their fundamental value, with a clear preference for shares providing imputation credits.

Experience

Maple-Brown Abbott, which manages the fund, is often considered Australia’s first significant boutique fund manager, though it has grown so big now one could think of it as part of the establishment. There is no doubting the team’s experience.

Fees

This fund is offered through the Colonial First State platform (and should not be confused with MBA’s own Australian Equities Trust). Management costs on this fund are 1.86%.

Gripes

MBA’s reputation has fallen somewhat in recent years as its investment style has been at odds with the roaring bull market, which tends to favour growth managers. But in theory teams like this do best when a falling market starts to turn and good opportunities emerge.

Verdict

An imputation fund makes quite a lot of sense in a choppy market as yield becomes so much more important.