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Things like Argo and AFIC are pretty good vehicles as for long term stress free market investing. Like an index fund with management that's not too active so as to jack up the fees.

 

Just keep adding and building, not too fussed with timing.

 

Vanguard have introduced what I think are great funds lately. VDCO, VDBA, VDGR and VDHG. Diversity of sectors with international exposure with quite low fees. here

 

Most of Vanguard's funds distribute quarterly not half yearly. I think that's good for those reinvesting or living on the income.

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Argo Investments Limited (ASX: ARG), a major Australian listed investment company with $5.3 billion in assets, announces a 42.2% increase in half-year profit to $157.2 million. The interim dividend has been raised to 16 cents per share fully franked.

Refundable franking credits

 

Argo is very concerned that many of its retired and self-managed superannuation fund shareholders may experience significant reductions in income due to the Australian Labor Partyâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s policy to prevent them receiving refunds of excess franking credits. We believe the proposed policy is inequitable. Argo maintains a prudent franking account balance to protect franking on its next dividend and we do not have excess franking credits to distribute at this time.

Purchases

Bega Cheese

Boral

Coles Group (due to demerger from Wesfarmers)

Corporate Travel Management (new position)

Eclipx Group (new position)

James Hardie Industries (new position)

Oil Search

QBE Insurance Group

Rural Funds Group

Star Entertainment Group (new position)

Transurban Group

Viva Energy (new position)

 

Sales

AMP

Asaleo Care

Coca-Cola Amatil (exited position)

Twenty-First Century Fox (exited position)

Wesfarmers (partly demerged into Coles position)

 

After these transactions, the number of stocks held in the portfolio rose from 93 to 99 and the cash balance decreased slightly to $199 million at 31 December 2018, representing 3.8% of the Companyâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s total assets.

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KEY POINTS

Revenue ($m) 315 , up 31.5%

Pre-tax profit ($m) 307 , up 25%

Net profit ($m) 293 , flat 33.7%

Final dividend Ãâہ¡ÃƒÆ’‚© 17, up 6.3%

Date dividend payable Sept 13

 

during the 12 months Argo topped up stakes in companies including Bega Cheese, Boral, Oil Search and Transurban.

 

It bought into fleet leasing group Eclipx, building products firm James Hardie, gaming company Star Entertainment, and Viva Energy for the first time.

 

MD Jason Beddow said Argo was concentrating on higher-quality companies with strong cash flow which had the capacity to lift dividends, knowing that the sharemarket was at high valuations.

 

.... and, Sold down ( ** complete disposal)

Asaleo Care**

BHP Group

Coca-Cola Amatil**

Incitec Pivot

Milton Corporation

Navitas**

Rio Tinto

Twenty-First Century Fox**

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Argo says 2021 could be even worse for Banks

The managing director of $5.5 billion Argo Investments is worried that financial markets are factoring in only a short pandemic as he likens it to only being in the first quarter of an Australian Football League match which still has a long way to run. Jason Beddow said the big four banks are likely to be in for an extended tough time and will be hamstrung by banking regulators, and that will in turn flow through to consistently lean times for bank shareholders.

 

He said there is a perception among many investors that once 2021 arrives there will be a more positive outlook. But he is bracing for the prospect of an extended pandemic and economic damage, coupled with the extra volatility which may stem from huge uncertainty and unpredictable events which may follow on from the US election.

 

Argo, which is now underweight in bank stocks after steering clear of capital raisings and dividend reinvestment plans, was forced to cut its final dividend to 14¢ from 17¢ a year ago after a 32 per cent drop in net profit after tax to $199 million for 2019/20.

 

Argo relies heavily on dividend payments from the 200 different ASX companies it invests in, but the big banks have either been deferring dividends or reducing them heavily. Argo last cut its dividend payout a decade ago during the Global Financial Crisis.Mr Beddow said the Australian Prudential Regulation Authority would be keeping a very close eye on the big banks and the extent of payout ratios for a long time. APRA will still be vigilant on what the banks can do, he said.

 

The Argo overall return for 2019 -2020 from its portfolio went backwards by 10.1 per cent after all costs and tax. Mr Beddow said the group had taken an ultraconservative approach when the sharemarket plunged in late March, and this had hurt its performance. It had stayed away from some of the companies in ecommerce which had delivered a huge rebound in share price in the following months. It had also steered clear of FMG which hurt performance. In hindsight we were a bit too conservative, he said. But Mr Beddow said that safe approach may prove to be a big plus over the longer term.

 

 

INVESTMENT PORTFOLIO

In an extraordinary year for the share market, a majority of sectors posted negative returns, with bank stocks among the worst performers. Ongoing industry specific headwinds and broad exposure to Australia's rapidly weakening economy weighed on the banking sector. As a result, Argo portfolio exposure to the banks has fallen from 17.4% to 13.8% and remains underweight relative to the broader Australian share market.

 

During the financial year, Argo purchased $243 million of longterm investments which included adding to new positions. Over the same period, Argo received $127 million from sales and takeovers of longterm investments. The larger movements in the portfolio were:

 

Purchases

AP Eagers (Automotive Holdings takeover)

Downer EDI

Freedom Foods Group

Oil Search

Ramsay Health Care

Suncorp Group

Treasury Wines * (new position)

 

Sales

AMP

Ansell

Automotive Holdings Group (AP Eagers takeover) **

Corporate Travel Management **

Dulux Group (Nippon Paint takeover) **

Milton Corporation

Nufarm **

** Fully exited position and removed from portfolio.

 

Together with other stocks exited, the total number of stocks in Argo's investment portfolio decreased from 95 to 89.

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  • 5 months later...

a 14c ff dividend to be paid by ARG, which is more than the income received so reserves are drawn down (the beauty of a LIC structure)

 

The larger movements in the portfolio were:

Purchases

Aurizon Holdings*, Bega Cheese, Downer EDI, Healius, Newcrest Mining*, Sydney Airport

 

* New portfolio position

 

Sales

AMP**, Ansell**, ANZ Bank, Aust. United Investment, Sydney Airport, Westpac

 

** Fully exited position

 

The total number of stocks in Argo's diversified investment portfolio increased from 89 to 92 with some smaller companies in the digital payments, technology and battery commodities sectors added to the portfolio.

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Dividend of 14c ff remains the same as pcp. Includes 8c LIC Capital Gain discount. Payable 17 September. DRP at 2% discount.

 

Profit down 12.8%. Increase in reserves from $1,343m to $2,255m. Cash increased from $169m to $179m. The total number of stocks held increased slightly to 90.

 

 

The larger movements in the portfolio were:

Purchases

Aurizon Holdings*

Downer EDI

EML Payments*

IGO*

Newcrest Mining*

Suncorp Group

Sydney Airport

The Star Entertainment Group

* New portfolio position

 

Sales

ANZ Banking Group

Boral (now out since EoFY)

Commonwealth Bank of Australia

James Hardie Industries

Vocus Group (takeover)

Washington H. Soul Pattinson

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From the Annual Report, as well as the major moves in and out of the portfolio, ARG has taken positions on some smaller companies, while exiting others, including a couple of chronic underperformers like AMP and FNP.

 

New stocks added to the portfolio were Carbon Revolution (CBR), Endeavour Group (demerged from Woolworths), HUB24 (takeover of Xplore Wealth), Songtradr Inc and Superloop (SLC).

 

Other stocks exited were AMP, Ansell, Freedom Foods Group, Iluka Resources, Orora, Perpetual and Xplore Wealth (taken over by HUB24).

During the year, Argo outlaid $350 million on investment purchases and $358 million was received due to disposals and takeover proceeds (this is only about 5% turnover, as ARG has > $6B invested). The total number of holdings in the portfolio increased slightly to 90.

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