Prime SMA Performance Summary – Apr 2021

Optimism on Australia’s economic recovery continued to propel equity markets higher in April. Equity returns have been further bolstered by earnings upgrades being the strongest in over 20 years.

The strongest EPS momentum sectors are the Banks and Materials which are enjoying a cyclical upswing but also trade on below market PE multiples and provide investors with above market dividend yields. A powerful combination for investors seeking attractive income returns.

The strength in bank share price performance has been underpinned by the magnitude of the recovery in earnings and dividends. The major banks are trading on a 1-year forward dividend yield of ~4.5% which compares favourably to the broader Australian share market and with the 10-year bond yield.

This markedly improved economic and business outlook also needs to be balanced by the ongoing threat of COVID-19 and the sharp rise input costs evident in supply chains in recent months.

Indeed, as we move closer to the peak in the momentum of growth, market returns could show signs of moderation. While we see limited upside at the ASX 200 index level, we still see good opportunities at a stock and sector level.

The Portfolio continues to see attractiveness within Quality and Value supported by fair valuations and strong fundamentals. The historically high valuation spread between Value and Growth stocks further supports our thesis for tilting the portfolio toward sectors that offer a higher margin of safety. Hence, our preference for Quality and Value at this point of the cycle.

Portfolio Performance Figures

Risk Profile Portfolio Performance Figures as at 30 April 2021

Post-Franking Credits

Prime SMA – Model Portfolio Performance Figures as at 30 April 2021

Post-Franking Credits

About the Portfolio

Portfolio Objective
To achieve capital growth with moderate tax-effective income via franked dividends through investment in listed Australian securities.

Model Portfolio
The Model Portfolio is managed by selecting primarily those securities with moderate growth potential but robust cash-generating capacity. These securities are expected to deliver an above-market average income yield, together with a relatively moderate level of capital growth. The portfolio benchmark is the S&P/ASX200 Accumulation Index.

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.


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