Prime SMA Performance Summary – June 2021

The rapid economic recovery from the pandemic has supported continued momentum in equity prices with the ASX 200 rising 2.3% in June.

Earnings have continued to rebound strongly with central bank and fiscal stimulus sustaining elevated multiples. For the present, the current phase of earnings expansion coupled with the ongoing liquidity boost by policymakers is enough to justify the ASX 200 trading at a ~20% premium to its long-term average.

The portfolio has benefited from its holdings in Commonwealth Bank, Goodman Group, Wesfarmers, and Woolworths all are which are trading near record highs, reflective of their strengthening market positions and ability to deliver earnings growth through the cycle. Indeed, a key feature of the portfolio has been its preference to hold companies that have delivered resilient earnings throughout the pandemic, namely in consumer staples and healthcare sectors. 

Policymakers’ efforts to successfully inoculate the global economy have helped to deliver a V-shape recovery in corporate earnings. The ASX 200 is poised to deliver 20% gains in earnings for the upcoming FY21 earnings season and double-digit earnings gains for the 12 months following, based on consensus forecasts.

Against a backdrop of rising earnings, the 12-month forward dividend yield for the ASX 200 is now ~3.9%, supported by strong dividend momentum in Bank and Material stocks.

Whilst we remain positive on the outlook for earnings and dividends for the ASX 200, much of the good news is now captured in market valuations. A period of consolidation in the near term is warranted particularly given the two-steps-forward-one-step-back process of dealing with the pandemic.

Portfolio Performance Figures

Risk Profile Portfolio Performance Figures as at 30 June 2021

Post-Franking Credits

Prime SMA – Model Portfolio Performance Figures as at 30 June 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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