Hi Geoff,
We liked the Dominion investment (DM1) for reasons we covered here. They listed this week and are trading very mildly above issue price, which is about right. The Macquarie ETF is more akin to a high yield bond fund, investing in riskier high yield credit. There used to be a listed investment company on the ASX under code NBI that eventually delisted because of its persistent discount to NTA. They had a similar strategy. Obviously, open ended ETFs are better and won’t trade at a discount like closed ended LICs.
Wilson Asset Management has also joined the fray this week with the launch of WAM Income Maximiser (WMX). We had them in, and it’s a solid approach, we just think the fees are too high at 0.88% plus a 20% performance fee. The structure of the portfolio is very similar to the Market Matters Income Portfolio that’s now been running since 2017. They both hold around 50-60% in high yield equities and the balance in fixed income, including Hybrids.
In terms of things to look out for in a genuine alternative to bank hybrids, bearing in mind that MQG, the Insurers and other corporate can still issue hybrids, are underlying exposures and the structure of the security. DN1 is a good example of a solid alternative to hybrids given it also has a maturity date.
We’ll do our best to cover any new securities as they come out.
