Portfolio Management
Growing your wealth through a range of high conviction low turnover portfolios with clear ownership and complete transparency.
Established in 2013
Well known Melbourne
family office heritage
Melbourne Office: 03 8648 3186
Email: admin@roystoncaptial.com.au
Royston Capital
Level 6, 111 Collins Street,
Melbourne VIC 3000
Core Australian Equities
When investing in Australian equities we look for companies that demonstrate real Market Opportunities for Profitable Products or Services with Competitive Advantages and Barriers to Entry. The first elements make a business possible, the last elements make it a good and enduring business; without these, competitors enter to drive costs up and prices down ultimately eroding the company’s competitive advantage.
Other characteristics we seek include:
- Attractive and tax effective dividend yield or capacity to pay such over time
- Free cash flow that exceeds debt servicing obligations (not borrowing to pay dividends) and sound capital expenditure management
- Sound and transparent earnings growth
- Earnings predictability
- High quality management and shareholder friendly board
- Justifiable Price / Earnings ratio (PE)
Benchmark
S&P ASX 200 Accumulation Index
Investment Universe
Companies in the S&P ASX 300 Index.
Number of stocks
Generally 20-25
Cash
The portfolio aims to be fully invested but generally has up to 3% cash at any one time and is otherwise unrestricted.
Performance
Australian REIT and Infrastructure Fund
The Australia REIT and Infrastructure Fund (ARIF) exists as a Managed Discretionary Account under Royston Capital and advised by Admiral Investment. Admiral is an investment manager licensed by the Hong Kong Securities and Futures Commission that focuses in real estate and related investments across Asia Pacific.
The ARIF is a long only mandate that invests in Australian REITs (A-REITs) and Infrastructure Trust. The goal of ARIF is to provide steady dividend income and capital appreciation through time. The portfolio seeks to outperform the S&P ASX 300 A-REIT Index, on a total return basis, through the medium term. ARIF will be denominated in the Australian Dollar and invested in Australian denominated assets. This mandate invests only in listed vehicles that provide liquidity on a daily basis.
REITs and infrastructure trusts are listed instruments to allow investors to gain exposure to the real estate and the infrastructure sectors. Assets in both sectors are characterised by their relatively stable and transparent cash inflow. Real estate and infrastructure are often seen as inflation hedges, providing growth that is inline with or slightly ahead of inflation through time. Their lease or revenue structure also provides protection during weaker markets. REITs have weighted average lease expiry of several years. Infrastructure Trusts are often regulated by the government, but their demand comes from the wider public and is not subject to the rise and fall of any particular industry. Earnings for both sectors are thus predictable and relatively more stable than many alternatives.
Similar to other Australian companies, management teams of A-REITs and Infrastructure Trusts are monitored by the stock market at large. Top management roles are competitive, especially compared to the rest of Asia Pacific. In particular, the annual vote on top management compensation package is seen as a regular referendum on management performance, and every year there are changes in top management.
REITs are also legally required to pay out most of its net income as dividend to qualify for certain tax benefits. While infrastructure trusts are not required by law to pay out dividends, many maintain a respectable yield to stay competitive with REITs and other higher-yield instruments. In Australia, dividend yield in 2015 ranges from 6% to 9%, and tax benefits are available in the form of franking credits.
Benchmark
S&P ASX 300 A – REIT TR Index.
Investment Universe
REITs and infrastructure trusts listed on the Australian Stock Exchange.
Number of stocks
Generally 12-15. A-REITs will represent between 60 to 80% of the portfolio, and Infrastructure Trust between 15 to 25%. .
Cash
The portfolio aims to be fully invested but generally has up to 3% cash at any one time and is otherwise unrestricted.
Performance
Interest Bearing Securities
When investing in interest bearing securities we seek preservation of capital while also seeking attractive income streams. We consider the following variables:
- Credit rating and profitability of underlying issuer
- Ranking within the capital structure
- Call economics
- Floating or fixed rate issue
- Investor protection within the structure
- Liquidity
- Frequency of distributions and availability of franking credits
- Running yield and yield to maturity
- Duration risk
- Conversion discounts and step-up margins
- Other complexities with the structure such as put and call options should they exist
Benchmark
Bloomberg Ausbond Bank Bill Index
Investment Universe
- Term deposits
- ASX listed income securities
- Corporate bonds
- Government and semi-government securities
- Managed funds
Number of stocks
Generally 8-12
Cash
The portfolio aims to be fully invested but generally has up to 3% cash at any one time and is otherwise unrestricted.
Performance
Self-funding Installment Portfolio
This portfolio has been designed for those with a smaller balance in self-managed superannuation fund, or seeking to address Division 293 tax issues. However, the portfolio can be applied to other investment structures.
This portfolio is based on the Core Australian Equites portfolio. A self-funding installment is used as the alternative to purchasing the ordinary share.
Where there is no self-funding installment an alternative may be selected otherwise the ordinary share is purchased. Self-funding installments are a geared investment and are weighted in the portfolio by its exposure to the ordinary share.
The overall aim of the portfolio is to maximize the use of franking credits, gearing and growth assets to assist those seeking a high growth, low cash flow strategy to grow their wealth.
Benchmark
S&P ASX200 Accumulation Index
Investment Universe
Generally the Royston Capital Core Model portfolio with self-funding installment warrants replacing said investments where available.
Number of investments
Generally 20-25
Cash
The portfolio aims to be fully invested but generally has up to 3% cash at any one time and is otherwise unrestricted.
Performance
International
Our international equity portfolio employs a Fund of Funds approach and seeks out specialist managers and opportunities not always available to retail investors.
When researching and selecting international fund managers, Royston Capital will seek to review with particular focus on:
- Investment Philosophy and Investment Style that is in line with that of Royston Capital
- Organisation and People
- Compliance
- Governance Policy
- Investment Performance
- Custody of Assets
- Customer Service, Administration and Reporting
- Product Fees.
The Fund Manager’s position on ethical issues in light of the Royston Capital’s Ethical Stance on investments will be taken into consideration.
The funds we select have a high conviction to their investment strategy and as a result generally hold a maximum of 50 stocks. Each manager in the portfolio has a specific purpose and expertise.
Benchmark
MSCI World ex Aust (Net Div)
Cash
The portfolio aims to be fully invested but underlying managers may hold a cash balance for liquidity purposes and investment opportunities.
Performance
Diversified Portfolios
One of the most effective means of reducing risk is to diversify your portfolio. You can reduce volatility by ensuring that your investment portfolio is not over exposed to any one type of asset class, sector or style.
Effective asset allocation has been proven to be a key determinant of long-term portfolio returns as has the duration of investment.We can offer a diversified portfolio with consolidated reporting. We provide you with a tailored investment mandate based on our discussions about your tolerance to risk and return and your investment objectives.
We construct our diversified portfolios based on three classifications for risk tolerance; low, medium and high risk, and provide three potential portfolio choices depending on your investment requirements.
Our blended portfolios leverage the single asset class portfolios and may also include illiquid assets such as property syndicates, venture capital and private equity and other alternative assets depending on individual needs for diversified investment strategy.
Benchmark
Weighted average of indices in line with the pre-determined asset allocation or CPI + as agreed with you.
Investment Universe
Royston Capital investment portfolios and other non-liquid investments such as property syndicates private equity and venture capital.
Number of investments
N/A
Cash
As agreed or by the pre-determined asset allocation.
Neutral asset allocation shown for illustrative purposes
Please contact us to find out more about our current strategic asset allocation view.
0% Growth, 100% Defensive
The portfolio aims to provide investors with attractive levels of income. To achieve this, the portfolio invests solely in defensive (100%) type assets via cash, bonds, listed income securities and term deposits.
This portfolio is designed for those investors with the low risk profile seeking a conservative diversified investment strategy. Given that the portfolio is invested solely in defensive type assets it should display minimal levels of capital volatility with a 1-2 year investment time frame recommended.
This portfolio is designed for those investors with the low risk profile seeking a conservative diversified investment strategy. Given that the portfolio is invested solely in defensive type assets it should display minimal levels of capital volatility with a 1-2 year investment time frame recommended.
35% Growth, 65% Defensive
The portfolio aims to provide investors with solid levels of income with some potential for capital growth. To achieve this the portfolio invests in a blend of defensive and growth type assets.
This portfolio is designed for those investors with a low risk profile seeking a diversified investment strategy. Given that the portfolio is invested predominantly in defensive type assets it may display low levels of capital volatility with a 2 year + investment time frame recommended.
This portfolio is designed for those investors with a low risk profile seeking a diversified investment strategy. Given that the portfolio is invested predominantly in defensive type assets it may display low levels of capital volatility with a 2 year + investment time frame recommended.
50% Growth, 50% Defensive
The portfolio aims to provide investors with a balance of income and capital growth. To achieve this, the portfolio invests in a blend of defensive (50%) and growth (50%) type assets.
The portfolio is designed for those investors with a low or medium risk profile seeking a diversified investment strategy. Given that the portfolio is invested in a blend of defensive and growth type assets it may display a slightly below average to medium level of capital volatility with a 2-4 year investment time frame recommended.
The portfolio is designed for those investors with a low or medium risk profile seeking a diversified investment strategy. Given that the portfolio is invested in a blend of defensive and growth type assets it may display a slightly below average to medium level of capital volatility with a 2-4 year investment time frame recommended.
65% Growth, 35% Defensive
The portfolio aims to provide investors with a balance of income and capital growth. The portfolio has a bias to growth assets. To achieve this, the portfolio invests in a blend of defensive (35%) and growth (65%) type assets.
This portfolio is designed for those investors with a medium risk profile seeking a diversified investment strategy. Given that the portfolio is invested in a blend of growth and defensive type assets it may display a moderate level of capital volatility with a 4 year + investment time frame recommended.
This portfolio is designed for those investors with a medium risk profile seeking a diversified investment strategy. Given that the portfolio is invested in a blend of growth and defensive type assets it may display a moderate level of capital volatility with a 4 year + investment time frame recommended.
80% Growth, 20% Defensive
The portfolio aims to provide investors with solid capital growth with some income. To achieve this, the portfolio invests in a blend of growth (80%) and income (20%) type assets.
This portfolio is designed for those investors with a medium or high risk profile seeking a diversified investment strategy. Given that the portfolio is invested predominantly in growth type assets it may display high levels of capital volatility with a 4-6 year investment time frame recommended.
This portfolio is designed for those investors with a medium or high risk profile seeking a diversified investment strategy. Given that the portfolio is invested predominantly in growth type assets it may display high levels of capital volatility with a 4-6 year investment time frame recommended.
90% Growth, 10% Defensive
The portfolio aims to provide investors with solid capital growth with some potential for income. To achieve this, the portfolio invests in a blend of growth (90%) and income (10%) type assets.
This portfolio is designed for those investors with a high risk profile seeking a diversified investments strategy. Given that the portfolio is invested predominantly in growth type assets it may display high levels of capital volatility with a 6-8 year investment time frame recommended.
This portfolio is designed for those investors with a high risk profile seeking a diversified investments strategy. Given that the portfolio is invested predominantly in growth type assets it may display high levels of capital volatility with a 6-8 year investment time frame recommended.
100% Growth, 0% Defensive
The portfolio aims to provide investors with attractive capital growth. To achieve this, the portfolio invests solely in growth (100%) type assets.
This portfolio is designed for those investors with ah high risk profile seeking an aggressive diversified investment strategy. Given that the portfolio is invested solely in growth type assets it should display the highest level of capital volatility with a 8 year + investment time frame recommended.
This portfolio is designed for those investors with ah high risk profile seeking an aggressive diversified investment strategy. Given that the portfolio is invested solely in growth type assets it should display the highest level of capital volatility with a 8 year + investment time frame recommended.
Asset Administration
Our Portfolio Administration System (P.A.S.) can record and report on all your assets (listed and unlisted) to provide a holistic view of your portfolio.
Importantly, our administration meets AASB GS007 audit requirements and portfolios come with an annual audit certificate that confirms the accuracy of the portfolio reports.
Click here to download the flyer
- The administration of your portfolio includes investment recording, reporting of capital and income movements
- Assets are recorded in your name, not pooled with others, with listed ASX securities reported via CHESS
- Our portfolio reporting provides for transparency, performance measurement and to facilitate accounting and tax compliance obligations.
- Brokerage for ASX and international listed transactions has been negotiated to very low rates
- Online access is provided to your portfolio.
- Your financial and investment strategy is centralised to a reputable and robust banking account eligible for Government Guarantee and with an attractive interest rate – Commonwealth Bank of Australia, Accelerator Cash Account
- The cash account is used to capture all cash flows from interest, dividends and trade settlements.
- The account offers online access, ATM card and cheque book facilities. We also offer a bill payment service.
Governance
The Royston Capital Investment Committee ensures investment decisions are consistent, structured and unbiased and that appropriate investment due diligence framework is maintained at all times.
Risk
At Royston Capital, we believe that Risk Management of portfolios is critical to the ongoing success and out-performance.
Investment risk is limited by appropriate diversification both within and between asset classes.
Currency risk is managed by appropriate hedging arrangements.
Consideration of ethical investment principles and practices are a critical element in the process for the selection of funds managers where appropriate and will be taken into account as part of the reporting process by Royston Capital.
Investment Philosophy
Our investment philosophy is built around 6 core views:
- Investment markets are inefficient over the short to medium term
- A need to focus on the understanding, allocation and Management of risk
- Beta or market returns are important but not an automatic decision
- Currency needs to be considered ‘actively’ within the investment process
- Alternatives have a role to play in diversified portfolios
- Direct investment (such as equities) provide opportunities for targeted exposure to specific market segments identified as having strong growth characteristics.
Ethical Stance:
Where appropriate for clients of Royston Capital, the Committee will endeavour to recommend investment opportunities that provide good financial returns and at the same time respectful of the world in which we live.
Thus the Committee will seek to avoid, within the limits of reasonable feasibility, having client monies invested with any investment manager or in an individual security which has substantial holdings in companies whose principal activity
- is destructive of the environment, or
- is discriminatory in work practices, or
- is directed to the production of armaments, or
- is exploitative of human dignity.
However, to the generally limited extent that its investment style (and policy) will make possible, the Committee will also seek to have a voice (direct or indirect) in influencing the attitudes and practices of the corporate development and management sector in relation to ethical issues and so will not be absolute in adopting a negative screening strategy.
Click here for further information about our Investment Philosophy.