MICHAEL PRICE | from Ausbil

Is your portfolio built for growth, income, or a bit of both? How do you decide what’s right for your financial goals? In this episode I sit down with Michael Price, Portfolio Manager of the Ausbil Active Dividend Income Fund, to unpack these questions and dive into the world of dividend-focused investing. With over 35 years of experience in quantitative analysis, actuarial science, and financial markets, Michael brings a wealth of insight to the table.

Michael’s journey into investment management is anything but typical. Starting as an actuary—a specialist in measuring and managing risk—he transitioned from insurance to portfolio management. “Actuaries use statistics and modeling to assess risk and opportunities,” Michael explains, “and then design solutions to manage that risk or take advantage of it.” While insurance was the traditional stomping ground for actuaries, Michael found his calling in investment management, blending his knack for numbers with a passion for markets.

The Ausbil Active Dividend Income Fund is designed for investors who want to live off their portfolio’s income without dipping into capital. The fund targets a 7-8% annual distribution (after fees, including franking credits) while aiming to outperform the broader Australian market.

“It’s about taking advantage of the fact that not every company pays its dividend on the same day,” Michael says. Instead of chasing high-yield stocks that might sacrifice total return, the fund rotates its holdings to overweight companies with upcoming dividends—think of it like surfing a wave of income opportunities. “We’re not just about income,” Michael adds. “If your capital grows over time, your income can keep up with inflation.”

Franking credits are also attached to Australian dividends. “A dollar of franking credit is worth the same as a dollar of cash to all Australian taxpayers,” Michael notes. With offshore investors (who own about a third of the Aussie market) largely indifferent to them, franking credits are undervalued.

Zooming out to the macro picture, Michael shares his take on where markets are headed in 2025. With inflation cooling but likely settling at the higher end of the Reserve Bank’s 2-3% band, and a strong U.S. economy buoying global growth, he’s optimistic. “Recessionary fears are overblown,” he says. But don’t expect resource giants to keep pumping out massive dividends like they did a few years back—sustainability is key.

Ever heard of dividend harvesting—buying a stock just for its dividend, then selling after payout? It’s a tempting idea, but Michael warns it’s riskier than it sounds. “If the company goes backwards, you can lose more on capital than you gain in income,” he cautions. A diversified fund, with its ability to smooth income monthly and navigate market shifts, offers a smarter path for income seekers.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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EPISODE TRANSCRIPT

Michael Price: It has been the franking credits has been the limiting factor. So, uh, when a company does make a profit, it can pay it out as a dividend or it can do a buyback. It can buy back its shares and create more capital gain because if there's less shares, the earnings per share goes up and that's normally good for capital gains. And when we ask the companies about how they choose whether to do a dividend or a buyback, they're all telling us that what they have been told by us and other investors is pay out a fully frank dividend first, but after that we don't particularly want unfran dividends, that buybacks are the next best things.

Phil: G'day and welcome back to Shares for Beginners. I'm Phil Muscatello. Is your portfolio designed for growth or income or a little bit of both? What's the difference? And how can you work out what's right for your investment needs at this particular stage in your life? Joining me to tackle these questions is Michael Price. G'day, Michael.

Michael Price: G'day, Phil.

Phil: Thanks very much for coming on the podcast. It's uh, great to meet you.

Michael Price: You're welcome. Thanks for having me.

Phil: Michael Price is portfolio manager of the Ausbil Active Dividend Income Fund. He has over 35 years of quantitative, actuarial and financial markets experience working in Sydney and Melbourne with companies such as AMP M Capital, ING Investment Management, Mercantile Mutual and Colonial Mutual. Before joining Ausbil Michael was head of Australian equities at AMP Capital. Now, Michael, we don't often have actual actuaries on the podcast. Can you tell us what an actuary actually does?

Michael Price: I can have a go. Actuary, a specialist at, uh, measuring and managing risk and uncertainty. We use statistics and modelling to assess risk and opportunities and then trying to design solutions that manage that risk or take advantage of the opportunities.

Phil: And it's usually in the insurance industry, isn't it? That's where actuaries shine.

Michael Price: Yeah, Actuary, uh, uh, insurance is the traditional field where actuaries sort of grew up and use that training. It's a lot broader now. Investment management is quite common. Data science is definitely an emerging field. But yeah, insurance was the original sort of employment field for most of the actuaries.

Phil: It's a funny word, risk, isn't it? I mean we've covered this quite a bit on the podcast because There's a big difference between what ordinary people think is risk as opposed to what the finance industry considers to be risk. Do you find that as well?

Michael Price: Yeah, and I'PROBABLY also distinguish between risk and, and uncertainty. So yeah, the future is uncertain but if you've got a plan in place, maybe it's not as risky as you might think. And uh, managing a range of possible outcomes is definitely part of the actuarial training but something, yeah, we all need to do.

Phil: I know, that's great isn't it? The managing a range of possible outcomes. That's what investing is all about, isn't it?

Michael Price: Yeah, yeah it is. The future is always going to be uncertain. Ah. And being able to survive no matter what is where you want to be. So you can certainly sleep a lot more at night with that uncertainty if you know you're going to be okay.

Phil: So uh, I didn't realize actuaries actually worked in investment management as well. But is this how you made the transition into investment management?

Michael Price: Uh, yeah, yeah it is. Look, it's changed a little bit since I started but back when I qualified as an actuary, investment management was one of the four specialist subjects that you had to do. And it was certainly the one I was most interested in. It was the first one I tackled. My first role was with an insurance company. But what I was doing was uh, what we called asset liability management, where we sort have a look at the needs of clients and would try to find the appropriate investment assets which would match those needs or liabilities as closely as possible to reduce the risk of the uncertain outcomes. From there I moved over into a quantitative investment management role. What that means is basically we do a whole lot of number crunching to select companies rather than basing the company and that or the company decisions on a deep underlying fundamental analysis. Yeah, it's much more number based predominantly and construct portfolios on the back of that. So I did that for a while but then eventually was able to move over into a more traditional fundamental portfolio management role. So've been lucky enough to work with a lot of uh, good teams and large teams of people. We have analysts who build those bottom up fundamental models of the company and I get to concentrate on the sort the top down view of the world thinking about what's going on

00:05:00

Michael Price: uh, in the economy and how we might invest on the back of that and then create portfolios to meet client needs on the back of that. I've always specialized really in portfolios which have multiple objectives, so they're a little bit trickier. To manage mathematically and really able to go back and use some of my actuarial training and still able to do that.

Phil: Yeah, I like the term quantitative and I had a guest on the program once and he said that quantitative is numberary and qualitative is fairly.

Michael Price: Yeah, that's my way of looking at. They're both important parts of investment management. I mean everybody, even the most fundamental guys, they still run some numbers and certainly in Australia or the quantitative teams have uh, some fundamental understanding of what's going on as well as crunching the numbers.

Phil: Now I'm not sure if we actually met many, many years ago because you used to work for Mercantile Mutual. I had a recording studio in the nineties in Surrey Hills and Mercantile Mutual was one of my clients and it was in the days of cassettes. You remember cassettes?

Michael Price: I do remember cassettes.

Phil: Did you ever work um, on any of those? You wouldn't even call them podcasts in those days, but they were released on cassette financial information. Uh, Sandra Sulley was the presenter of the Things of Grahame Nicholson. You might remember Graheme Nicholson.

Michael Price: Okay, yeah, no, I wasn't getting out so much back then. The quantitative people were pretty much behind the scenes. So I was at Mercantile Mutual and then I ing for 17 years. So time probably overlapped. But yeah, I don't recall going out and recording on cassettes.

Phil: It just seemed like a good company to work for. What was the name of the CEO? Uh, Rod.

Michael Price: Rod Atfield.

Phil: Rodfield Y. Yeah.

Michael Price: As I said, 17 years, 17 good years at Mercantile Mutual. Ing and yeah, got to do lots of very interesting things and ended up in what is really my current role, uh, was through them.

Phil: Ok, well let's get back to what you're doing now. And that's a dividend fund. I mean it's pretty self explanatory but tell us about a dividend fund. What's it designed for?

Michael Price: Yeah, look, it's designed for people who actually care about the split between income and growth rather than just focus on the total return. Sor obviously. But yeah, not everyone is like that. And having done that, they want more of their return in the form m of income. So typically their investors where part of their assets. They want to live off the income and not touch that capital. Now look, in theory people should only worry about the total return and they should just sell down a little bit of their assets if they need some extra income. But in practice Life is just so much easier if you don't have to do that, if you don't have to worry about whether today you should sell down or how much you should sell down. Yeah, in practice there's definitely, I think, uh, a need for dividend income funds. Look, that might sound fairly simple and straightforward, but um, the interesting thing is if you have a look in the marketplace, most of the dividend funds have slightly different objectives. They don't all agree on just how much extra income is desirable. They don't agree on whether or not you need to give up capital return in order to get that income. Somepl place significant value on franking credits where others don't. Some sort give up some total return in order to lower risk. And they also use different techniques to get the uh, extra income. So it's quite a complicated area and again, the sort of thing I like doing and I've sort of got that training in. But yeah, but the one thing they do all have in common is that they are uh, trying to get more income to investors than the broader market.

Phil: What's the model client for your fund?

Michael Price: Yeah, look, the model client, interestingly is almost in some sense what you might call an investment foundation that I have managed money for foundations which, their perpetuity. They're going to live forever so they really uh, are never going to touch that capital and they are just going to live off the income indefinitely. And so that would be the perfect client. But I think most people have at least a slice of their assets where they want to live off the income, get as much income as possible from that, but still have access to that capital, whether it's for a contingency, something that comes up unexpectedly, or aged care, health care are obvious ones for older people and um, passing it on as a bequest if that becomes possible. So yeah, we do have a lot of interest from retirees but. But there's a lot broader application and not necessarily you put everything into a dividend income fund, but

00:10:00

Michael Price: having a slice of those assets or slice of your assets which have that particular objective. I think many people would have that.

Phil: So what's the makeup of the fund? What comprises the fund? What sort of.

Michael Price: Yeah, look, assetsah. It's in Australian share fund, so it only invests in Australian shares. It's predominantly larger Australian shares. Although Ausbill company I work for does have a, uh, good team looking at smaller companies and emerging companies. But really we're looking at about the top 500 shares in the Australian marketplace. So each year we try to distribute between 7 and 8% per annum. So that's after fees, but including franking credits. We'll probably talk more about franking credits later, but they're very important for the fund. But when the fund was being developed and I was being interviewed by Obill, uh, the head of marketing made it very clear that some people care about this split between income and capital. But, but no one actually wants a lower return. And Oswill has a track record of outperforming the market and delivering ELPHA on top of the market return. And so that was the challenge. They gave me that. Could I come up with, uh, an equity income fund that delivered that 7 to 8% distribution each year, but still outperformed the total market as well. And that's basically, that's what the, uh, Ousbill Dividend Income Fund is all about.

Phil: Well, that's a bit of a tightrope walk for you, isn't it?

Michael Price: It is a challenge, but yeah, that's what I enjoy doing.

Phil: So you're trying to achieve better dividend returns but also provide capital growth as well, is that what I'm hearing?

Michael Price: Yeah, yes, very much. Capital growth is important. Again, if we think back about the ideal investor, uh, if you're going to live off your income indefinitely, that income needs to grow with inflation over time and have some capital growth. And really to do that the capital needs to grow as well. So if the 7% can stay the same, but as long as the capital is growing over time, then then the income should keep up with inflation. This was certainly something we talked about before the fund was launched, what the right number was. So the 7 to 8% part of the way we get there is, uh, when I think about the long term return from the Australian equity market after fees, including franking credits, maybe a little bit of value, add 10%. It seems like a pretty common number. So if we're doing 7 to 8 in income, that leaves 2 to 3% for capital growth. And 2 to 3% is the reserve bank target for inflation. It hasn't been within that band for most of the last 10 years, but at least in the long term, I think we can expect inflation in that 2 to 3% range. So look, even though the market isn't going to do 10% year in, year out, if we can average that over time and inflation is not going to do two to three years in year out, but it can average that over time, then 7 to 8% income leaves 2 to 3% capital and the fund can deliver an income stream which grows with inflation. Over time.

Phil: So does that mean that you're paying out the 7 or 8%, but then the funds that remain in the fund grow over a period of time? Is that how it works or is it all kind of bundled up together?

Michael Price: No, that's exactly how it worksah. Um, the distributions come out and then seems obvious, but, uh, you've only got your total return to play with, and your capital growth is the difference between your total return and the income that you distribute. There have been equity income funds in the past which have distributed 10% plus and used techniques which meant that the total return was over five. And it took people a little bit time to realize that meant that the capital is not growing over time. It has to be going the other way. But whereas the way we've designed it is to get that capital and growth as well. It's why the, uh, outperformance is important. If the market's doing nine without any, uh, outperformance, and if you're underperforming and only doing 7 to 8 and distributing 7 to 8, it's not going to grow. And so it is a key part of the process and the fund objectives.

Phil: Super is one of the most important investments you'll ever make. But how do you know if you're in the best fund for your situation? Head to lifeshrpa.com doau to find out more. Life Sherpa, uh, Australia's most affordable online financial advice. I remember investing in an ETF at one stage and it was, um, an income ETF or a dividend dtf. And, uh, I couldn't believe it. It just didn't have any growth over time whatsoever. So, um, obviously you're trying to do the right thing there.

Michael Price: How much income were you getting?

Phil: Uh, I can't even remember. It was a long time ago. Um, I got out of that one and just went into another kind of index fund.

00:15:00

Phil: Okay, so we've heard the term dividend harvesting on this podcast. Can you explain what dividend harvesting is and is it a strategy that's used by your fund?

Michael Price: Yeah, look, dividend harvesting is simply about buying a company just for the dividend. And so you buy a company before it pays the dividend, you wait till it pays the dividend and then you sell it afterwards, waiting for 45 days if you want the franking credit as well. Look, it is a good way to get income, but it's not so good for total return both if you're out of the market, which there have been some ETFs like that where they kept you out of the market. So the total return is more in line with cash than the Australian equity market. Or if you're buying it without knowing much about the company, you can get that extra income. But if the company goes backwards, you can lose a lot more on capital than you get in extra income.

Phil: Yeah, it's one of those things that sounds good in theory, doesn't it? But practically, if you try and do it yourself without any expertise, it, uh, can really bite.

Michael Price: Yeah, it can. But that said, it is closely related to what the fund does, which is actually what I think is the best way for a portfolio to get extra income out of the portfolio. So the idea behind the fund is it takes advantage of the fact that not every company pays its dividend on the same day to collect more dividends over the year, rather than higher dividends. By that, if you think about the alternative, collecting higher dividends if you want to get 7 to 8% after fees on all your stocks. If you have a look at the companies that have dividends that high, they tend not to be great for total return. So buying higher dividend stocks, good for income, not so good for total return. So what the fund does is it only holds companies that we like that, that pass our stock selection screen that the analysts all approve of, that we'd be happy to hold for the long term. And we create a portfolio that, if the market shut down here, I'd be happy to hold for the next year. Typically, the dividend yield on that portfolio is around the same as the market, because it is trying to be broadly the same shape as the market and outperformed the market. But what I do is, having got that portfolio, have a look at which of the securities in that portfolio are going to pay a dividend over the next month or two. And then I increase the weight of those companies which have an upcoming dividend and reduce the weight of the companies that are most similar sort of thematically, statistically. Again, getting back to the quantitative training, try and keep the overall shape of the portfolio as consistent as possible with what we want, but collect extra dividends as those dividend payment dates come by. And the way the numbers work, it needs to be about 10% of the portfolio. If I increase the weight of about 10% of the portfolio when it's got an upcoming dividend, there's eight months in the year where at least 10% of the dividends get paid or 10% of the companies pay their dividends. So you've got eight opportunities a year, and, yeah, 10% of the portfolio eight times a year gets you around 50% more dividends in the market and allows you to meet the objectives of the fund.

Phil: A little bit like surfing a wave, I guess, isn't it?

Michael Price: Yeah, or going back in time. Graphic equalizer. Did you have one of those in your studio?

Phil: I've got digital ones.

Michael Price: So we push up the weight of the stocks with the upcoming dividends and then reduce the weights of the ones that don't, but are as similar as possible and y get the extra dividend income that way.

Phil: Yeah, a parametric equaliser for any of those audio nerds. He might be.

Michael Price: Listen. Sor. My mistake.

Phil: No, no, no, no, no. I was just specifying what kind of equaliser.

Michael Price: I'm a different kind of nerd.

Phil: Uh, we're all nerds in our own special way, aren't we?

Michael Price: In our area of expertise.

Phil: Yeah, that's right. Uh, look, I was watching a video from about a year ago where you mentioned that the fund is style unconstrained. What does this actually mean?

Michael Price: All it means is the fund doesn't restrict itself to both, uh, to either value companies or growth companies, but it's happy to hold both. So Ausbil's investment philosophy, um, since the day it was launched, was that it's all about earnings and earnings revisions that drive share prices. And what we mean by that is that expensive high growth companies can continue to outperform as long as they deliver on their earnings. And while cheap value based companies will continue to disappoint until their earnings turn around, what really matter is those earnings revisions and whether a company can meet or exceed expectations of the market. And you can find those earnings revisions in value companies or growth companies. And sometimes there's more in the value states and sometimes there's

00:20:00

Michael Price: more in the growth space. So by being stol unconstrained, we can take advantage of all the opportunities. We should be able to outperform in all types of market and have, uh, a broader portfolio which doesn't have a strong style bias to either value or growth.

Phil: What about franking credits? Do they play any role in the strategy and do they get paid out to investors?

Michael Price: Yeah, look, franking credits are, uh, really, really important. People often think about franking credits as just for retirees. In fact, a dollar of franking credit is worth the same as a dollar of cash to all Australian taxpayers. So yeah, it's just one of those strange things that we don't really pay that much attention to them when it comes to returns. Now the Australian market is about One third owned by offshore investors. And for them the Franken credits don't have any value or have very little value, maybe a little bit on the withholding tax. But what that means is the real opportunity for Australian based investors to really pick up those franking credits at a very, very cheap price. They're basically not correctly valued by the market. So look, with the extra income that the fund collects over the year, it can typically get about 1% or close to 1% each year in extra franking credits. So over and above that of the market it basically gets that without any cost at all, apart from a little bit of hard work and some, a little bit of brokerage through the algorithmic systems which are very cheap for a company of our size. So look, in fact that's the secret SACE behind the fund. Many you might be thinking, well how on earth can you get the same total return as the core Australian equity fund if you're going to get that extra income as well? And the secret is the franking credits. It's that extra 1% you get from franking credits that what you might lose on a cash basis from that 10% of the fund which is getting increased weight around the dividends, you get back that and often you get back more from the franking credits.

Phil: Well, let's zoom out a little bit to the macro and again I'm referring to the video that I watched a couple of days ago and it was from about a year ago and you were still talking about a highly, quite a highly inflationary environment. But now, well we seem to be in a disinflationary environment. Do you think it's sustainable? And how is this affecting investment decisions for the.

Michael Price: Yeah, look, uh, I think inflation will get back to within those bands that the 2 to 3% that the Australian Reserve bank has and uh, 2% over in the US however I do think it'll probably be at the top end of that range. I don't think it's going to get below that for a sustainable period of time like we experienced a, a decade ago and lasted for close to 10 years. A couple of reasons for that. So one is the Australian Reserve bank in particular very proud of the really strong employment record that we have, uh, record levels of employment and they've indicated that they're happy for inflation to be slightly higher or towards the top end of that band as long as people don't lose their jobs. And so because of that inflation should stay will be towards the top end of the band. The other thing is that uh, uh our house view we have a full time chief economist uh looking at the world and we certainly believe that the US is particularly strong at the moment and that will allow Australia to recover as well from a bit of a beneficiary of some of these interest rate cuts. And so we think recessionary fears around the world uh, are uh, definitely overblown. And in fact growth will be stronger this year or the year ahead that has been in the past. Soeah a combination of a reserve bank which is happy to allow inflation being high and growth being stronger than people expect means that uh, we think inflation will be at the top end of the range. Now look, as I've said the investment process for the fund that does actually start with a top down view of the world and the economic outlook we then try and identify attractive sectors and themes to invest in on the back of that top down view. So lower inflation does allow for lower interest rates and that is good for companies that are exposed to growth in the economy. And that's how we're trying to position the fund at the moment.

Phil: You and I are old enough to remember what the days of inflation, I mean real inflation was like and what interest rates, the kind of levels that they had to go to. Do you think something's fundamental? I know you're not an economist but what's your feeling there? Something fundamentally changed that raising interest rates doesn't seem to be having an impact on employment.

Michael Price: It's certainly surprised central banks to get technical their nayru,

00:25:00

Michael Price: their non inflation accelerating rate of unemployment estimate. Uh, I think they're coming around to admitting it might have been too high that the economy can cope with lower unemployment and still not be inflationary. It's the challenge for all actaries as for investment managers is always asking how good a uh, predictor of the future is the past that has something fundamentally changed or not. And I do think that labor markets probably more efficient might be the sort of uh, the positive word that less secure would be that the negative word but does mean that people if they do lose their job and get another one fairly quickly and that allows unemployment to be lower in the longer term. So yeah, that would be my take on it.

Phil: I like giving surprise questions like that. You really had to think about that one, didn't you?

Michael Price: Yeah, well look, it is something we do think about. It's something which has really come up this week. The reserve bank saying they think they got their estimate of how much or how inflationary full employment would be wrong and they're trying to understand why they got that wrong and they've been thinking about it themselves.

Phil: Ok, well getting back to the questions. What are the sectors you see doing well in 2025 and giving the interesting times in which we live?

Michael Price: Yeah, well look, one of the best parts of this job is times are always pretty interesting. There always seems to be something going on. Look, right now our top down view is based on stable bond rates, a strong US economy and this upswing encyclical growth. So that means we're looking for cyclical companies that beneficiaries of a stronger economy, beneficiaries of US strength. So uh, we're looking at resource companies, we're looking at some of these US based earners, offshore earners, looking at companies that are exposed to the housing cycles as sort of steel building materials, maybe even some consumer discretionary as well. So yeah, they're the sectors we think will be most attractive over the next 12 months.

Phil: Do you think resource companies going to be able to maintain the level of dividends that they've been providing over the last few years? Because they're in great dividend earners. But that can turn on a dime, can't it?

Michael Price: Yeah, it can and in fact it has. So uh, just in the last couple of weeks all the major miners have substantially lowered their dividends from a couple of years ago. Interestingly, I think it was two years ago that the three iron ore companies paid more dividends than the four major banks. Whereas this year'probably be back to being about half the major banks. So yeah, uh, I think that's important for investors. When you have a look at one of the things I like saying is I think it's easier to meet objectives. A portfolio can meet objectives that individual stocks can't. So you can get some short term, very high dividends from individual stocks. But it really is, is just very hard to uh, maintain that over time we're still going to get reasonable dividends out of the resource companies. EHP reassured me just a couple of days ago that they're always going to pay 50% of their profit in dividends no matter what. But they will be a lot less than what we were uh, used to when the iron ore price was incredibly high.

Phil: Is that something that you pay attention to, the dividend payout ratio? I mean like the banks, what are the paying, like 80% or something like that?

Michael Price: Uh, yeah, yes, we do pay attention to the payout ratio. It's to do with the sustainability of the dividends and predicting how likely they are to grow in future. The big thing for us because we're not this passive buy and hold forever. We do have getting this extra income by rotating around the dividend dates. So ye, it's not essential for us that uh a dividend gets maintained but if it's going to disappoint the market expectations that's never going to be a good thing. So understanding payout ratios and whether they're sustainable is a very important question. And yeah we again had discussions with the banks recently. Uh a company like Telstra there's another interesting one really paying out everything it can is something we talk about. Actually just one interesting point is that for the banks in for Telstra it has been the franking credits has been the limiting. So when a company does make a profit it can pay it out as a dividend or it can do a buyback. It can buy back its shares and create more capital gain because if there's less shares the earnings per share goes up and that's normally good for capital gains. And uh, when we ask the companies about how they choose whether to do a dividend or a buyback they're all telling us that what they have been told by us and other investors is pay out a fully frank dividend first but after that we

00:30:00

Michael Price: particularly want unfran dividends that buy backs are the next best thing. So yeah, this is all part of the analysis that we're doing on the companies.

Phil: It's a lot of moving parts isn't it? Uh and I guess just speaking about dividend payout ratio and BHP assuring you that they're going to pay out 50% on a continuing basis but that 50% can be of a figure that can be quite a lot more volatile than say a bank or a Telst str.

Michael Price: It certainly can. So the latest one is less than half what it was a couple of years ago. So yeah it's definitely not as reliable. Again the advantage of a portfolio. Interesting though you might mention banks as uh, stable dividends. How soon we forget the pandemic when the banks all skipped a dividend for a half year. So the banks also uh, as a collective I think lowered their dividends by 75% during the pandemic. We have seen resource companies lower their dividends by 75% from PeakD TRE off the last time we had a big resource cycle and that s potentially happening again. So yeah it's all about the risks of individual stocks which is why like I think offering a portfolio can provide that protection which individual stocks can't.

Phil: So tell us uh, and of Course, past performance, there is s no guarantee of future returns. But tell us about the fund and how it's performed over time.

Michael Price: Ye so look, the fund has nearly been around seven years now and extremely happy with the performance. So after fees and including franking credits, it has comfortably outperformed, uh, the broader market or the index. And it has been able to deliver that 7% plus distribution every year again after fees, including franken credits. And it was able to do it during the pandemic, which was really pleasing that when the fund was launched we said, or I said, 7% to 8% was my expectation of what we could deliver if we had another GFC, I we could do 7% and that was about the minimum turned out during the pandemic, dividends per share dropped by 33% was only 30 during the GFC. So it was a slightly bigger drop and we were still able to get there. So now people are a lot more comfortable letting me say that I'm pretty confident that we can deliver that 7%, 7 to 8, uh, in future, as well as the six full financial years that we've had. So, uh, there is one thing I probably should have mentioned about the distributions.

Phil: Please tell us.

Michael Price: Yes, and again, one of the benefit of a fund rather than uh, in individual securities is that we are able to smooth these distributions over the year as well. So at the start of the financial year, after the first month, sorry. The other thing is we are able to pay them monthly rather than half yearly like many other funds, or quite lumpy like if you're holding your shares directly. So at the end of the first month, the financial year of July, we announce a cents per unit and the expectation not guaranteed, but the expectation is that that cents per unit will be able to pay exactly the same amount for the first 11 months of the financial year. Now, it is a trust. So at the end of the year we do have to pay out the balance of the income. So you get normally a little bit extra on top of that at the end of the year and then you put in your tax return and you get your franking credits after that. But we're now able to smooth this income as well across the year. So not only is it much, uh, higher than the market, it's also a much smoother, uh, income stream than the market. So getting back to. So your first question about the typical investor s someone who does want to live off the income. Well, you want to know how much income you're going to get every month and you want to know it's going to get there. And yeah, that's another feature of the fund we've been able to provide.

Phil: So Michael, how can listeners and viewers find out more about Azbill and the fund?

Michael Price: Go to our website, www.ousbill.com.au. there'be a PDs there where you can read about.

Phil: Michael Price, thank you very much for joining me today.

Michael Price: Thank you very much for having me, Phil. Appreciate it.

Phil: Thanks for listening to Shares for Beginners. You can find more@sharesforbeginners.com do if you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

00:34:46

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