Optimism abounds here at The Weekend Australian as we take in the views of our contributors and market gurus on prospects for 2016. A turnaround may take time — even RBA governor Glenn Stevens suggests we chill out for a few months — but amid the commodity chaos there are gems to be found. Look for opportunities at home, from baby boomer needs to food and stocks likely to benefit from a lower Aussie dollar. Here are 100 thought-starters from The Weekend Australian’s contributors and Criterion columnist, bolstered by ideas from the wider market. Take it on board with more than the usual allowance for risk.
Splash the cash
1. Galaxy Resources (GXY)
A lithium producer with a price performance kindly described as uneven, it once soared from 10c to 80c in 2009 and back to 2.5c, under the weight of a huge $200 million debt burden. Having sold its main lithium carbonate processing asset and renegotiated its debt, the company is looking to soon restart its Ravensthorpe lithium and tantalum mine in a joint venture with General Mining. Liked by StockAnalysis.
2. BBX Minerals (BBX)
A two-hole wonder that appears to have tasty gold prospects at its Juma East prospect deep in the Amazonian jungle in Brazil. The first hole produced visible gold, which sent shares to 15c before being suspended for a time. Management is ex-Western Mining in Brazil and AngloGold Ashanti people, which offers some confidence. A rocket stock for the brave.
3. Peel Mining (PEX)
Has copper and gold prospects at Apollo Hill near Leonora in Western Australia and Mallee Bull near Cobar in NSW. A tightly-held stock, which spiked up in October on news of promising copper mineralisation at its 50 per cent-owned Mallee Bull site, only to ease back since.
4. Highfield Resources (HFR)
Owner of five potash projects near Pamplona in northern Spain. One — Pintanos — has a defined exploration target of more than a billion tonnes at 11.5 per cent potash oxide, in what is seen as an eastern extension of its flagship Muga potash mine now under construction. Given appropriate government approvals, it could move higher. A spec buy by Criterion.
5. Coventry Resources (CYY)
It has a high grade in-ground copper discovery at Caribou Dome in south central Alaska, but needs more funding to proceed with more extensive drilling. Its share price has been variable, seemingly marked down on each snippet of news. Rated a spec buy by Criterion.
6. Catapult Group (CAT)
A big player in wearable technology that lets sporting and athletic types and their managers and coaches know the stats on distance run, heart rate and kilojoules consumed. As a maker and seller of global-positioning and indoor-stadium tracking systems for athletes and elite sports teams, it raised $12 million in its IPO from investors including US billionaire and Dallas Mavericks basketball team owner Mark Cuban. More than 500 elite sports clients have signed on, including gridiron team the Dallas Cowboys, basketball’s San Antonio Spurs and soccer clubs such as AC Milan, Aston Villa and Marseilles. It has interest from soccer clubs in Thailand and China. Its shares have trebled in a year,
but Criterion still calls it a buy.
7. Cirrus Networks (CNW)
A West Australian-based IT solutions provider that designs, builds and manages IT infrastructure for businesses, with healthcare its preferred field. Has recently won a contract from aged care provider Bethanie Group in WA and has panel status with the WA Department of Finance, which means it can bid for more government work. Rated highly in the Deloitte Australian TechFast 50 group of companies.
8. Urbanise.com (UBN)
A cloud-based building services delivery platform for the facility management industry. It is designed to connect building operators with their clients, suppliers and the people who live and work in the buildings they manage. After a $20m IPO last year, it has struck 15 new agreements across markets including the UAE, Britain, Europe, Malaysia and Australia. It’s also acquired Mystrata, a strata management administration platform.
9. Bulletproof (BPF)
Providing end-to-end managed cloud services, Bulletproof is well positioned in a fast-growing sector and aims to capitalise on the trend that more and more enterprises take their business to the cloud. Most of its revenue is of a recurring nature, providing some income stability. Management have a favourable track record in the internet and software industry and are major shareholders in the company. Liked by Wise-owl.
10. Freelancer (FLN)
Accelerating revenue and rising projects on the website have been major value drivers in 2015 for this staff-outsourcing marketplace. As Freelancer’s business matures, investors want to see sustainable earnings and bottom-line growth. As most of its revenue is derived offshore further depreciation of the Aussie dollar should enhance its revenue profile. It recently raised $10m through an institutional placement at $1.40 a share and flagged that the funds could be used for potential acquisitions. Liked by Wise-owl.
11. Fastbrick Robotics (FBR)
Promoters of a bricklaying machine that might build a four-bedroom house in two days easily raised $5.75m in a listing in late November. The funds will go to develop the company’s prototype robots into commercial machines, with the first due to be rolled out in Western Australia in 2017. With shares trading at a near-50 per cent premium to the 2c issue price, clearly a lot of people are won over by the prospect of faster building and cost savings. A spec buy according to The Australian’s Criterion columnist.
12. Electro Optic Systems (EOS)
A tracker of space junk — bits of old rockets and satellites — using ground-based lasers in the ACT and Western Australia, it watches out for damaging collisions between communications satellites. It has a collaboration agreement with US aerospace giant Lockheed Martin. With much chat recently on suggestions of future star wars where the big powers seek to knock out rival spy satellites, any developments in this arena are closely watched. A spec buy in Criterion’s book.
13. Greencross (GXL)
A consolidator of the fragmented veterinary industry that owns more than 130 vet clinics across Australia and New Zealand. Under takeover offer, but may have more growth to come. A buy in Morningstar’s eyes.
14. Big Un (BIG)
An Australian media and technology company which manages the Big Review TV broadcast network. Big is enjoying strong sales that might further accelerate with its recent partnership with CDM Direct Communication Services. The company’s capacity to convert its existing sales pipeline into paid memberships should become salient over coming months. Liked by Wise-owl.
15. Crowd Mobile (CM8)
Crowd Mobile, operator of crowdsourced question and answer mobile apps, is one of the few tech companies on the ASX to generate cashflow. Its principal assets include product distribution capability via 60 mobile phone carriers in 25 countries, and proprietary content production capabilities focused on consumer advice. The Track acquisition is a formational deal that Wise-owl says will add strong earnings growth history and scale, and justify a valuation of 63c a share.
Growth with ageing
16. MedAdvisor (MDR)
A cloud-based app that monitors usage of prescription pills and tells you when the next round is due. The app is free to patients, with revenue derived from links to chemists, drug companies and — in future — GPs. It claims to have signed up about a quarter of country’s chemists and wants to have at least half on its books. Rated a spec buy by Criterion.
17. Oncosil Medical (OSL)
Oncosil Medical seeks better ways to deliver radiation therapy to cancer patient’s tumours. The lead product in development is an implanted medical device that emits radiation into pancreatic and liver tumours for up to three months. Wilson HTM rates it a spec buy with a 35c price target.
18. Sirtex Medical (SRX)
Sirtex has had another stellar year in 2015 with the company increasing Sirflox unit sales and progressing well with research into further applications of their products. The company remains a ‘‘feel good’’ investment and it’s hard not to see further medical professionals putting the product forward for patients as it receives more acceptance. The scare in March after an initial study update provided an opportunity for value investors but at current levels the company only remains suitable for growth investors. Liked by Lincoln Indicators.
In time, their day might come
19. BHP (BHP)
The deal of a lifetime at current prices or walk away in tears? Crushed in the commodity collapse and with a mine disaster in Brazil to deal with, the Big Australian is humbled for now. Charts suggest even $14 a share is possible, especially if the dividend dwindles. Yes, it might rise again, but the question is when, exactly? One for those with faith.
20. Alumina (AWC)
A low-cost alumina producer with cash costs in the bottom quartile of the cost curve and a discount to fair value that looks attractive. With the alumina industry losing money, and Alumina’s enterprise value less than half the replacement cost of alumina capacity, value is compelling, says Morningstar. The move from long-term contracts to spot alumina pricing, coupled with more balanced supply, should see improved prices and returns, potentially helping the market price of shares to converge with intrinsic value over time. A buy for Morningstar.
Soon to glisten again?
21. Alkane Resources (ALK)
A gold producer generating a $25m cashflow a year, in addition to its key value driver of the world class Dubbo Zirconia Project. Securing offtake or a strategic partner in the aerospace or advanced materials sector would result in a major rerating. Rated a buy at Petra Capital.
22. Evolution Mining (EVN)
Evolution Mining, the country’s second-largest listed goldminer, looks close to completing its protracted acquisition of smaller rival Phoenix Gold. That may help its share price, which has already doubled in the past 12 months. Company executives have spoken of investing more than $25m next year on exploration.
23. Independence Group (IGO)
A low-cost gold producer via its 30 per cent interest in the Tropicana project 300km north east of Kalgoorlie. The company is a serious nickel producer at Long Mine, and has zinc and copper production at Jaguar. A strong balance sheet with positive cashflows at current prices across all three commodities. Outside of the majors, it is one of the better defensive miners due to its diversified and quality assets. Liked by StockAnalysis for 2016. Canaccord says it’s ideally positioned to benefit from a recovery in base metal prices.
24. Gold Road Resources (GOR)
Gold Road Resources offers speculative exposure to the gold mining industry. Has a big land package in the Yarmana region well east of Kalgoorlie, existing resource inventory at Gruyere, and a track record of low discovery costs. Gruyere’s large scale, long life and under-explored surrounds could attract interest from established miners. Liked by StockAnalysis. Wise-owl expects takeover interest to build.
25. Doray Minerals (DRM)
WA-based junior gold producer with the Andy Well goldmine producing around 80,000 ounces a year. Output is likely to double to 160,000 ounces equivalent with gold and copper production from the Deflector deposit following the merger with Mutiny Gold. The merger diversifies operational risk and revenue streams, with both assets having potential for exploration success and mine life extension. Liked by Patersons.
26. Resolute Mining (RSG)
New management is the key catalyst to turn the company around. A consistent producer of more than 300,000 ounces of gold a year, with a large resource inventory of about 13 million ounces. It has the ability to deliver leveraged growth from long-life assets, in the eyes of Petra Capital.
27. St Barbara (SBM)
A transformational turnaround in 2015 has put the mid-tier gold producer back on a stable footing, with strong cashflow generation from Gwalia allowing debt repayment ahead of schedule. Its share price has bolted in the past year, but Petra Capital thinks further upside exists as it has a potential mine life of more than 10 years at Gwalia. Canaccord calls it a standout, based on potential upticks in the gold price and cashflows.
OIL AND GAS
Sagging in surplus
28. Real Energy
Real Energy Corporation is an Australian energy company focused on oil and gas exploration in the Cooper-Eromanga Basins. Eastern Australia gas prices have doubled since 2011 and Real Energy is positioned to address a tightening supply landscape. Even though the company is reliant on external capital, recent progress in a gas-sales agreement with Incitec Pivot is a medium-term driver.
Liked by Wise-owl.
29. FAR (FAR)
This oil and gas explorer has a 15 per cent interest in offshore permits from Senegal in West Africa that produced one of the world’s largest oil discoveries in 2014 at the SNE field. Appraisal work aims to lift resources towards 700 million barrels, which could make FAR shares worth up to 35c, says StockAnalysis.
30. Woodside Petroleum (WPL)
Woodside has very low net debt, large resources of oil and gas awaiting approval, and has the ability to pick off the best assets or companies from a broad field of projects and assets — much like a kid in a lolly-shop, according to StockAnalysis. Well placed for any upturn in prices.
31. AWE (AWE)
A low-cost oil and gas producer that is surviving the downturn in prices, AWE has low debts and locked-in revenue from domestic gas sales. Its Waitsia gas discovery north of Perth should come online in late 2016 and underpin a long-lived domestic gas business in Western Australia. It’s well liked by the folk at StockAnalysis.
Large and loveable
32. Amcor (AMC)
Paper and packing might not sound sexy, but they deliver reliable earnings as well as growth based on demand for consumer products, particularly in flexible packaging where experience and strong suppliers relationships can benefit innovation and lead to healthy margins.
33. Goodman Group (GMG)
As the owner and developer of warehousing and warehouse facilities, Goodman stands to benefit from the rise of global demand for industrial property. The company is genuinely global, with operations in sixteen countries that contribute more than half its earnings. Such a foothold allows it to take experience from one market and apply it to another. Morningstar advises investors to accumulate the stock, as it has the most favourable growth outlook, given the importance of large-scale, modern warehouses in efficient distribution chains.
34. Sydney Airport (SYD)
A low Aussie dollar, more tourists and a safe, green world bode well for all tourism operators and the airport through which they come. For Sydney, rising wealth in China’s middle class could well see a doubling of passengers by 2020, according to Tourism Australia. The company earns money on the arrival of passengers as well as through the leasing of business premises, car parking and retailing activity.
35. Transurban (TCL)
Owner of almost every major toll road in the country after its purchase of Brisbane’s financially troubled AirportLinkM7 in November. Its revenues have had annual compound growth of 10 per cent in the past decade and look likely to continue for the next decade and probably beyond, on the back of population growth and CPI-indexed tolls. Meanwhile it is diversifying through overseas expansion, and is in a partnership in the US for express lanes in Virginia.
Rising on Asian appetites
36. Websters (WBA)
Chaired by Chris Corrigan, this Tasmania-based walnut business has made some bold expansion moves into broadacre cropping and cotton and grazing businesses in western and northern NSW. The latter, Bengarang, has the country’s largest water entitlement portfolio of more than 235,000 megalitres, along with more than 40,000 hectares of irrigated cotton country. The water portfolio alone is worth almost $300m. Liked by Patersons.
37. TFS Corporation (TFC)
Controls the world’s largest ethical and sustainable supply of Indian sandalwood, a $1 billion market with exhausted natural reserves. With harvest volumes scheduled to rise tenfold in the 2015-16, improved earnings and consumer demand could galvanise interest in the stock. Wise-owl expects shareholders to be rewarded in time.
38. Tassal Group (TGR)
Tassal has performed well since reporting in August 2015 and remains well-placed to benefit from increased salmon consumption in 2016. The business acquisition in 2015 saw the company increase its reach into the seafood category and increase vertical integration in the salmon market. TGR is suitable for value and growth-seeking investors, with a fully franked dividend yield of about 4 per cent. Liked by Lincoln Indicators.
39. Select Harvest (SHV)
A specialist almond grower aiming to rise on Asian food buyer interest, with ambitious expansion plans that could increase the area of productive orchards by 40 per cent. That’s after it reduces debt through the sale and leaseback of land valued at $200m. A crippling drought in California, the world’s dominant almond-producing region, as well as rising consumer demand for almonds because of their health benefits, has seen Australia’s $500m almond industry boom. Liked by Patersons.
40. Australian Agricultural Company (AAC)
A shift away from live exports toward packaged meat products and an uptick in prices has prompted a near-doubling of meat sales, a surge in total revenue and the posting of a first-half net profit of $50m. Packaged meat now accounts for 84 per cent of AAC’s revenue, up from 76 per cent a year ago. The company now processes its own cattle through its Livingstone Beef abattoir near Darwin. Patersons has a buy recommendation with a price target of $1.77.
Buy ’em, love ’em, smash ’em
41. AP Eagers (APE)
AP Eagers has enjoyed healthy vehicle sales and the successful integration of a number of acquisitions through 2015. As the second-largest dealer operator in Australia, APE should benefit from further industry consolidation and a rosy outlook for new vehicle sales in 2016. The dividend yield sees the company provide investors with an added bonus of income on top of an already stable earnings outlook. Liked by Lincoln Indicators.
42. Carsales.com (CAR)
The company has had solid growth from its Australian operations while increasing its exposure to the overseas classifieds segments with grass-roots investments through the 2015 financial year. Acquisitions have been lower-margin businesses but the long-term growth story remains for the company as it nurtures its overseas acquisitions and they benefit for Carsales.com’s expertise and experience. Carsales.com pays a fully franked dividend that is approaching market yield. Liked by Lincoln Indicators.
43. AMA Group (AMA)
The smash-repair industry is itself being bashed into shape, and may well shrink more with the advent of safety features such as computer-triggered braking and driverless vehicles. Neighbourhood panel beaters are merging into slick corporate chains under pressure from insurers such as Suncorp. AMA Group has just acquired the biggest operator, Gemini Accident Repair Centres, in a cash and scrip deal that looks attractive to Criterion as a spec buy.
HOME AND OFFICE
Family and finance
44. Arena REIT (ARF)
Arena combines an attractive portfolio of high-quality childcare and healthcare assets and is trading on an attractive yield of 6.4 per cent. In addition, the group possesses a growth pipeline which Lincoln Indicators expects will continue to drive increased distributions moving forward. ARF is suitable at current levels for income-seeking investors looking for an above-market dividend yield.
45. Servcorp (SRV)
Servcorp has been able to maintain an excellent track record of floor rollouts and earnings growth that shows no signs of slowing down. North American operations remain challenging. However, this has really only been a minor speed bump and should potentially become profitable in the next 12 to 18 months. This stock might be more suitable to growth investors at current levels but Lincoln Indicators wonders whether it will be a takeover target in 2016.
Winners from a falling $A
46. Henderson Group (HGG)
A Britain-based funds manager that benefits from solid inflows and can say that most of its underlying funds beat their benchmarks. The company may also gain from a lower Australian dollar compared to the British pound in 2016. It already provides a small dividend to investors. Lincoln Indicators thinks that at current levels the stock would suit growth investors who want exposure to overseas markets while still investing in a locally listed company.
47. Ramsay Health Care (RHC)
Contributions from the new facilities in Australia, Generale de Sante and Medipsy in France and the continued strong admissions in the British hospitals will support its growth. It is now the largest private hospital operator in France. Ramsay has announced a foray into China to become the first big international hospital operator to establish operations in the country, where it should benefit from the large population and growing demand for better healthcare from an emerging middle class. Its share price makes it ideal for growth-and value-seeking investors, in the eyes of Lincoln Indicators.
48. CSL (CSL)
It trades at a 6 per cent discount to Morningstar’s $106 fair value estimate, due to relatively subdued growth in its immunoglobulin products and less enthusiasm for the prospects of Privigen and Hizentra, the intravenous antibody products used to boost the body’s natural defences against infection.
Morningstar suggests integration of the Novartis influenza vaccine business, renamed Seqirus, and the upcoming launch of several new recombinant coagulation products, coupled with the steady progress in the broad research and development pipeline “bode well for earnings growth and hence narrowing of the share price discount to our fair value over the medium term”.
49. Sonic (SHL)
The company stands to benefit as we all grow older. It is one of the world’s largest medical diagnostics companies, and a provider of laboratory and radiology services to medical practitioners and hospitals. Sonic has acquired heavily overseas and now derives half its revenues abroad. Healthcare companies are well known as defensive stocks for their ability to earn through cycles, because whether the economy is good or bad, people still require basic medical services. Sonic has also proven its ability to make small accretive purchases.
50. Brambles (BXB)
Brambles is trading at a 9 per cent discount to Morningstar’s $12.00 fair valuation, as investors appear to overlook the growth potential in its pallets business. In the next four years, Brambles will allocate $1.5 billion of growth capital expenditure to new pallet offerings (nestable pallets, wheeled units, cardboard layer pallets), which Morningstar expects will further expand Brambles’ customer proposition and widen its competitive moat. We also envisage potential expansion into adjacent supply chains, such as home and hardware and pharmaceuticals, market segments that could double CHEP’s addressable market.
Moving in on the banks
51. Money3 (MNY)
With plans to no longer be an unsecured payday lender, Money3 sees its future as a financier of used motor vehicles for those with a tarnished credit record, and in other secured areas no longer pursued by the big financiers. Its shares have halved from highs of a year ago despite strong net profit performance though its national network of 66 branches, online “Cash Train” business and a broker network. Liked by Patersons.
52. Credit Corp Group (CCP)
Credit Corp is one of the larger players in the purchase debt ledger business, where delinquent portfolios are bought from banks and utilities at a steep discount to the face value and the companies make their money by pursuing individual debtors for repayments. It has also launched Wallet Wizard, a small-amount term lender that targets subprime borrowers (but is not a payday lender). Wallet Wizard merges two previous products that have accrued a substantial asset book.
53. Collection House (CLH)
Another car loan and short-term lender whose shares have moved up and down on the back of Canberra chat on interest rate caps on such lenders. Baillieu Holst has a price target on it of $2.
54. Mortgage Choice (MOC)
The home-loan broker might have pulled the plug on its health insurance comparison website Help Me Choose, a smaller rival to the listed iSelect. But that was only a small part of its revenue. Plans are being hatched for a financial planning offshoot, but meanwhile, it remains a high-yielding, low-risk but low-growth exposure to the housing sector. Criterion rates it a buy.
POTS OF POTENTIAL
55. Aconex (ACX)
An IT systems provider to the construction, mining and infrastructure sectors that allows detailed tracking and management of big multifaceted projects. Has more than 50,000 users worldwide for its cloud-based information bases. Given a 30 per cent growth rate, Credit Suisse rates it an outperform with a $5.25 share price target, saying the company is best placed to win a bigger share of a global market estimated to be worth more than $8.5 billion.
56. QUBE (QUB)
Qube Holdings, a port and logistics operator focused on containerised and bulk products, automotive and stevedoring services, is in a tussle to acquire Asciano as part of a strategy to consolidate the fragmented logistics chain. It seeks strategic land assets adjacent to transport links leading to ports in Melbourne and Sydney. These include the Moorebank Intermodal Terminal Project that could be big and generate much growth in group earnings and competitive advantages. Success could mean share price appreciation over time. Morningstar suggests investors accumulate the stock.
57. ResMed (RMD)
Its shares might be trading at a discount to most fair value estimates, but Morningstar thinks clinical evidence to date linking sleep-disordered breathing to a series of medical disorders beyond cardiology will open up rewarding commercial opportunities for ResMed. “The obstructive sleep apnoea business remains robust and progress in the adjacent medical areas of chronic obstructive pulmonary disease is positive for growth,” it says. Given its offshore presence, it should benefit from further weakening of the Australian dollar.
58. Woolworths (WOW)
Woolworths’ share price has suffered from slowing revenue growth since early 2014 under competition from Aldi and drag from the Masters hardware chain. In contrast, Coles has maintained solid revenue growth despite Aldi. Morningstar expects Woolworths to reduce profit margins to maintain market share and reignite revenue and profit growth. A fair value price would be $33, according to Morningstar.
59. Crown Resorts (CWN)
Crown Resorts offers defensive earnings via its two Australian casinos in Melbourne and Perth, and potential to grow from its 34.3 per cent-owned Crown Melco in Macau, as well as new casinos earmarked to be built in Sydney and Las Vegas. Recent share price weakness has followed a slowdown in Macau in the wake of a government crackdown on corruption, tighter credit conditions for junkets and fears of economic slowdown in China. A stabilisation of any of the current headwinds would be good for the share price, says Morningstar.
60. Virtus Health (VRT)
The country’s biggest assisted reproductive services provider, which each year helps more than 5000 couples achieve their dream of having a baby. It provides a large slice of all in vitro fertilisation (IVF) cycles in Australia, backed up with diagnostic clinics and day hospital services. It recently bought a large stake in a similar Irish business, and has an offshoot in Singapore. Liked by Morningstar.
61. Allan Gray Australia Equity Fund
A deep value manager, Allan Gray is overweight energy and materials, yet it holds the view that while prices have collapsed (think gas, gold and aluminium), demand for these commodities hasn’t gone away and at some point commodity consumers will have to pay a price that allows producers to stay in business. There’s no guarantee that it will happen in the next 12 months, but in the eyes of InvestSense, Allan Gray’s focus on the highest-quality producers should help. It’s returned close to 8.5 per cent a year over three years.
62. UBS HALO Australian
This fund has a contrarian approach, overweight to the energy sector, on the view that oil prices are artificially oversold by speculators. With oil producers suspending investments, which means less supply a few years down the road, constant demand should mean higher prices, in the eyes of InvestSense. The fund has posted returns of 10.7 per cent a year over three years.
63. Macquarie High Conviction Fund
Resources companies might have crashed on the ASX, but this fund in looking elsewhere has delivered 22 per cent (after fees and expenses) for the year to November 30, 2015. Focusing on “what matters”, it looks to invest in only 20 to 30 companies, and has posted close to 17 per cent a year over three years and 9.2 per cent a year since its November 2005 inception.
64. Greencape High Conviction Fund
Offers access to a highly concentrated portfolio of mainly Australian equities but can hold up to 10 per cent in stocks listed offshore, a style adopted since inception in 2006. It’s delivered more than 3 per cent for the year to November and 11.4 per cent a year over the past three years, net of fees. Regularly rates highly among ratings agencies such as Morningstar and Lonsec.
65. WaveStone Capital Australian Share Fund
An active long-only manager based on three key people with a wealth of experience. This fund has delivered 12.4 per cent since inception and 14.5 per cent after fees for the year to November 30, 2015. It is recommended by Zenith and rated by Lonsec.
66. Alphinity Australian Share Fund
Seeks to find undervalued companies entering an earnings upgrade cycle. The approach is bottom-up stock picking enhanced by selected quantitative inputs. This fund has delivered 10.9 per cent a year for the three years to November 2015 and 8.5 per cent a year over the past five years, net of fees. A related concentrated fund has delivered 12.1 per cent a year over three years. The Australian Share Fund is highly recommended by Zenith.
67. UBS Microcap Fund
Offers exposure to some of Australia’s most dynamic and fastest-growing listed companies, defined as those with a market cap of less than $250m at portfolio entry. Launched in August 2014, it’s delivered a total return, after fees, of 19.7 per cent since inception and nearly 22 per cent after fees over the past 12 months.
68. Macquarie Australian Small Companies Fund
Investing in smaller companies can offer big rewards. After fees and expenses this one has earned 36.6 per cent for the year to November 30, 2015, and 14.1 per cent a year over three years.
69. S. G. Hiscock ICE Fund
A not-quite-typical small cap fund that seeks companies that own or use assets that are difficult to replicate, such as licences, patents, brands or a captive client base, and have an entrenched market position. Thus it tends to avoid mining, property and basic manufacturing, and heads towards stocks in healthcare and technology. Has returned close to 21 per cent a year for the past three years. The minimum investment is $250,000.
70. Arrowstreet Global
Offers exposure to between 150 and 400 large and small companies across both developed and emerging markets. Combining intuition and quantitative research, after fees and expenses it has delivered just over 30 per cent a year over three years, and 18 per cent a year over 5 years. Australian investors can gain access to the fund, which is based in Boston, through the Macquarie Professional Series.
71. Fidelity Global Demographics Fund
Designed to exploit the world population getting bigger, wealthier and older, this fund seeks global stocks where demographic factors drive company growth — global consumer and healthcare companies make up 70 per cent of the portfolio. Over three years it’s delivered a gross return of more than 27 per cent a year. Minimum investment is $25,000.
72. Macquarie Asia New Stars No. 1 Fund
It’s been a volatile year in Asian sharemarkets, particularly in China, yet this fund’s focus on domestic demand sectors such as consumer and healthcare has done well to return 16.9 per cent for the year, 26.6 per cent a year over three years and 15.9 per cent a year since inception in May 2010.
73. Advance International Shares Multi-Blend Fund
A fund for those seeking long-term capital growth through exposure to a diversified portfolio of international shares and currencies. The way the fund is set up allows for potential tax and cost benefits, while encouraging a “hands-on” approach to take advantage of market themes. The fund offered a single-year performance of 17.3 per cent, three-year returns of 24.4 per cent a year and five-year returns of 14.8 per cent a year as at October 31, 2015.
74. UBS Diversified Fixed Income Fund
Offers access not just to an Australian portfolio but also global fixed income assets. Actively managed, it has returned close to 4.5 per cent a year over three years after management costs. The fund is rated by Lonsec and Zenith.
75. T. Rowe Price Dynamic Global Bond Fund
In a rising-rates world, unconstrained bond funds have had the wind in their sails. This one manages duration tactically to derive a sustainable income from global bond instruments, while avoiding high correlation to equity markets (often a side effect of high credit exposure). InvestSense says it stands out for its relative simplicity, a focus on government bonds and opportunistic use of credit exposure, which translates to notable capital preservation. Returned close to 8 per cent in the past year.
INCOME & GROWTH
76. Schroder Real Return CPI Plus 5 per cent Fund
A diversified investment solution that aims to deliver an annual return 5 per cent above inflation. The fund continually assesses investment opportunities in order to meet its objective while striking a balance between risk and reward, meaning it is suitable for investors looking to achieve real returns. Highly recommended by Zenith and Lonsec.
77. MLC Inflation Plus
One for investors, especially retirees, seeking a real return above the consumer price index through a multi-manager approach. It comes in three options: assertive, moderate and conservative, each with different return targets (CPI plus 6 per cent, 5 per cent and 3.5 per cent respectively). They’re actively managed to achieve required results. Recommended by Zenith and by Lonsec.
78. Antares Dividend Builder
Has a diversified portfolio of high-yielding Australian companies that aim to grow dividends over time, with an emphasis on securing franked income and minimising portfolio turnover to keep net realised capital gains low. It’s also available as a separately managed account, which gives investors beneficial ownership of the shares.
79. Pengana Australian
The fund seeks out reasonably-priced companies, judged by the usual metrics of operating leverage, balance sheet and return to shareholders, that can generate an after-tax cash earnings yield of 6-8 per cent a year with strong growth for the medium term. The fund is keen on capital preservation rather than ‘‘super’’ returns and cash holdings when suitable equities can’t be found.
LICENSED INVESTMENT COMPANIES
80. Perpetual Equity Investment Company
One for those who like direct investments but don’t want to pick stocks themselves or commit exclusively to passive investing, this concentrated Australian equity fund could be for you. InvestSense says its value focus, with a mid-cap bias and more importantly an exposure to global listed securities, gives the manager useful flexibility.
81. Magellan Global Equities Fund (MGE)
Sitting within the ASX’s family of exchange-traded products, Magellan has been a stellar performer since arriving on the market under its new structure that allows market trading of an unlisted fund. The managers have had an acute sense for picking undervalued global stocks and have also gained from the sliding Australian dollar. Has posted a return of more than 21 per cent a year for 10 years.
82. iShares Global 100 ETF (IOO)
The world is a vastly bigger place than the Australian market and growing strongly in parts, such as the technology end of US markets. This ETF tends to invest in technology, financials, healthcare, consumer staples and energy, but it is not a place to find high dividends.
83. iShares Europe ETF (IEU)
If you prefer to focus on Europe, this one tracks the performance of leading companies there. Companies are chosen on market capitalisation, liquidity, industry group and geographic diversity. As the European Central Bank continues to support the economy with its quantitative easing policy, Wise-owl expects European equities to outperform in 2016.
84. iShares Global Healthcare ETF (IXJ)
Direct exposure into 90 stocks that include the world’s big pharmaceuticals, such as Novartis, Pfizer, Roche and Merck, and seem well placed to ride the baby-boomers into old age. Investors would have picked up a gain of more than 40 per cent over the past year.
85. BetaShares Nasdaq 100 ETF (NDQ)
Offers investors diversified, liquid, low-cost and transparent exposure to the Nasdaq 100 Index that reflects the exchange’s tech-oriented enterprises, including Apple, Google, Amazon and Facebook. It claims to be the only ETF in Australia to track the Nasdaq 100 index. Since its inception to the end of November 2015, NDQ has returned close to 13 per cent, compared to the S&P 500, which has returned about 6 per cent for the same period.
86. Betashares US Dollar ETF (USD)
One way to ride the rise of the US dollar and the decline of the Aussie. It’s simple and cost-effective, and if you agree with the view that the former is going up and the latter down, in line with our terms of trade, then value should accrue.
87. Vanguard International Fixed Interest Index (Hedged) ETF (VIF) and Vanguard International Securities Index (Hedged) ETF (VCF)
These two help address a gap in international fixed-income securities available to investors via a listed product. The Vanguard International Fixed Interest Index (Hedged) ETF holds about 1200 bonds issued by around 34 countries, while the Vanguard International Securities Index (Hedged) ETF tracks an index containing about 13,000 securities issued by government-owned entities and investment-grade corporate issuers. A way to diversify into global fixed interest and income.
88. Vanguard Australian Property Securities Index ETF (VAP)
Residential property has long been a darling of Australian investors, especially through years of market volatility. But with price growth and residential rental yields slowing in many parts of the country, investors might look elsewhere for property exposure. The Vanguard Australian Property Security Index ETF provides broadly diversified exposure to listed Australian real estate investment trusts, with holdings in retail, office, industrial, tourism and multi-sector ventures. A distinct alternative to an illiquid investment in a single bricks and mortar building.
89. AMP Capital Wholesale Australian Property Fund
A vehicle for retail and SMSFs to invest in commercial property, ranging from Australian office to retail and industrial properties. It aims to provide stable returns made up primarily of income with some long-term capital growth. One-year returns are 8 per cent and three-year returns are just over 10 per cent a year. The minimum investment is $10,000 and the fund is recommended by Zenith and Lonsec.
90. AMP Capital Core Infrastructure Fund
Retail investors can own infrastructure assets such as Melbourne Airport in Australia and Angel Trains in Britain through this fund. With a mix of 50 per cent direct infrastructure assets and 50 per cent listed infrastructure securities, the fund seeks to deliver predictable cash flows through economic cycles. In the five years to September, it has delivered 11.1 per cent a year with a cash yield of 6.7 per cent.
91. AMP Capital Dynamic Markets Fund
A lower-cost and lower-volatility alternative to broader equity markets. The fund’s asset allocation is flexible, moving with markets across a range of asset classes with the aim of delivering more stable returns over time. The fund has consistently achieved returns above its benchmark, with one-year and three-year performance tracking at 11 per cent.
Income and security for SMSFs
92. AAI’s floating rate bond
AAI Limited, an insurer and subsidiary of Suncorp Group, issued a new floating rate subordinated bond in November. Being floating rate, the amount of interest investors earn is directly linked to future expected interest rates. If the market expects interest rates to rise, the interest earned on these bonds will also rise. The estimated yield to call in November 2020 is a high 5.4 per cent a year.
93. BHP Billiton fixed
rate US dollar bond
BHP Billiton’s shares might have crashed this year and questions arisen about its dividends, but it will still pay interest on its bonds no matter what happens to the price of iron ore. The company issued multi-currency subordinated bonds in US dollars, euro and sterling in October totalling $US6.5bn. Maturity dates vary but there is one US dollar-denominated bond with a first-call expected maturity in 10 years’ time. Expected yield to first-call date is a whopping 6.41 per cent a year, according to FIIG Securities. Minimum investment is $US200,000 ($276,000).
94. Sydney Airport inflation-linked bond
Sydney Airport is a monopoly infrastructure asset with unique and compelling cashflows. It has a long-dated, protective, inflation-linked bond due to mature in 2030. Variations in inflation during the life of this bond are added or subtracted from the capital price of the bond, known as the adjusted capital price. At maturity investors receive the $100 issue value plus the cumulative impact of inflation over the life of the bond. FIIG Securities says total return when held to maturity is expected to be 6.06 per cent a year, assuming inflation is 2.5 per cent — the RBA target midpoint — but could be higher if inflation spirals.
95. CMC Markets Stockbroking Pro Platform
A customisable online share trading platform with appeal for frequent traders. It offers technical analysis, advanced ordering types and dynamic content at the click of a mouse. A charting package offers studies, patterns, stock charts and overlays for the keen user.
96. ANZ Smart Choice Super
A low-cost superannuation fund that adjusts investments according to age, becoming more conservative over time. It allows you to manage your super online, alongside your banking through ANZ internet Banking, ANZ goMoney and Grow by ANZ. Customers can also consolidate their super online using ANZ’s paperless rollover service.
APPS A GOGO
97. Your watch as a portfolio tracker?
Try CommSec’s Apple Watch app, for much info on the go. With the app you can see a portfolio, watch lists and even ask Siri to get live share prices. Keep your eye open for the rollout of Android Pay, a Google-based app that should allow all sorts of payments by waving your phone near a reader.
98. Grow by ANZ
Puts your super, insurance and share investing side by side with everyday banking. Trade shares, see research on Australian stocks, buy and manage insurance needs, open a new super account and round up existing super in just a few taps. It has Touch ID log in and a Quick Balance feature which allows you to see all account balances in a single swipe. It is available for iPhone, iPad and iPod touch and is compatible with the Apple Watch. Download via iTunes.
99. Macquarie Black
Macquarie’s premium card offers two Macquarie Reward points for every dollar spent, plus benefits and access to premium services, including discounted limousine travel and airport lounge benefits, free travel insurance, a 24/7 concierge service and a no annual points cap. New applicants benefit from a zero per cent balance transfer for the first 14 months and can also access up to four cards for their family members with no annual fee.
100. Macquarie Global
For those who have a financial adviser and $500,000 to invest, Macquarie offers discretionary investment management, while taking into account customisations, prevailing markets and likely tax position. There are multi-strategy options and access to professional investment managers.
The Weekend Australian accepts no responsibility for these product offerings. The author owns BHP shares. Some of the firms featured have or seek corporate work with several of the stocks mentioned. Readers should contact a licensed financial adviser.