Argo Investments managing director Jason Beddow says it is his fund’s “pretty simple story” that is a winner with advisers and their SMSF clients.
“We’re an internally managed LIC (listed investment company), low-cost, we pay fully franked dividends and it’s a sustainable dividend, it’s not paid out of trading profits,” Beddow says.
“I think we’re considered a safe pair of hands.”
Argo won the listed investment company category for the second year in a row and along with the simplicity, its features, such as its internal management, which means there are no management fees leaking out to “super star managers”, also make it a winner, he says.
No fees to “super stars” means there are few conflicts of interest.
Beddow is only the company’s third managing director since it was formed in 1946 by a solicitor and an accountant to provide a means of investment for their clients. Beddow became managing director in 2014 after four years as chief executive.
He says LICs are the ideal proposition for SMSFs as many trustees may not have the assets to spread their investments over a variety of investments, but they can easily purchase an LIC, which does it all for them.
“Argo is a low-cost, relatively low-risk way for them to get equity exposure,” he says.
The company’s objective is to maximise long-term returns to shareholders through a balance of capital and dividend growth. To do this, the portfolio holds around 100 diversified stocks. Around 20 of the largest blue-chip holdings make up 60 per cent of the value of the portfolio and over 60 per cent of the dividend income. Smaller companies with long-term growth and dividend potential are also held.
Shareholder numbers keep growing, proving the popularity of the offering, which now has $5.5 billion in funds under advice.
Around one-third of that register is made up of what Argo can identify as SMSF trustees. Cost has become a real focus for these investors.
“The SMSFs generally like direct investing, they don’t tend to want to invest in the managed fund product,” Beddow says.
“At the end of the day we’re always trying to do better. We pay tax and we like to minimise the tax leakage.”
The renowned Chris Cuffe joined the board last year but overall the team is fairly consistent.
“What we’re trying to achieve is kind of the same and I think that sort of consistency, while it might be a bit boring at times, when it gets to people investing their money, people quite like it,” Beddow says.
The group understands the importance of advisers and tries to engage with those using Argo directly. It also presents at certain conferences, but in general it doesn’t market aggressively as it doesn’t really need to.