Having helped DIY investors successfully invest in the Australian share market for over 30 years, we know the value of a well diversified portfolio.
Using the foundations of our quantitative financial health methodology, we spent two years optimising our trusted methodology for the U.S. market. Using a multi-factor model and our Financial Health overlay we have been able to identify a portfolio of financially healthy stocks that are ideal for long term growth.
The end result is our Lincoln U.S. Growth Funds, a Hedged and Unhedged Fund designed for Australian DIY investors who are looking to capitalise on long-term growth in the U.S. market.
By Tim Lincoln Managing Director and Chief Investment Officer
As of 25 October 2024
For over 12 months now, the Lincoln U.S. Growth Fund has employed a tactical position to reduce portfolio volatility for our U.S. Growth Fund. This defensive approach has unfortunately coincided with an extraordinary risk rally, which has seen equity markets globally push through all-time highs.
The basis for our defensive positioning was predicated on the Fund team’s assessment that earnings in 2024 were unlikely to experience any meaningful growth in the face of sticky inflation, tight monetary policy and sluggish economic growth. Whilst inflation has remained stickier than expected, and the Federal Reserve have only just in September begun a monetary easing cycle, the U.S. economy has been somewhat more resilient than expected and earnings across the S&P500 have been steady. But investor enthusiasm to add risk has manifested with Price-to-earnings multiples near 25-year highs.
We are observing a situation where valuations have almost never been more stretched and major geopolitical tensions are looking likely to escalate further. The Fund team therefore believe that the prudent approach is to continue holding some protection in the portfolio and mitigate significant drawdown risk for our unitholders if events in the Middle East deteriorate further. However, there has been a progressive improvement for the inflation outlook whereby most global central banks have begun an easing cycle for monetary policy. If inflation continues to trend towards target, this should foster a more balanced environment for corporate earnings growth in the year ahead. So, the Fund team intend to progressively reduce protection and increase market exposure over the next six months to be fully invested in early 2025.
For more information, please contact our Fund Team at 1300 676 333
All Lincoln Indicators Managed Funds are established to provide investors with maximum peace of mind about the security of their investments. Not only do we invest in financially healthy companies that have a low risk of failure, but we also hold all client investments in a segregated trust with our custodian J.P. Morgan Chase Bank. Furthermore we are regulated by the Australian Securities and Investment Commission (ASIC) in Australia with strict regulatory requirements which govern exactly what we can and can’t do.
| Investment Type |
Lincoln U.S. Growth Fund Unhedged Exposed to currency risk |
Lincoln U.S. Growth Fund Hedged Protected from adverse currency fluctuations |
|---|---|---|
| Minimum Suggested TF | 5 Years | 5 Years |
| Minimum Initial Investment | $5,000 | $5,000 |
| Minimum Additional Investment | $1,000 | $1,000 |
| Management Fee (p.a) | 1.0% | 1.0% |
| Performance Fee (p.a.) | 20% of outperformance of the benchmark | 20% of outperformance of the benchmark converted to AUD |
| Entry/exit Fees | nil | nil |
| Minimum Withdrawal | $1,000 | $1,000 |
| Minimum Balance | $5,000 | $5,000 |
| Buy/Sell Spread | 0.25% / 0.25% | 0.25% / 0.25% |
| Distribution Frequency | Annual | Annual |
| Date of inception | 1 July 2020 | 1 July 2020 |
If you invest in the Unhedged fund, you are exposed to fluctuations in the Australian dollar. This can be a good thing if our dollar falls relative to the US dollar. For example, if you were invested in the Lincoln U.S. Growth Fund Unhedged and the value of the Australian dollar decreased relative to the US dollar, then the value of your portfolio would increase. Of course it can also work the other way around.
If you invest in the Hedged fund, we use strategies to offset the impact of currency fluctuations. This means if you invest in the Lincoln U.S. Growth Fund Hedged you are protected from the adverse impact of a rising Australian dollar. But equally, you don’t get to benefit from situations where the Australian dollar is falling.
If you have a strong view on where the Australian dollar is heading, you could favour one approach over the other.
Distributions are paid annually, with the option to reinvest or receive cash directly in to your nominated bank account.
No, the Lincoln U.S. Growth Fund has no minimum investment timeframe and you will not be penalised if you decide to redeem your funds within a short period of time. But we suggest a minimum of 5 years to allow an adequate timeframe for the Fund to deliver on its long-term objectives.
Lincoln U.S. Growth Fund Hedged: The performance fee is 20% p.a. of outperformance of the S&P 500 Accumulation Index (USD).
Lincoln U.S. Growth Fund Unhedged: The performance fee is 20% p.a. of outperformance of the S&P 500 Accumulation Index converted to Australian Dollars.
To discuss the future of your investments in detail, book in a free consultation with a Lincoln representative.
To discuss the future of your investments in detail, book in a free consultation with a Lincoln financial expert.
