Benefits of investing in the Grant Samuel Epoch Global Equity Shareholder Yield (Unhedged) Fund

Benefits of investing in the Fund include:

• Access to a portfolio of high quality global companies with attractive income and capital appreciation potential;
  
• Portfolio holdings generate strong free cash flow and use their excess cash to provide shareholder yield - dividends, share buybacks and debt pay downs - without taking undue business risk;
  
• Active management by an experienced investment team;
  
• Risk management integrated with the investment process;
  
• Aims to distribute quarterly; and
  
• Governance of the Fund in accordance with its Constitution and the Corporations Act.
  

Risk level

High

Compared to an investment in funds that have invested in assets such as fixed interest or cash there is a relatively high risk of the value of your investment going down in any year.

Investor suitability

The Fund is designed for investors who want a medium to long term exposure to a portfolio of high quality global companies with attractive income and capital appreciation potential, and who are prepared to accept the risks of the Fund set out in Section 4 of the PDS.

Fund overview

The Fund is designed to seek attractive total returns with an above average level of income from a diversified portfolio of global companies that are sustainably growing their free cash flow year after year, and returning that cash to shareholders through consistent or increasing dividends, share buybacks and debt reduction. Epoch defines these uses of free cash flow as shareholder yield'.

Investment strategy

Epoch defines a shareholder yield strategy as one that focuses on companies with a consistent track record of delivering cash dividends, share buybacks and debt reduction to shareholders — these three factors are collectively known as shareholder yield'. Through employing such a strategy, Epoch believes it can produce superior risk adjusted returns.

Epoch's shareholder yield strategy is encapsulated by a 9% solution', which defines an aspirational return from investing in a diversified portfolio of companies that generate, at minimum:

• a 4.5% yield from cash dividends

• an additional 1.5% from share repurchases and debt reduction

• an underlying cash-flow growth rate of 3%.

The fund at a glance

• A diversified portfolio of 90-120 global companies with attractive income and capital growth potential
  
• Risk management is integrated into the investment process and seeks to achieve the least possible volatility for the return characteristics sought
  
• Complements other global equity strategies that primarily focus on traditional valuation methods and capital appreciation
  
• Suitable for investors seeking income; generally provides a tax-effective income (yield + low turnover)
  
• Highly regarded by research houses: Epoch was one of two finalists in the 2016 Professional Planner / Zenith Fund Awards for this strategy.

How we invest your money

Investment process

The investment process starts with an initial screen of approximately 14,000 stocks, using proprietary quantitative research metrics consisting of 11 criteria; stocks must meet all 11 criteria to be considered for fundamental analysis.

This is followed by a rigorous bottom-up approach that focuses heavily on free cash flows; on average, Epoch considers 150-250 stocks for fundamental analysis, which focuses on identifying companies paying high and sustainable returns to shareholders.

Interviews with company management are a key component of the investment process and Epoch personnel typically meet with more than 2000 companies each year.

Before making an investment, Epoch analyses a company as if it were looking to purchase the entire business. The Fund invests in businesses with understandable operating models, transparent financial statements, and a proven ability to generate free cash flow.

By actively seeking companies with strong shareholder yield characteristics, Epoch's goal is to construct a portfolio of 90-120 stocks that will achieve a higher level of yield than other income options, as well as capital growth.

Asset classes and asset allocation ranges

(Asset: Minimum-Maximum)

• Cash*: 0-10%

• Equities**: 0-90%

* Including cash equivalents such as other investment grade interest-bearing securities.

** The investment guidelines provide an indication of the intended holdings in the Fund and may be higher or lower from time to time.