Vanguard Australian Shares High Yield Fund
About this fund
Investors with longer term investment objectives often have requirements for regular income and capital growth, especially retirees or those approaching retirement. The Vanguard Australian Shares High Yield Fund combines a tax-effective income stream with the potential for capital growth in the one investment. Using 'dividend enhancement' techniques, Vanguard tilts the portfolio towards companies expected to pay higher than average cash dividends and franking credits.
What is the fund's investment objective?
The Vanguard Australian Shares High Yield Fund is a style-biased fund that targets a grossed-up dividend yield that is 1% above that of the S&P/ASX 200 Index (excluding A-REITs) before taking into account fund fees and expenses, whilst providing a return (income and capital appreciation) that is broadly in line with that index. Grossed-up dividend yield is calculated taking into account both cash dividends and associated franking credits.
The index
The S&P/ASX 200 Index (excluding A-REITs) consists of approximately 180 Australian equity securities (shares) and represents more than 92% of the value of all Australian-based companies (excluding listed property trusts) listed on the Australian Securities Exchange (ASX).
What is this fund's investment strategy?
Style-biased index funds can be managed by tracking style-biased indexes - such as published 'value' and 'growth' indexes - or by biasing the portfolio to a desired characteristic while targeting a broad market index. As there is no published index that is biased to the 'high yield' characteristic, Vanguard has selected the S&P/ASX 200 Index (excluding A-REITs) as the index for this fund and selects shares from that index for the fund's portfolio.
The fund will overweight the shares of some companies and underweight and even exclude others (relative to their index weights). Those positions do not reflect a view that some companies will outperform others. Rather, they bias the portfolio to the desired higher dividend yield and franking credit characteristics.
The return (income and capital appreciation) of the fund is expected to be broadly in line with the S&P/ASX 200 Index (excluding A-REITs). However, the fund's performance is likely to deviate further from the index than other Vanguard Wholesale Index Funds because shares for the fund's portfolio are not being selected with the aim of replicating the index but rather for their expected grossed-up dividend yield. Where an assumption about the tax rate is relevant to an investment decision - for example, decisions on participating in share buybacks - Vanguard will assume that investors are in lower tax brackets. The taxation consequences may not be the same for all investors.
Who this fund may suit
- Long-term investors (usually seven years plus)
- Investors seeking a tax-effective income stream
- Retirees or those nearing retirement
- Self managed super funds
- Investors drawing down an allocated pension
- Higher income earners using a gearing strategy
Important Information
Past performance is not an indication of future performance. Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263 / RSE Licence L0001335) is the product issuer. We have not taken your circumstances into account when preparing this publication so it may not be applicable to your circumstances. You should consider your circumstances and our Product Disclosure Statement (PDS) before making any investment decision. You can access our PDS at www.vanguard.com.au or by calling 1300 655 101. This publication was prepared in good faith and we accept no liability for any errors or omissions. We are the trustee of: Vanguard® Personal Superannuation Plan ABN 81 550 468 553/ Vanguard® LifeStrategy® Index PST - Conservative ABN 73 765 732 050/ Vanguard® LifeStrategy® Index PST - Balanced ABN 23 846 775 905 / Vanguard® LifeStrategy® Index PST - Growth ABN 95 836 361 772/ Vanguard® LifeStrategy® Index PST - High Growth ABN 61 378 605 876. © 2009 Vanguard Investments Australia Ltd. 'Vanguard', 'Vanguard Investments', 'LifeStrategy' and the ship logo are the trademarks of The Vanguard Group, Inc.
