The First State Dividend Advantage Fund is an all-inclusive investment fund that includes environmental, social, and governance factors in its investment process. With more of its focus on governance, the Fund identifies quality companies defined by their financials, management, and franchise strength.
The FSSA Dividend Advantage Fund are long-term investors who measure the success of their investment in three to five years. Except for Japan, they provide investors with long-term high yield equities focused on the Asia-Pacific region.
What First State Dividend Advantage?
The First State Dividend Advantage fund aims to provide investors with regular distributions and long-term growth while investing all or most of its assets in the FSSA Asian Equity Plus Fund. It has an underlying Sub-Fund that invests primarily in equity investments or equity-related listed companies (almost 70% of its net asset value). It also invests in companies that have offices or conduct most of their businesses in the Asia Pacific.
How Does First State Dividend Advantage Work?
The First State Dividend Advantage Fund adopts a bottoms-up approach centered in detailed fundamental analysis to help them identify well-performing companies to invest in for the long run. The Fund looks for effective management teams in companies and a strong competitive advantage.
The Fund also adopts an agnostic style where it may or may not display growth or value characteristics. Their main focus is to purchase sensibly-priced companies with a sustainable long-term growth projection.
Due to the nature of their investments, they tend not to change their positioning in the market. The Fund also performs exceptionally when during volatile markets. The Fund’s investment strategy has allowed it to outperform its competitor by over 400 basis points annually for the past three years on an annualized performance basis.
In short, the FSSA Dividend Advantage fund is a research-driven bottoms-up investment platform that identifies well performing companies, then purchase them at a sensible price, and holds them in the long term. They are actively involved in the management of the companies, which allows them to raise legitimate concerns and guide the administration to address the issues that need attention, therefore to add to portfolio performance.
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Should You Invest in First State Dividend Advantage?
Yes. The FSSA Dividend Advantage fund is a convection-driven portfolio with high-quality Asian equities. It has also consistently had a strong performance since its inception in 2004. The Fund invests in the Irish domiciled First State Asian Equity Plus Fund is designed with the bottom-up research process.
The process involves identifying quality companies with a reasonable valuation and with key characteristics such as:
- Sustainable growth trajectory.
- Quality of management.
- Strength of the franchise and its balance sheet.
The funds result in a portfolio with 55-70 names that often include the off-benchmark positions. Investors use this Fund to diversify to broader, index-like Asia investments. Martin Lau, its project manager, has overseen the Fund’s strategy since 2003 before its funding and has a wealth of experience of over 25 years in the industry. He has a team of over 20-members of investment professionals with more than 11 decades of experience combined.
The Fund has a strong proven performance over the multiple market cycles while consistently outperforming its benchmark while ranking as the top funds of its peer groups with exceptional resilience.
Pros
Here are some of the reasons why you should consider investing in the First State Dividend Advantage:
1. Offers an Opportunity to Tap into The Asia Region
Asia is among the largest contributors of wealth globally since most advanced economies are recovering from the global financial crisis. Asia has over 4.5 billion, which is almost 60% of the world’s population. Its increased income and level of urbanization have helped boost consumption and created domestic champions. The region has increased R&D spending with a lot of focus on innovation, leading to globally competitive leaders.
2. Growth of The Middle Class
Domestic consumer brands have boosted the growth of the region’s middle class. A great example is Vitasoy International. It is a conservative foods company with over 70 years in the Asian market.
Vitasoy has a strong franchise in Hong Kong and plays an important position in other markets in the Asia Pacific ex Japan regions. It is well-positioned to tap into organic food and plant-based protein. The company also has strong brand equity, producing premium product pricing with decent margins.
Its expansion will provide an additional future growth driver.
3. The Fund Invests in Pharmaceutical Companies
The First State Dividend Advantage has invested in CSL; a leading biopharmaceutical company primarily focused on vaccines and plasma therapies. The company has had a stable management team and an exceptional track record.
Most of its revenue is generated from overseas markets. North America currently dominates the market shares, but Asia, China to be specific, is expected to be the fastest-growing market over the next decade due to its aging population.
Cons
1. Holds Risks
The Fund holds some risk just like any other investment. The value of your investment can go up or down, and you might not get back your total assets. It is important to note that past performance is not indicative of the future performance
2. Change in Exchange Rates
Rates of exchange can also affect the value of the investment made hence affecting your income.
3. Individual Stock Does Not Fully Represent the Return of the Fund
Different factors substantially affect the return of the Fund other than the price of the individual stock. The returns depend on all the baskets of stores in the Fund.
How Do I Invest in The Fund?
You can invest in the FSSA Dividend Advantage Fund through FSSA Investment managers or any other fund manager that offer the fund in their portfolios licensed by the Monetary Authority of Singapore. Most managers will provide accurate and timely information, but at times there may be technical or factual inaccuracies, typographical errors, and inadvertent delays.
Here are the key features of the Fund:
- Investment style: Large Blend
- Minimal initial investment: S$1,000
- SEC Yield/TTM Yield: -/4.35%
- Turnover: 1,248%
- Investment products: Securities
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Conclusion
Managed by the FSSA Investment Managers, the FSSA Dividend Advantage Fund has delivered an exceptional track record over the thirty years it has been on operations. The Fund utilizes the bottom-up fund mandate while investing in the Asia Pacific region excluding Japan.
Key Takeaways
- The Fund offers a portfolio with high-quality Asian equities.
- The FSSA Dividend Fund has had an exceptional performance since its inception.
- The Fund does not target dividend yield since it only invests in stocks with forecasted dividend growth and long-term capital appreciation.
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