The Fund seeks to achieve the investment objective by investing in companies listed on the ASX that Aurora expects will pay franked dividends. These companies will either already pay franked dividends or currently hold franking credits and may pay dividends in the future.
Aurora may achieve its goals through acquiring securities in any ASX listed company, including an ASX listed investment company (LIC). Where securities in a LIC are purchased, they will typically be purchased at a discount to their underlying net tangible assets (NTA) per security. Aurora believes that purchasing LIC securities that trade at a discount to their NTA per security will assist in reducing volatility whilst increasing the gross dividends received on the investment. Aurora may seek to actively engage with the management of its investee entities to assist in realising underlying value and/or franked dividend income.
Investments will be actively managed and selected at the discretion of Aurora. Returns of the Fund are targeted from a combination of both dividend income and capital growth. The Fund may also short sell securities (e.g. by borrowing those securities and selling them) to achieve its investment objectives and/or to reduce part of the Fund’s equity market exposure.
Selling borrowed securities may reduce the risk of loss from adverse market movements. This risk reduction is expected because most ASX traded securities are positively correlated. That is, on average, their prices tend to go up and down together. Consequently, when the market falls, we expect the value of the securities the Fund owns (the long securities) will fall. Similarly, when the market falls we expect the value of the securities the Fund is short will rise. When the market falls, the profit on the short securities is expected to partially offset the loss on the long securities. The extent of this offset will depend upon the value of the short securities relative to the long securities and the extent to which the short securities and long securities are correlated. The opposite is expected to occur when the market rises.
The Fund seeks to provide investors with access to:
- Dividend income and capital growth/return
- Access to franking credits
- Regular distributions