The Funds - Milford Asset

The Funds

Each Milford Fund has a particular investment focus, giving investors a range of options when they build their investment portfolio. It is also possible to invest in several Funds simultaneously, which provides diversification by broadening exposure to different types of investments. All Milford PIE Funds are actively managed by our experienced and award-winning investment team. 

The latest Monthly Review for the Funds can be downloaded here.

Conservative Fund

The Conservative Fund's objective is to provide moderate returns* and protect capital over the minimum recommended investment timeframe.

The fund is diversified, primarily investing in fixed interest securities, with a moderate allocation to equities.


Diversified Income Fund

The Diversified Income Fund's objective is to provide income and capital growth* over the minimum recommended timeframe.

The fund is diversified, primarily investing in fixed interest and equity income generating securities.

How does the Fund compare to bank deposits?

The Milford Income Fund aims to produce a premium to what investors can achieve in the bank. However, there are some important distinctions between the Fund and bank deposits which include:

  • Income returns are not fixed and will vary depending upon our distribution policy and income generated on underlying investments
  • The Fund invests into shares as well as fixed income investments, and thus has a higher risk profile than a bank deposit
  • The value of investments will rise and fall with movements in the value of underlying fixed income and share investments
  • Investors can withdraw their money at any point in time without penalty, unlike most fixed-term deposits
  • The Fund is diversified amongst a number of companies which will typically include bank investments
  • Distributions from the Fund are tax paid under current tax laws and investors do not need to include them on their tax return, (assuming investors select their correct PIR  tax rate)

An investment in the Milford Income Fund will be more volatile than bank deposits. It is important to note that Milford will only invest in securities where we believe that the Fund, and its investors, are compensated for the extra risk incurred.  If we cannot find attractive investments the Fund will hold a large portion of bank deposits or equivalent.

How is the Fund managed?

The Milford Income Fund takes an active approach to both investment strategy and selection of individual income generating investments (both fixed income and equity income investments).

The Fund has four principal areas where it can add value for its investors:

  • Interest rate management – deciding when to lock in higher rates by investing in longer dated fixed income investments
  • Allocation – between the different types of  investments depending upon the relative attractiveness from a risk and return perspective
  • Investment selection – selecting those investments which should outperform. 
  • Managing risk – the Fund actively manages risks through diversification of investments and ensuring investors are appropriately rewarded for the risk incurred.
What does the Fund invest in?

The Fund currently invests in four main investment sectors

  1. High Grade Fixed Income – these are securities which are rated BBB- or equivalent better by Standard and Poors or other rating agencies
  2. High Yield Fixed Income – these securities offer higher returns but potentially higher risk.  We ensure that investors are more than compensated for this risk before we make any investment
  3. Listed property companies – listed property companies in Australia and New Zealand
  4. High yielding listed company shares – these will be in shares of companies which Milford believe have the ability to pay attractive and sustainable dividends.

The Fund will increase or decrease the relative weight to each sector depending upon our view of the relative attractiveness of the investment with regard to risk and return. In normal times the Fund will have about 60% in fixed income investments (items 1 – 3) and around 40% in share investments. 

By investing in shares we believe we can generate capital growth for investors whilst delivering consistent income. However, shares may show greater variation in values over short time periods.

What income does the Fund currently generate and distribute?

The Milford Income Fund will pay quarterly distributions to investors around the 20th of the month in February, May, August and November. Additionally, investors may elect to “top up” distributions by selling units but must recognise this can reduce the value of their investment capital in the Income Fund.

The current distribution policy for the Fund is currently 1.60c per unit per quarter or 6.4c per unit per annum. This is lower than the before tax and fees rate being earned by the Fund as investors have no further tax to pay on any distribution

Please note that the total return investors receive will be a combination of distributions and changes in the value of the units due to movements (up and down) in the value of underlying investments. However no amount of return can be guaranteed and returns can be negative.

The distribution amount is different than the yield of investments in the Fund due to four main reasons:

  • The ability to provide smooth investment distributions to investors over a medium-term period. There will be periods where market rates may be above long-term averages and vice versa. 
  • The ability to provide some growth in distributions over time by adopting a more cautious distribution policy.
  • A buffer against any short-term negative movements in the value of fixed income and equity investments.
  • Movements in the unit price – leading up to a distribution payment the unit price may rise reflecting income generated over the period.  This means that the distribution yield maybe lower than the income being earned on investments

Milford will typically set a distribution rate that is lower than the actual income earned over time. However, where distributions are lower than income received this will be reflected in an increase in the value of units (assuming no capital movements in investments) and potentially higher distributions in the future.

The current yield of investments is noted in the monthly Fund update.


Balanced Fund

The Balanced Fund's objective is to provide capital growth* over the minimum recommended timeframe.

The Fund is diversified, primarily investing in equities, with a significant allocation to fixed interest securities.


Active Growth Fund

The Active Growth Fund's objective is to provide annual returns of 10%* over the minimum recommended timeframe.

The Fund is diversified, primarily investing in Australasian equities, with a moderate allocation to international equities and fixed interest securities.


Global Fund

The Global Fund's objective is to provide capital growth* through global investments over the recommended investment timeframe.

The Fund primarily invests in international equities.


Trans-Tasman Fund

The Trans-Tasman Fund's objective is to provide capital growth* by outperforming a mix of two relevant share market indices over the recommended investment timeframe.

The Fund primarily invests in Australasian equities.


Dynamic Fund

The Dynamic Fund's objective is to provide capital growth* by outperforming the relevant share market index over the recommended investment timeframe.

The Fund primarily invests in small to mid-cap Australasian equities.


* After management and administration charges but before tax and before the performance fees (if applicable).