MARRIOTT DIVIDEND GROWTH FUND
* Raging Bull Award for the Best Broad-based Domestic Equity Fund – the top-performing fund on straight performance in this category over three years to December 31, 2010
* Certificate for the Best Domestic Equity General Fund on straight performance over three years to December 31, 2010
Reliable, growing dividends helped the Marriott Dividend Growth Fund to weather the recession in good shape and emerge as the leading broad-based equity fund over the past three years.
The fund won the Raging Bull Award for performance that saw it return 14.37 percent a year over the three years to the end of December. This was the highest return among the funds in the domestic equity general, value and growth sub-categories over this period.
Among all domestic equity funds over the three years , only the Satrix Divi Plus Fund out-performed the Marriott fund, with a return of 16.95 percent a year.
Index-tracking funds, such as the Satrix Divi Plus exchange traded fund, do not qualify for Raging Bull Awards, which are made to active fund managers only.
The All Share index returned 6.47 percent a year over the three years to the end of December last year, and the average return of domestic equity general funds was 4.58 percent over the same period.
Marriott focuses on generating a reliable income for its investors. The Dividend Growth Fund does this by investing in shares that produce reliable dividends, and these companies tend to produce lower-risk returns, Marriott says.
The fund typically invests in industries such as banking, pharmaceuticals, food, clothing and telecommunications.
The Dividend Growth Fund does not necessarily seek out shares with the highest dividend yields but rather those that can provide a reliable income. Marriott also believes it is important that the price paid for the dividend flow is at an acceptable level.
Compared with other equity funds, the Dividend Growth Fund has a low-risk approach, which was reflected in its good rating based on risk-adjusted returns. It scored the highest PlexCrown rating of five crowns for the five-year period ended December 2010 and was ranked third on risk-adjusted measures among its domestic equity general peers.
Marriott’s low-risk approach often results in other domestic equity funds, whose managers take greater risks, out-performing Marriott’s funds on straight performance over shorter terms.
The Dividend Growth Fund avoids shares with unpredictable revenues, such as commodity or construction counters, and will under-perform during commodity or construction booms.
However, during the recession that began after the 2008 credit crisis, Marriott’s steady income growth approach paid off handsomely.
Duggan Matthews, a member of the team that manages the Dividend Growth Fund, says avoiding poorly performing resources shares is the reason for its top ranking.
He says Marriott can take some credit for seeing the recession coming some three years ago. It adjusted the fund’s exposures away from the banks and into companies that provide necessities that consumers continue to buy in a recession, Matthews says.
Marriott says in a recent press release that over the seven years since 2003, investors in the Dividend Growth Fund have experienced an average increase of 12.5 percent a year in the income they have earned from the fund. This growing income makes the fund a good one for retired investors who need a regular tax-free income, growing at a rate greater than inflation, and who can afford some capital volatility that comes with investing in equities.
Marriott is of the view that the current market is expensive.
However, the Dividend Growth Fund is invested in shares that are likely to offer steady returns regardless of market volatility, Duggan says.