Benefits of investing
Diversification with administrative ease
Argo shares offer exposure to a portfolio of around 100 Australian companies and trusts via a single shareholding. This allows Argo shareholders to achieve diversification across the share market without the need to maintain and monitor a portfolio of different holdings. In addition, the administrative burden is eased, as you only receive dividends and correspondence from one company.
Low management costs and no fees charged to shareholders
Argo is internally managed and shareholders are not charged fees. The costs of managing the portfolio and administering the Company are borne internally and in the last financial year equated to 0.15% of average assets under management, a figure well below most other actively managed investment products
Opportunities for additional investment without paying brokerage
Once you become an Argo shareholder, and if you have a registered address in Australia or New Zealand, you can elect to participate in the Dividend Reinvestment Plan (DRP) or the Share Purchase Plan (SPP) when offered by the Directors. These plans allow you to increase your Argo holding by dealing directly with the Company, rather than through the share market, thereby saving brokerage charges. Participation in the DRP allows automatic reinvestment of your dividends into additional Argo shares, often at a discount to the market price. The SPP, which in recent times has been offered once a year, allows additional investment of up to $15,000 per annum. Details of any SPP offer are posted to eligible shareholders at the time of the offer together with an application form.
Long-term share price and dividend growth
Argo’s business objective is to maximise returns to shareholders through a balance of capital and dividend growth from a diversified Australian investment portfolio.
The investment team constantly monitors the daily noise in the share market and economy to take advantage of short-term market volatility in order to buy or add to existing holdings at attractive prices, which will help to grow the portfolio in the long run and provide share price appreciation and growing dividend income into the future.
A $10,000 investment in Argo shares on 1 July 2003 would have grown to a value of $31,702 at 30 June 2018, assuming the dividends paid are reinvested.
Tax-effective dividend income
Argo pays dividends to its shareholders out of the profit it makes from ‘harvesting’ the dividends and distributions received from the companies and trusts held in its investment portfolio. Argo has paid dividends every year since its inception in 1946, with the quantum of dividends influenced by fluctuations in the dividends and distributions generated by the portfolio. Since 1995, Argo’s dividends have all been fully franked. The extent of franking depends on the tax credits available to the Company.
In addition, some dividends include a Listed Investment Company (LIC) capital gain component, allowing certain shareholders to claim a tax deduction for a portion of the attributable part of the LIC capital gain component of the dividend. Details are provided on the dividend statement when applicable.
Closed-end listed fund structure
Some unlisted managed funds are forced to sell portfolio stocks when investors wish to redeem their units. As a listed investment company, Argo’s portfolio is separated from the activity of buyers and sellers of Argo shares as they trade with one another on the share market. This closed-end structure is ideally suited to building a long-term portfolio because Argo is not forced to sell desirable stocks in order to satisfy fund outflows.
If you wish to sell some or all of your investment in Argo, you simply sell the desired number of shares on the Australian Securities Exchange. Argo does not charge exit fees and your only costs will be brokerage charges payable to your share broker. As with other sales of shares, the proceeds will be available 2 business days later. (changed to T + 2 from 7 March 2016)
Transparency and corporate governance
As a public company, Argo’s operations are overseen by the Board of Directors on behalf of all shareholders. The Directors, other than the Managing Director, are elected by shareholders and are subject to re-election at the Annual General Meeting at least once every three years.
As a listed company, Argo regularly discloses up to date information to the public via Australian Securities Exchange announcements including: monthly net tangible asset backing (NTA) per share, twice-yearly financial results and a comprehensive Annual Report.