Investment


Presentation Video

Gyrostat risk managed investing - lowest cost protection always in place

It can be applied to the following issues:

What are you doing to generate strong returns in volatile markets with your defensive assets?

The Gyrostat Absolute Return Income Equity Fund buys and holds ASX 20 stocks with lowest cost protection always in place with upside.  We have an 8 year track record of no quarterly capital draw-downs exceeding 2%, cumulative returns of 42% and regular income.  

We have sought investor feedback on our product positioning and value to their portfolio.  This process included a review of current and expected future market conditions, past and expected future returns, and income distributions. We continue to be committed to providing a 'hard' risk parameter, and the value of this approach was well recognised. It is our belief that a modest increase to our risk parameter is warranted, to a 'hard' quarterly 3%.  This should generate higher returns to our investors. Monthly NAV performance will be more variable, with enhanced returns in more volatile market conditions but lower returns in flat markets.

Returns have increased with more volatile market conditions, consistent with our guidance.

 Suitable investors:

  • Equity income in retirement:  regular income by pass through of dividends (minimum BBSW + 3% pa paid bi-annually)
  • Philanthropic investor:  direct cash distributions to your designated charity whilst maintaining control of your capital investment.
  • Conservative 'absolute return' asset allocation family offices, particularly in more volatile markets

What are you doing to prepare for market falls?

Gyrostat operates under investment mandate applying our investment risk management overlay.  Investors face a range of restraints on significant changes to tactical allocation but primarily capital gains tax implications.

Protection can utilise Australian indices such as XJO, be stock specific (largely within the ASX20) orany listed stock or EFT which has a liquid traded options market (international asset allocation).

The protection has a defined 'hard' risk parameter (eg. no quarterly losses to exceed 5%) and is typically funded by the most recent dividend.

Progression of investment risk management

There have been significant advances in risk management approaches for conservative investors.  Each level reduces the downside variability of investment capital with complementary return characteristics.

By combining these three levels conservative investors can protect and grow capital with reliable income through the complete investment cycle.

The variety of risk management approaches have complementary risk and return characteristics through the investment cycle.

  • Asset allocation:  Income and growth assets
  • Protection sometimes in place using predictive risk management overlay - additional growth asset benchmark equity index
  • Protection always in place, the Gyrostat approach - stable and rising absolute returns with regular income.  Benchmark BBSW90 + 3% pa

Risk managed investing is particularly important during high PE periods/later stage bull markets.  The risk of a major correction is elevated - we are now in the longest bull market since WW2.  Most large corrections occur within 8 years, we are now at year 11, with the longest on record 13 years.  

i) Volatile markets provide more profit opportunities to participate in share price upside and protect on share price falls

ii) Gyrostat always has additional downside protection in place in case of large market falls

 

Our solution – protection always in place with upside return potential

With protection always in place we complement short term bonds and bench-marked against the absolute return bank bill swap rate BBSW90. Our expected returns vary with the stage of the investment cycle with capital growth in trending and volatile markets, as this provides the opportunity to re-set protection levels and lowers the costs. 

Traditionally protecting your portfolio was expensive. Gyrostat has overcome this issue by actively managing ASX options, utilising proprietary software and taking advantage of reduced broker costs due to deregulation.  We are always fully invested in blue chip high yielding shares and protect downside with lowest cost alternatives on the ASX.  

 

Gyrostat three step investment approachhockey chart 01

Super impose a 'hockey stick' pay off at all times on a share price chart, moving the protection level on market moves. 

  1. Buy and hold blue chip shares with protection on the Australian Stock Exchange
  2. Set the amount of protection to always participate in the upside with minimal capital at risk
  3. Re-set the protection level on market moves - if the share price rises increasing protection level, on falls reduce protection level 

Business Model "How we invest"


Unit Trust

Investors purchase units in “Gyrostat Capital Stability Income Fund”.

The fund net income is dividends and franking credits less expenses and the cost of protection.

Stock Market ASX

The fund simultaneously buys stock and enters ASX options market

Stocks are “buy and hold” to generate dividends and franking credits

Options Market ASX

For hedging risk only we use calls and put options to grow your investment when markets rise, and protect your investment when markets fall.

Daily management to restore risk-return profile from market movements

Technology & Deregulation

Software continuously monitors price movements to identify “least cost” alternatives to restore risk-return pay-off from market moves.

Deregulation enables low cost transactions