How is the current volatility affecting the deployment of capital in WAM Income Maximiser (ASX: WMX)?
Recent market fluctuations have been creating opportunities to invest in high-quality companies at attractive valuations. Since we began deploying funds on 17 April 2025, we have invested around one third of the capital raised and are well ahead of schedule in investing the debt portion of the portfolio. We will continue to invest at the most strategic times over the coming weeks and months. With WAM Income Maximiser, we have the added benefit of being able to adjust the allocation between the two asset classes, high quality equities and fixed interest/corporate debt, to maximise risk-adjusted returns for shareholders.
In WAM Alternative Assets (ASX: WMA), how do you determine market valuations and compare them with listed assets on the ASX?
As a listed investment company, we are required to undertake a rigorous valuation process twice a year, aligned with our audited financial reporting obligations. This involves verifying and gaining comfort with the valuations of the underlying assets in our portfolio. We invest through specialist investment partners who also conduct their own valuation processes, and the methodology varies by asset class. Real estate and infrastructure assets are typically independently valued on a semi-annual basis. Private equity holdings are generally carried at cost in the first year, with independent valuations occurring annually thereafter. Private debt is held at amortised cost through the profit and loss statement. Interestingly, water entitlements are among the most straightforward to value, as they trade in an active and transparent market. While alternative assets differ from listed equities in terms of pricing frequency and transparency, we apply a disciplined and consistent framework to ensure valuations are robust and reflective of fair market value.
Managing allocating capital between different asset classes and time horizons can be difficult for retail investors. Can each panellist explain how you manage this? Geoff can you share your views on WAM Income Maximiser?
Each of our strategies approach asset allocation and investment horizons differently, depending on the nature of the underlying assets and the objectives of each fund.
WAM Alternative Assets adopts the longest time horizon, investing mainly in closed-end, illiquid structures. These assets are typically held for between three to eight years, depending on the asset class and opportunity. Due to the illiquidity of these investments, we adopt a long-term thematic approach and place significant emphasis on the quality and capability of our investment partners, as we are unable to exit these positions quickly.
Catriona Burns, Lead Portfolio Manager of WAM Global highlighted that the fund typically has turnover of 30-40% per annum, implying average holding periods of companies of two to three years. However, holding periods are determined by the investment process and the ability to continue to identify catalysts, so some stocks have been held for over five years.
Oscar Oberg, who oversees four of our equity LICs, explains that WAM Capital (ASX: WAM), WAM Microcap (ASX: WMI), WAM Active (ASX: WAA) and WAM Research (ASX: WAX), and the investment approach is consistent: we seek undervalued growth companies with a clear catalyst.
- WAM Active operates with a shorter-term focus, with portfolio turnover typically four to five times per year, reflecting its responsiveness to market-driven opportunities.
- WAM Research has a longer time horizon, generally holding positions for three to five years, underpinned by a disciplined research-driven investment process.
- WAM Capital blends the two—approximately 50% active and 50% research-based—resulting in an average holding period of three to four years.
- WAM Microcap follows a similar blended strategy, focused on smaller companies (market capitalisation under $300 million) and generally holds investments slightly longer than WAM Capital.
Matthew Haupt, Lead Portfolio Manager of WAM Leaders, highlights its dynamic portfolio weighting approach. While many holdings have remained in the portfolio for over three years, decisions are made daily based on new information. The fund’s high turnover—comparable to WAM Active at around 400–500% per annum—reflects its aim to capture short-term market movements by shifting between defensive and more cyclical exposures as market conditions evolve.
Geoff Wilson AO, commenting on WAM Income Maximiser, notes that the equity portion of the model portfolio typically comprises around 60% and is expected to have an annual turnover of approximately 100%. The strategy focuses on undervalued, dividend-paying companies within the ASX 300. The remaining 40% is generally invested in investment-grade debt securities, which are held for approximately three years on average. The portfolio structure may shift depending on market conditions but maintains a consistent focus on income generation and capital preservation.
The RBA is expecting to cut rates several times in 2025. Does this mean that it will result in a dividend cut for Wilson Asset Management LICs including WAM Income Maximiser?
Dividends are decided on by the Board of Directors of each of our LICs with consideration to investment portfolio performance and the profits reserve available, among other things. As such, RBA rate decisions do not directly influence the Board’s decision. However, if rate cuts were supportive of portfolio outperformance, this could increase the likelihood of a Board declaring higher dividends.
WAM Income Maximiser seeks to deliver a franked dividend yield of at least the RBA cash rate plus 250bps. By construction, our model investment portfolio covers most of this hurdle rate using the flow-through dividends and interest received from the underlying securities. Importantly, WAM Income Maximiser is not a passive vehicle, and we seek to actively manage interest rate risks on both the equity and debt sides of the portfolio, so that investors don’t have to.
In WAM Alternative Assets (ASX: WMA), do tariffs and interest rates have any flow on effects to alternatives?
U.S. tariffs are unlikely to have any significant impact on the companies and assets that WAM Alternative Assets invests in. For the few growth companies in the portfolio that sell products internationally, exports to the US are immaterial. While overall slower economic growth may have some indirect impacts on investments in the portfolio, it may also present opportunities for growth companies to acquire smaller competitors at cheaper prices. There will be minimal impact on our more defensive investments, such as infrastructure and healthcare real estate, which generate stable revenue through long-term contracts.
If as a result of these policy announcements we see monetary policy support in the form of interest rate cuts, the WAM Alternative Asset portfolio could benefit. This would make borrowing cheaper for the companies and assets we invest in and for potential buyers, likely leading to higher valuations and more opportunities to sell those investments at attractive prices.
As institutional investors, do you have influence over a company’s governance, for example WiseTech Global (ASX: WTC)?
Influence is largely a function of ownership size. In the case of WiseTech, in WAM Leaders we only held a small position which naturally limited our ability to exert meaningful influence. However, we did engage with the company to express our concerns, particularly around board composition and governance standards. That said, the more substantial shareholder pressure has come from large institutional investors such as Australian Super and HESTA, who collectively hold significant stakes and have taken a more active role in advocating for governance improvements. It’s worth noting that, despite the scrutiny, the company’s founder has managed to consolidate even greater control, demonstrating considerable influence. Ultimately, while smaller shareholders may have limited direct influence, ongoing engagement and alignment among institutional investors can help drive better governance outcomes over time.
How does the WAM Global (ASX: WGB) investment team determine geographical exposure?
The WAM Global investment portfolio comprises high-quality undervalued growth companies across North America, Europe, and Asia. While the investment process has a bottoms-up, stock specific focus, geographic exposures are considered during the portfolio construction process to capture thematic drivers and enhance diversification. When considering geographic diversification, a company’s look-through revenue and profit generation are prioritised over its country of domicile.
Will WAM Income Maximiser have a DRP?
Yes. We invite WAM Income Maximiser shareholders to increase their holding in WAM Income Maximiser by participating in the Dividend Reinvestment Plan (DRP), allowing you to grow your investment and compound returns over the long term.
If you would like to participate in the Dividend Reinvestment Plan (DRP) for WAM Income Maximiser, please access InvestorServe, a secure website operated by Boardroom Pty Limited, which allows you to view and manage details relating to your shareholding. If you are not already a registered user, you can do so through the InvestorServe website at www.investorserve.com.au. Once registered, select “Payment Instructions” from the left-hand menu and then “Reinvestments & Donations”. Click “Action” on the right side of the page to participate in the DRP.
Will WAM Income Maximiser invest overseas?
The WAM Income Maximiser investment portfolio will predominantly be comprised of high-quality Australian equities in the ASX 300 Index and primarily investment grade corporate notes and bonds, hybrids and short-term money market instruments. While the investment mandate allows for offshore investing, that is not the objective of the Company. We would only do so if there was a significant opportunity for shareholders and in this case, we would hedge currency exposures.
