About

Invest with one of Australia’s largest and most experienced fund managers

The Perpetual Equity Investment Company Limited (the Company) offers investors access to a portfolio of predominantly high quality Australian and global listed securities, selected by Perpetual Investment Management Limited (the Manager), one of Australia’s most experienced fund managers, and managed to provide regular income and long-term capital growth.

Why invest in Perpetual Equity Investment Company Limited?

Reliable income stream

A track record of delivering an income stream of fully franked dividends

Flexibility

Up to 35% in global securities and up to 25% in cash for diversification with the intention to add returns above the benchmark, or to manage downside risk

Ease of access via the ASX

With a single trade, PIC provides investors with easy access to an actively managed portfolio of Australian and global listed securities

Depth and breadth

As one of Australia's largest and most experienced investment teams, Perpetual conducts extensive company visits each year and makes decisions to invest in high quality and attractively valued securities based on fundamental, in-depth, bottom-up research

Active management

To vary the portfolio's exposure to equity market risk, and to enhance the value of the portfolio when opportunities arise both domestically and globally

Quality and value

Access to Perpetual's tried and tested quality and value investment process that assesses companies on 4 key quality criteria; quality of business, conservative debt, sound management and recurring earnings.

Transparency

Daily NTA published on the ASX to provide transparency of the portfolio

Key facts

Company name	Perpetual Investment Company Limited
ASX code	PIC
Inception	Listed on the ASX in December 2014
Structure	Listed investment company
Investment objective	To provide investors with an income stream and long-term capital growth in excess of its Benchmark over minimum 5 year investment periods.
Benchmark	S&P/ASX 300 Accumulation Index
Investment strategy	The Company’s investment strategy is to create a concentrated and actively managed portfolio of Australian securities with typically a mid-cap focus and global listed securities. The Company will typically hold 20 to 40 securities. 50% - 100%: Australian listed securities 0% - 35%: Global listed securities 0 - 25%: Cash, deposit products (including term deposits), and senior debt with less than one year to maturity (including any exposure to such investments gained by investing in managed funds). The maximum individual security limit is 15%. Currency hedging - Currency exposures may be hedged defensively but no attempt is made to add value to the Portfolio by actively managing currency. Derivatives are permitted The Company can hold up to 10% in unlisted securities, on condition that these securities are proposed to be listed on any recognised global (including Australian) exchange within 12 months. Borrowing does not form part of the investment strategy of the Manager, however, the Company retains the right to leverage up to 10% of the Portfolio’s net asset value at the Board’s discretion. The Company may not own more than 10% of any entity in which it is invested.
Management fee	1.00% p.a. + GST for the first $700 million of the portfolio net asset value, 0.85% p.a. + GST of the portfolio net asset value in excess of $700 million and less than or equal to $1 billion and 0.75% p.a. + GST of the portfolio net asset value in excess of $1 billion.
Dividend frequency	Half yearly. Under the Company’s dividend policy, the Board’s intention is that all dividends paid to shareholders will be franked to 100% or the maximum extent possible.

Foundation of the Company's investment strategy

The Company’s investment strategy is to create a concentrated and actively managed portfolio of Australian securities with typically a mid-cap focus and global listed securities.

It is the Manager’s view that the Australian equity market provides a concentrated exposure to the financials and materials sectors, with reduced opportunity in potential global growth sectors such as healthcare and information technology. The mid-cap focus refers to a typical preference for Australian listed securities outside the top 20 listed securities by market capitalisation. The allocation to global listed securities will be opportunistic in nature as the Manager believes opportunities will exist to purchase global listed securities at potentially cheaper valuations from time to time relative to Australian listed securities. The global listed securities are not expected to have any consistent capitalisation bias, but will typically be larger and more liquid than comparable Australian entities.

The investment strategy will take a high conviction approach, with a flexible mandate, offering a value and quality focus across both Australian and global listed securities. Whilst the portfolio will be concentrated in typically 20-40 securities, the Manager will diversify the portfolio across industry sectors and offshore investments.

Quality and value

The Manager will undertake fundamental, in-depth, bottom-up research to identify high quality and attractively valued securities using the Manager’s disciplined investment process. The fundamental bottom-up analysis utilised by the Manager is an investment process that focuses on identifying the quality and value of an entity through its fundamental value drivers.

The investment process first assesses companies on four key quality criteria:

Sound management
Conservative debt
Quality of business
Recurring earnings (where applicable).

The companies are then valued according to the differing nature of their business, and the securities are ranked from 1 (strong overweight) to 5 (sell). The portfolio manager then utilises the rankings and their own judgement to construct the Portfolio.

The Manager’s investment philosophy for this disciplined investment process has not changed for more than a decade. The Manager remains true to its investment philosophy through all market cycles.

The following table summarises the highlights and benefits of the key aspects of the Company’s investment strategy.

Key aspects of the Company's investment strategy	Highlights of these key aspects	Benefits
Core of quality Australian securities	The Manager has a proven track record of investing excellence in equities Access to the Manager’s proven investment philosophy & process Identify quality securities based on the Manager’s 4 quality filters	Proven equities experience
Up to 35% invested in global listed securities	Opportunity to add returns above the Benchmark return and diversification Leverage the Manager’s experience and expertise globally, with proven performance in global listed securities Local manager, with the Australian investor in mind	Opportunity to add returns above the Benchmark return
Up to 25% cash, deposit products and senior debt (including any exposure to such investment gained by investing in managed funds)	Flexible mandate to vary Portfolio’s exposure to equity market risk Exposure determined by the attractiveness and availability of securities	Flexibility to manage downside risk

Risks

All investments carry risks. The value of your investment may fall for a number of reasons, which means that you may receive back less than your original investment or you may not receive income over a given timeframe.

The value of the Company’s shares may decline significantly if the Company’s business, financial conditions or operations are negatively impacted and its shares may in turn trade below NTA on the ASX. In these circumstances you could lose all or part of your investment in the Company.

While it is not possible to identify every risk associated with investing in the Company, detailed below is a non-exhaustive list of the key risks that might affect your investment. For other key risks, please read the risks outlined in section 5 of the Replacement Prospectus. You should consider with a financial adviser whether the information about the Company is suitable for your objectives, financial situation or needs.

Risk factor	Description of risk
Market and economic events	Certain events may have a negative effect on the price of all types of investments within a particular market in which the Company holds securities, and may also have a negative effect on the value of the Company’s securities. These events may include changes in economic, social, technological or political conditions, as well as market sentiment. The causes may include changes in governments or government policies, political unrest, wars, terrorism, pandemics and natural, nuclear and environmental disasters. The duration and potential impacts of such events can be highly unpredictable, which may give rise to increased or prolonged market volatility. As a result, there can be no guarantee given in respect of the future earnings of the Company or the earnings and capital appreciation of the Company’s investments.
Value of investments and assets	The value of an investment in the Company or the Company’s investments may fall over the short or long-term for a number of reasons, including the non-exhaustive list of risks set out here, which means that you may receive less than your original investment when you sell your shares. A particular asset that the Company may invest in may fall in value, and result in a reduction in the value of the Company’s Portfolio and its shares. The prices of securities may be affected by the quality of the relevant entity’s management, the general health of the sector it operates in, its financial circumstances and government policy, as well as market and other factors.
ASX liquidity risk	Shares in the Company are listed on the ASX. Although liquidity is generally expected to exist in this secondary market, there are no guarantees that an active secondary trading market will exist at the time of selling shares. As a listed investment company, there is no regular redemption facility for shares.
Discount to net tangible asset value	The Company’s shares may trade on the ASX at a discount to net tangible asset value per share for short or long periods of time and the performance of the shares may not be correlated with the performance of the Portfolio.
Investment strategy risk	The Company’s success and profitability is very much reliant upon the ability of the Manager to devise and maintain an investment portfolio that complies with the Company’s investment objectives, strategies, guidelines, and the investments in which it is permitted to invest.
The Manager	If the Manager ceases to manage the Portfolio or the Management Agreement is terminated, the Company will need to identify and engage a suitably qualified and experienced investment manager to implement the Company’s investment strategy. This may take some time to address and involve transition difficulties and additional costs. The ability of the Manager to continue to manage the Company’s Portfolio may be compromised by such events as the loss of its AFSL or its non-compliance with the licence conditions of its AFSL and the Corporations Act. The Portfolio Manager (or other key personnel) involved in the management of the Company’s Portfolio may resign, or otherwise cease to be involved in the management of the Company’s Portfolio. This may require the Manager to find a replacement Portfolio Manager (or other key personnel), which may negatively affect the Company’s business and the ability to implement its strategies.
Portfolio concentration	The level of volatility in the Portfolio may fluctuate and the level of correlation with the Benchmark will vary (for example, because of the diversity of the Portfolio and the level of cash held over time). The lower the number of investments the Company holds at any point in time, the higher the concentration and, accordingly, the higher the exposure to changes in prices of individual investments.
Currency exposure	Securities and cash held by the Company may be denominated in foreign currencies. These currencies may move unfavourably against the Australian dollar and their value in equivalent Australian dollars may fall, which may impact the value of the Company’s Portfolio. The Manager expects the Company’s Portfolio will be typically unhedged.
Global exposure	For investments in global securities, the Company may be exposed to risks relating to its investment in the securities of entities located in a foreign jurisdiction, where the laws of those foreign jurisdictions offer less legal rights and protections to holders of securities in foreign entities in such foreign jurisdictions compared to the laws in Australia. Foreign countries may also be subject to different business cycles, government policies and geopolitical factors including pandemics, terrorism or warfare which may impact the value of global securities.
Future dividends and franking capacity	There is no guarantee or assurance that dividends will be paid in the future, or that dividends will remain at current levels or increase over time. To the extent that the Company pays dividends, the Company may not have sufficient franking credits in the future to frank dividends, or the franking system may be subject to review or reform. The value and availability of franking credits to a shareholder will differ depending on the shareholder’s particular tax circumstances and is subject to applicable tax laws and regulations. The Company's ability to pay a fully or partly franked dividend is contingent on it making taxable profits. No guarantee can be given concerning the future earnings of the Company, the earnings and capital appreciation of the Company's Portfolio or the return of your investment. The Manager may make poor investment decisions which may result in the Portfolio's return being inadequate to pay dividends to Shareholders.

Key documents

Replacement Prospectus dated 14 October 2014 Investor Notice - Increase in global allocation limit Investor Notice - amendment to Investment Obective