RDV
RUSSELL HIGH DIVIDEND AUSTRALIAN SHARES ETF
Investor case study
Sam the stock picker
Sam is age 35.
INVESTMENT PROFILE: Wealth
accumulator with an aggressive risk
profile who is interested in opportunistic
investments.
INVESTMENT NEEDS: Sam wants a cost
effective investment which complements
his current direct equity portfolio
and which can be easily traded.
Diversification is also an important
issue for him.
How RDV can improve diversification of a
direct shares portfolio
Sam currently holds 10 direct stocks in his portfolio and these are
predominantly resources stocks. He is aware that his portfolio
is overweight in the resources sector and that to reduce his risk,
he needs greater diversification.
Solution
As Sam wants to maintain his exposure to growth investments, his financial adviser
has suggested an exchange traded fund (ETF) like the Russell High Dividend
Australian Shares ETF (ASX code: RDV).
What are the benefits for Sam?
1. DIVERSIFICATION
By investing in RDV, Sam can instantly access a portfolio of around 50 stocks in just
one trade. This invtestment strategy is a quick and easy way for him to diversify his
domestic equity exposure.
2. TRADES LIKE A SHARE
As RDV is listed on the Australian Securities Exchange (ASX), he can easily trade it,
providing him with the liquidity and full portfolio transparency he needs.
3. COMPLEMENTS HIS EXISTING PORTFOLIO
Sam’s current portfolio is comprised of 80% resources stocks and 20% financial
stocks.
While he likes the resources ‘story’, Sam wants more diversification to help reduce
his risk and smooth out his overall portfolio returns. Due to the dividend focus of
the portfolio, RDV is essentially underweight the low-dividend paying resources
sector. This means that, it is an ideal investment to complement Sam’s other direct
resources holdings.
Sam’s financial adviser has suggested that he restructure his portfolio so that 60%
of his assets are invested in RDV.
The balance of his holdings can be used to stay overweight resources. He can fund
this strategy by using some of his existing cash savings or he can sell some of his
existing portfolio on a pro-rata basis.
In addition to this, Sam can view the full list of RDV holdings on a daily basis from
the Russell website.
TO LEARN MORE ABOUT RUSSELL ETFs
VISIT WWW.RUSSELL.COM.AU/ETFS OR EMAIL [email protected]
Current portfolio
New portfolio
 Financials
 Materials
 Consumer Staples
 Industrials
 Consumer Discretionary
 Telecommunication Services
 Utilities
 Energy
 Health Care
 Property Trusts
By allocating 60% of his portfolio to RDV, Sam increases the level of diversification in his portfolio.
Financials
Newhas
portfolio
He now
portfolio holdings of around 60
stocks
and broader exposure across multiple sectors.
 Materials
4. DIVIDENDS
 Consumer Staples
While Sam is not overly focused on dividend income given he is in the accumulation phase of his life,
 Industrials
dividends can still provide benefit to his investment strategy:
 Consumer Discretionary
› Partial reinvestment – Sam can elect to partially
reinvest his dividends
through a dividend reinvestment
 Telecommunication
Services
plan (DRP). This will enable him to continue to grow his portfolio and he can use the cash from the
 Utilities
balance of his dividends to offset other investment expenses. These expenses can include self managed
 Energy
super fund fees or gearing expenses associated
with margin lending or instalment warrants.
 Health Care
› Full reinvestment – Sam can reinvest all his dividends in a DRP which will provide a large boost to his
 Property Trusts
wealth accumulator strategy.
Sam may also look to use RDV to implement a gearing strategy in
 Financials
his portfolio
 Materials
USING DIVIDEND STRATEGIES TO FUND A LEVERAGED PORTFOLIO
 Consumer Staples
RDV is also an ideal tool for Sam if he is looking to borrow to fund the investments in his portfolio.
 Industrials
This is because:
 Consumer Discretionary
› RDV is comprised of a diversified portfolio of stocks with full transparency
 Telecommunication Services
› RDV
a high level of liquidity and is tradable through his broker
 has
Utilities
Energy
› theincome
distributions from RDV can be used to cover the borrowing costs associated with margin
 Health
Care warrants
lending
or instalment
 Property Trusts
› the franking credits from both paid and reinvested distributions can be used to offset his tax liabilities.
For more information about Russell ETFs visit www.russell.com.au/etfs
or email [email protected]
The Russell High Dividend Australian Shares ETF tracks an index that is weighted towards companies that are expected to deliver dividends higher than the market
average, however high dividends cannot be guaranteed.
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS License 247185 (RIM). This communication provides general information only and has not
been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information
is appropriate to your objectives, financial situation and needs. Any potential investor should consider the latest Product Disclosure Statement (PDS) for the Russell
High Dividend Australian Shares ETF (RDV) in deciding whether to acquire, or to continue to hold, units in RDV. Only persons who have been authorised as trading
participants under the Australian Securities Exchange (ASX) Market Rules can apply for units in RDV through the latest PDS. Investors who are not Authorised
Participants looking to acquire units in RDV cannot invest through the PDS but may purchase units on the ASX. Please consult your stockbroker or financial adviser.
R_PDS_ETF_RDV_CSTDY_DirectShares_V1F_1006 MKT/2444/0410