Originally Posted by
Lizard
I'm normally not a fan of companies that pay divs out of capital. However, as I argued some time ago on the MLN thread, in this case I find it quite useful (I hold MLN, not BRM).
I don't consider BRM or MLN as a share in itself, but as a managed fund. In my view, managed funds are a shortcut for the bits of your portfolio you don't want to spend a lot of time on and are willing to pay someone else to spend the time. For those that invest in managed funds via some kind of platform or adviser, using MLN may be no more efficient than any of the other funds available. However, for those who don't want to pay for an adviser or platform on top of their management fee, MLN (and BRM/KFL) is easy to buy and sell on-line and offers the tax advantages of a PIE structure. Furthermore, for the large proportion of investors that draw down against their portfolio, a regular, reliable high dividend yield is ideal. Yes, it may come out of capital to some extent when annual returns are below the 8% returned but this SHOULD over time become income-smoothing rather than depleting - having listed at the peak doesn't help.
Try keeping a semi-consistent income while having your share portfolio tied up in the usual selection of low/no dividend funds and you would have to make quarterly sales of small parcels to get the same cashflow - a move which is probably both time consuming, impractical and possibly expensive.
Overall, I think there is a niche for this model. I'll be disappointed if Fisher Funds are ever influenced by the critics to drop the dividend policy in exchange for a lower or more fluctuating model. If you don't need the dividend for income, take the DRP and get the re-investment growth in your holding that way.
The one set of complaints I can relate to is whether their share-picking ability is any better than average. Though in the short term, enough discount to NAV can cover a few mistakes...