3 Dividend-Paying Australian Equity Mutual Funds

Australian equity mutual funds provide diversification to a traditional investment portfolio. Investors looking to diversify their portfolios while receiving high dividend yields should consider the AMP Capital Equity Income Generator Fund (40660.AX), the T. Rowe Price Australian Equity Fund (19448.AX) and the Aberdeen Australian Equity Fund (5685.AX). All information presented here was accurate as of Oct. 5, 2018. 

AMP Capital issued the AMP Capital Equity Income Generator Fund in 2013. The fund aims to provide dividend income that is greater than that of the S&P/ASX 200 Accumulation Index, its benchmark index. The dividend income includes franking credits or credits that return taxes the company paid on corporate profits back to the shareholder. The fund aims to provide an average annual yield of 6% to 8% over the long term and has an annual management fee of 1.10%.

The AMP Capital Equity Income Generator Fund focuses primarily on high dividend–paying sectors. About half of its top holdings are in the financial services sector, and sectors for other fund allocations include real estate, communications services, and consumer cyclical. The fund has total net assets of AU$22.42 million, or US$15.82, and has a minimum investment of $10,000.

The T. Rowe Price Australian Equity Fund aims to provide long-term capital appreciation by holding a diversified portfolio of Australian equity securities. The fund has outperformed the S&P/ASX 200 Index, its benchmark index, with an average annual return of 11.83% since its inception in 2012.

If investors choose to invest directly with T. Rowe Price, there is no minimum investment requirement. However, if investors do not invest directly with T. Rowe Price, there is a minimum initial investment requirement of AU$500,000, or US$352,750, which is extremely high for the average investor. The fund charges an annual management fee of 0.60%.

The T. Rowe Price Australian Equity Fund has total net assets of AU$36.30 million, or $US25.61million, and 33 holdings. About a third of the fund's top holdings were in the financial sector, and sectors for other fund allocations include real estate, consumer discretionary and materials.

Although the Aberdeen Australian Equity Fund does not offer yields as high as those of the T. Rowe Price Australian Equity Fund and the AMP Capital Australian Equity Income Fund, it had a yield of 3.96% as of Oct. 5, 2018, and has achieved an average annual return of 7.40% since its inception.

Aberdeen Asset Management issued the Aberdeen Australian Equity Fund in 1999. The fund seeks to outperform the S&P/ASX 200 Accumulation, its benchmark index, over rolling three-year periods. To achieve its investment objective, the fund invests at least 65% of its assets in equities of listed on the Australian Stock Exchange (ASX) that have increased earning potential and the potential for capital appreciation.

The fund has total net assets of AU$141.20 million, or $US99.62 million. About a third of the fund's top holdings were in the financial sector, and sectors for other fund allocations include health care, materials, energy and industrial.