Events Trades

ASX Event Portfolio: About

15 Nov 2019
This is one of our oldest portfolios and seeks to profits from corporate actions, particularly takeovers. The return profile suits relatively conservative investors who are looking for a modest return with minimal volatility.

About the Portfolio

The portfolio invests in listed ASX equities that are undergoing some type of corporate action. There are three main types of event that we seek to profit from, these are:

  1. Takeovers
  2. Share buybacks
  3. Company wind-ups

While takeovers make up the majority of the trades, we are always on the lookout for profitable corporate action opportunities. The number of trades is dependant on the activity in the market but typically we expect an average of 10 trades per year with a holding period per trade of three to four months. The return per trade varies but averages around 2-3% which produces annualised returns of approximately 6-12% per trade. Some trades are intended specifically for people in low income tax vehicles (such as super funds) where the trade relies on obtaining a refund of franking credits. These trades can be quite profitable but generally should not be undertaken by people who pay a marginal tax rate of above 15%.


How To Follow This Portfolio

Our portfolios are designed to be as easy as possible for investors to follow. To follow the ASX Event Portfolio, investors need to buy the securities in the above table for which there is still an open recommendation (do not buy into recommendations that contain ‘hold’ or ‘sell’ in the recommendation text column). The volumes shown in this table are based on a $5,000 investment per trade.


Investment Characteristics

The ASX Event Portfolio has been run in its current form for over 5 years which has allowed us to gather performance statistics based on historical closed trades. The table below shows these statistics that are compiled on a per trade basis.


Construction A portfolio of ASX listed stocks undergoing a corporate action for which there is an arbitrage opportunity
Management Positions are added and closed on an ad hoc basis
Average Return Per Trade* 6.6%
Percentage of Profitable Trades* 75%

* Based on closed trade data over the past five years


Minimum Investment Amount and Period

There is no specific minimum investment amount although the minimum brokerage charged by your broker can put a practical limit on the minimum investment size. For example, if your broker charges a minimum of $10 per trade, this would represent a 0.5% charge on a trade size of $2,000 (portfolio size of $20,000 for 10 stocks). Given that the profit per trade can be in the range of 1-5%, this level of brokerage charge would be considered the maximum acceptable. Members should therefore aim to put at least $2,000 into each event trade.

Our analysts generally recommend members invest with a long term time horizon however the conservative nature and short duration of a typical event trade means that a relatively short time horizon (e.g. one year) can still produce an acceptable result.


Fees and Charges

Our advice product attracts a fixed annual subscription fee that does not depend on the amount invested. Other than this, the only fees and charges relate to those charged by your broker for trading. Under this model, the more funds you invest in our portfolios, the lower the annual cost on a percentage basis. This portfolio is also offered in a Separately Managed Account version for which you pay a small management fee for us to follow the portfolio on your behalf.



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