Three ASX stocks for stable income in choppy markets

Hans Lee

Livewire Markets

Let's not mince words - the window of publicly available investment ideas has been narrowing for some time. As interest rates rise by multiples of market expectations and inflation continues to be a thorn in everyday life, many investors continue to hold their cash back for when the picture is clearer. 

Indeed, a runner's tailwinds have become headwinds. 

In contrast, contrarians see the world in the opposite light. To them, the correction has provided a major buying opportunity. In fact, some investors think that the market has now capitulated and that a fresh uptrend is on the horizon.

So what camp does Anthony Golowenko of MLC Asset Management belong to? Listen in to this latest edition of Expert Insights and find out. We'll discuss the investing environment, how you can access portfolio protection through alternative assets, and where he is finding stable income amidst the ASX equity universe.

Watch the video or access our edited transcript below.

EDITED TRANSCRIPT

LW: How difficult has it been to invest in this market given rising rates and souring sentiment?

Anthony Golowenko: The market environment we've seen over the recent three months and calendar year to date for sure has been difficult. I think the context around that though if we look back over the past two years has been an incredible amount of stimulus and for investors in financial markets this has been a real benefit. 

Maybe in a simple way, the analogy of running down a hill with the wind at your back, we're now in a period that the wind has turned into a slight headwind. 

We've gone through a flat and maybe we've got a slight incline, but certainly, it's a more difficult environment for investors to rethink and recalibrate their portfolios.

LW: Is now the time for aggressive gains or portfolio protection? 

Anthony Golowenko: Given the uncertainty in the market environment, we certainly wouldn't see it as a time for aggressive high-growth investing potential. 

Portfolio protection can come in various forms and for our portfolios in the private markets and alternative space, something like insurance-related investments, which themselves have low or essentially no correlation to equities, can be really valuable.

The growth assets and over time, we really do still need that in our portfolios. The nature or changing dimension in that recalibration ultimately comes back to more focus on cash flow, strong revenues, and those that have a linkage to inflation.

LW: Have we reached capitulation in the markets?

Anthony Golowenko: The contextualisation of the past two years, we're going down a hill, we're flying down a hill, the support of capital for those businesses of long duration, the potential hyper-growth disruptors, it's clearly more difficult. 

Maybe for investors at home thinking about the experience they've had over the year to date or recent months, I think that gives a really good account of the level of diversity, the level of genuine diversification, and noting traditional fixed income really have struggled. Long maturity, all maturity assets have found it very difficult. 

So, recalibrating portfolios to both provide participation on the upside and also protect on the downside - that's how we're thinking and constructing our portfolios.
LW: Where are you finding opportunities to make sustainable income?

Anthony Golowenko: That example of insurance-related investments, after fees on average over time would deliver in the order of 5% to 6% per annum. Now that maybe not be overly exciting, what makes it exciting and valuable in the portfolio is the low correlation. 

Another area that we are looking at is investment-grade credit. So, stepping out there where the yield curve has moved quite substantially. In our portfolios, we see that as an opportunity. 

Within the equity space, private market, and public markets, there's what I'll term maybe an 'equity influence' really pressing on some of those prices. So, what we'd see in our portfolio quality Charter Hall Retail, Centuria Industrial has been beaten up a bit, but we see them executing really, really well. And in the agricultural space, Rural Funds that deliver a yield at or around have executed around 4%, but that growing at 4% per annum becomes valuable over time.

Learn more

MLC Asset Management's portfolios combine their best thinking on asset allocation with a disciplined investment process - developed over 35 years - that optimises returns and reduces risk. For further information, please visit their website

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The information in this communication is provided by Anthony Golowenko, a representative of MLC Asset Management Pty Limited ACN 106 427 472, AFSL 308953 (‘MLCAM’), part of the Insignia Financial group of companies (comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate) (‘Insignia Financial Group’). No member of the Insignia Financial Group guarantees or otherwise accepts any liability in respect of any financial product referred to in this communication or MLCAM’s services. This communication is not an offer, invitation or recommendation to buy, hold or dispose, any assets, undertakings, securities or any other financial products in any jurisdiction or to otherwise participate in any investment opportunity. The communication is of a general nature only and is not advice, it has been prepared without taking into account of the objectives, financial situation or needs of any person. Before making an investment decision, investors should consider their objectives, financial situation and needs. Opinions are subject to change and the accuracy of the information in this communication is not guaranteed. Past performance is not a reliable indicator of future performance. Whilst formulated on reasonable basis, any projection in this communication may be affected by inaccurate assumptions or may not take into account known or unknown risks and uncertainties. The actual results achieved may differ materially from the projection.  Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

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Hans Lee
Content Editor
Livewire Markets

Hans is a content editor at Livewire. He is the lead writer of Charts and Caffeine and created Signal or Noise. He graduated with an economics and journalism double degree from Macquarie University.

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