The top 100 picks for 2014 TIM BLUE THE AUSTRALIAN DECEMBER 28, 2013 http://www.theaustralian.com.au/business/the-top-100-picks-for-2014/story-e6frg8zx-1226790853147# The top picks for 2014 Here's the collected wisdom of The Australian's staff and contributors on where to tread - perhaps carefully - among the hot money flows in 2014. Source: AFP FEARLESS in Fourteen is the call for investors this year. Forget taper trauma, Chinese cryptics and Canberra collywobbles; if you are not in the market, you won't get a rerun of last year's glory days. Twitter, Facebook and Freelancer set the tone, and in the opinion of The Australian's staff and contributors, they flag a rerun of the dotcom psychology that stormed the markets a decade ago. Business models are different nowadays but they are still based on internet and wireless technology, and will grow as e-commerce inevitably grows. One word of caution: e-commerce stock returns are spectacular, but they can suck money away from the usual speculative grounds in mining and exploration stocks. Here's the collected wisdom of The Australian's staff and contributors on where to tread - perhaps carefully - among the hot money flows in 2014. COOL DUDE 1 Moko Social Media (MKB) AS a student, do you want to know how your football team is doing in the US or when training has been rescheduled, or who's got the best pizza prices tonight? This app-provider makes your smartphone a source of information, and an advertising platform, because you will probably read the ads as well. All that means it has a revenue stream, from 10 million smartphone owners and, with a Nasdaq listing, a sympathetic audience. Its shares have rocketed, but it's still really a spec buy. 2 MGM Wireless (MWR) AN apps provider operating in the education system: lets parents know if their children are wagging school, where they are on a Google map (MGM Pinpoint) and how to get in touch with them. A relatively small number of shares on offer. The big risk is that kids may decide to leave their smartphones at home. BOLD CALLS 3 Qantas (QAN) JUNKED! But wait: just how hard-hearted will the federal government be? The skies might be choppy and crowded with state-backed rivals, but some love from Canberra might deliver cheaper funding costs or a rewritten rule book on equity sell-offs. A punt for patriots. 4 Beadell Resources (BDR) THE collapsed gold price so severely dulled Brazilian miner Beadell that its share price makes sense only if gold has fallen to about $4 an ounce. Macquarie Research estimates that with production costs of about $US680 an ounce, and helped by sales of co-produced iron ore at the Tucano mine gate, it should be cash-positive in 2014. Gold bugs will see it is absurdly undervalued. 5 Guildford Coal (GUF) GUILDFORD Coal recently announced a maiden JORC coal resource for its Springsure Project in Queensland, but much interest centres on its activities in Mongolia, where it is well advanced on building a haul road from its Baruun Noyon Uul mine to the Chinese border and distribution hub at Ceke. Completion of the 98km road will allow batch testing with prospective customers. Patersons has it as a speculative buy with a price target of 15c a share. RISING STARS 6 Corporate Travel Management (CTD) IS this the next Flight Centre? As its name suggest, it handles bookings and all matters related to travel. The company has done well since listing three years ago, with a big acquisition of 75 per cent of Hong Kong's Westminster Travel, an outfit that has offices throughout Asia, and another deal in the US. 7 OzForex (OFX) THE strong ASX debut of OzForex shows that retail investors agree there is money to be made from hordes of Aussies travelling overseas and needing foreign currency for the hotels, restaurants, hats and frocks. OzForex processes global payments for consumers and businesses in more than 50 currencies, largely in competition against the banks. As the dollar weakens, we might not travel so much, but the demand seems there. 8 Rubik Financial (RFL) AS baby-boomers age and retirement incomes and tax planning become ever more complex, Rubik financial is the trifecta of a techie play, an earnings record and exposure to the growth world of financial advice. It offers software for planners, core financial information for the financial services industry and banking software for local financial institutions, often exasperated by reworked American software. It's a pity its share price has trebled this year, but as it aspires to greater things, it rates a buy. 9 Countplus (CUP) A MORE-than-tenfold return was crystallised for shareholders when financial planning group Count Financial was sold to the Commonwealth Bank in late 2011 for $347 million. Its proprietors are now operating Countplus, a similar financial services vehicle focused on the amalgamation of independent wealth management and accounting practices. The strategy offers independent practitioners a scalable cost base, income growth potential and improved asset valuations. A strong cashflow supports a quarterly 3c-a-share dividend, which equates to a 6 per cent annual yield. A Wise-owl pick. 10 Analytica (ALT) ANALYTICA is an Australian technology developer that commercialises medical devices. It has two products ready to market, one of which appears to have the potential to be a company-making asset. Designed to treat female urinary incontinence, the PeriCoach is due for launch in 2014. Evidence of early sales traction will be the key to capital growth. GAMING Go on, have a punt 11 Aristocrat Leisure (ALL) STRONG market conditions, tempered by competitive pressures in major markets, still leave the outlook for growth quite positive. ALL is targeting two game releases in 2013-14 in the Japanese market, with the major game to be released in the second half. First-half growth will be sourced from its US operations, and stability should continue in the domestic Australian division, in the eyes of Lincoln Indicators. 12 Ainsworth Game Technology (AGI) AGI appears to be growing market share again on the back of a strong financial year in 2013 and is benefiting from some regional strong points in terms of demand. With increased investment in product research and development, and the potential for online gaming to add to profits in the mid-term, Lincoln Indicators likes the company. GOLDEN GLITCH The glint may have gone, so look for low-cost producers. 13 Northern Star Resources (NST) NORTHERN Star fills the bill for StockAnalysis as a low-cost, dividend-paying West Australian goldminer at the high-grade Paulsens deposit. Recent near-mine exploration success ensures longevity, while several additional projects are on the backburner until the gold price improves towards $US1500 an ounce. 14 Troy Resources (TRY) TROY is a South America-focused, Australia-based goldminer. The company made the most of the appalling market conditions to snap up Azimuth Resources early in 2013 and is continuing to outline a large, high-grade gold deposit at the Smarts project in Guyana. 15 Doray Minerals (DRM) A LOW-COST producer that can make profits even if gold were to slip to $US1000 an ounce. Its price is testing an uptrend. A buy by Patersons with a price target of 84c a share. ANOTHER TIME For the day when copper prices might recover 16 OZ Minerals (OZL) WHACKED in half by falling copper prices, OZ Minerals fans wait in hope for an uptick and any good news from its Carrapateena copper-gold prospect in central South Australia, the largest in the country. It could take over the role as chief income producer as the Prominent Hill mine runs down, given its proximity to the Adelaide-to-Darwin railway now used to move Prominent Hill concentrates. CHARGING UP For all those mobile devices 17 Orocobre (ORE) A SOUTH American industrial minerals company with a portfolio of lithium, potash and boron projects and facilities at Olaroz in the Puna region of northern Argentina. In partnership with Toyota Tsusho Corporation, it has a brine-based lithium project with projected production of 17,500 tonnes a year of battery-grade lithium carbonate, due to start in the second quarter of 2014. The company also wholly owns Borax Argentina, a regional borate producer. Patersons sees a price target of $3 a share. OIL AND GAS As oil production peaks, investment in the sector makes sense. First, the specs. 18 Galilee Energy (GLL) LACKLUSTRE interest towards speculative investments and recent board disunity has seen Galilee Energy trade below its cash backing of 17c a share. The well-capitalised company's primary asset is a 50 per cent stake in the Galilee Gas Project in Queensland. Its partner, AGL Energy, satisfies most spending after farming into the project at an implied valuation of 24c a share to GLL. To turn around Galilee Energy's failing share price, a group of ex-Eastern Star Gas directors has taken a major shareholding and board control. A Wise-owl pick. 19 Buru Energy (BRU) BURU and its partner Mitsubishi hold the vast majority of prospective ground in Western Australia's Canning Basin. Ramp-up of production from the Ungani oilfield next year will provide supporting cashflow for testing of unconventional gas targets at Yulleroo and further oil exploration on the Ungani trend. 20 Fitzroy River Corp (FZR) FITZROY River holds a 2 per cent well head royalty interest over oil and gas production from the heart of the Canning Basin, including the promising Ungani oil trend. StockAnalysis calls it a lower-risk way to gain access to the unfolding Canning Basin story, because Fitzroy has no capital to spend, but takes 2 per cent off the top of everything that Buru and Mitsubishi produce within the royalty permits. 2 1 Kina Petroleum (KPL) IT has oil and gas appraisal and exploration assets onshore in Papua New Guinea, mainly in the Western and Gulf Provinces. Its cornerstone asset is the expanding wet gas resource within PRL 21, where its third well in the permit has gas flows of 48 million cubic feet a day (mmcf/d) and associated condensate flows of 3000 barrels of oil a day. BBY rates it a buy with a 12-month price target of $1.48 a share. 22 Sundance Energy Australia (SEA) A MID-CAP, onshore US exploration and energy production company. It has a production base from assets in the Eagle Ford shale ground in Texas, Greater Anadarko, Denver-Julesburg and Williston basins. A partial sale of its Williston Basin project will net it close to $50m, to be used to grow core assets. BBY has it as a buy and a price target of $1.30 a share. 23 Otto Energy (OEL) OTTO has an annual cashflow of more than $40m from its 33 per cent-owned Galoc oilfield in The Philippines. The company holds 93 per cent of Philippines permit SC55, where prospective gas resources of several trillion cubic feet plus hundreds of millions of barrels of oil have been identified. The company is seeking a farm-in partner to assist with drilling the high-impact, 100 million-barrel Hawkeye oil prospect. A 50 per cent joint venture over emerging exploration basins in Tanzania has longer-term appeal, in the eyes of StockAnalysis. 24 Tangiers Petroleum (TPT) SIGNIFICANT upside from fully funded drilling on the Trident prospect in Morocco gives the right sort of risk-return result with upside to $5 per share on success. Tangiers Petroleum is set to merge with fellow Africa-focused company Jacka Resources. StockAnalysis thinks this move will provide a back-up business development opportunity at its 15 per cent-held Hammamet West gas and oil discovery. OIL PRODUCERS 25 Woodside Petroleum (WPL) WOODSIDE is one of the world's pre-eminent LNG producers, with a solid balance sheet and a full dance card of development projects in Australia. It is seeking to expand globally, through the pursuit of drilling acreage in the Middle East and New Zealand. 26 Horizon Oil (HZN) HORIZON is experiencing a boost to operating cashflow from the start-up of its 26.95 per cent-held Beibu Gulf oilfield in China and is well advanced towards establishing a condensate stripping project at the Stanley project in Papua New Guinea's forelands, where it is a partner in a significant gas project that aims to be PNG's next LNG project. Liked by StockAnalysis. 27 AWE (AWE) SEVERAL growth options are on offer: its established Bass Gas project has nearby development options while its 50-50 joint venture with Santos on the Andi-Andi Lamut oilfield development in Indonesia will kick in revenue post-2015 and exploration in New Zealand's Taranaki Basin, as well as offshore gas projects in the Otway Basin can also deliver expanding profits. Price is testing an uptrend. Liked by StockAnalysis and BBY. BUILD 'EM UP Houses to be built 28 Fletcher Building (FBU) CHIEF executive Mark Adamson is consolidating the group's Australian unit and shifting roles to New Zealand, much like Boral, ahead of anticipated tougher times in the resources industry. The business operates globally, deriving about 40 per cent of its earnings in Australia, the same amount from NZ and the remainder from the US, Europe and Asia. Yet it could benefit from any federal budget housing stimulus. 29 Peet (PPC) A RESIDENTIAL property developer that has grown from its West Australian beginnings. Could be a beneficiary of moves to grow the housing base. 30 Adelaide Brighton (ABC) BY most estimates, there is a shortage of housing in the country that needs addressing. Be ready ahead of any housing stimulus with Adelaide Brighton, a provider of construction material. That's the view of George Nassios, chief investment officer, Deutsche Asset & Wealth Management, Australia. DIAMONDS 31 Kimberley Diamonds (KDL) FROM its Ellendale diamond field in the West Australian Kimberley region, a flow of yellow diamonds has sent New York's Tiffany jewellers into paroxysms of praise and scored sales at premium prices. Kimberley's share price has quadrupled in a year and, while diamond prices are holding, it must be rated as a spec buy. HEAVYWEIGHTS 32 BHP (BHP) A FINGER in every pie from iron ore to potash and Texas shale oil. Much of it is a healthy share of the world's largest and lowest-cost mines, easily expandable when needed. Liked by Deutsche's George Nassios. 33 Rio Tinto (RIO) WITH iron ore prices warming and chief executive Sam Walsh promising much, from lower capital spending to slashed costs and debt reduction, it could be a dividend love-in for investors in the world's second-largest resources company. Liked by Deutsche Wealth. 34 Aurizon Holdings (AZJ) PREVIOUSLY QR National, Aurizon has consistently grown by leveraging its large-asset, high fixed-cost base through volume growth. This has enabled it to lift its payout ratio to 70 per cent, and dividend franking to 90 per cent, improving yield and making the stock attractive to a larger shareholder base. A return of capital to shareholders is on the cards, too, if growth opportunities do not materialise. Patersons rates it a buy with a price target of $5.30 a share. RETAILERS Not over yet 35 Super Retail Group (SUL) A DIVERSIFIED retail group that continues to perform strongly. A recent quarterly update highlighted good growth and the company intends to ramp up the development of its multi-channel capabilities and establish new distribution centres in Sydney and Brisbane. Pays a dividend. Liked by Lincoln. 36 RCG Corporation (RCG) HEALTHY sportswear retailer that combined a recent capital raising with a profit upgrade. With a strong distribution network supported by robust brands, this company has mastered the art of conventional retail and pays a forecast grossed-up yield of 7.62 per cent. A recent sell-down by management should improve the liquidity of this tightly held stock. Liked by Lincoln. 37 Myer Holdings (MYR) HERE'S an idea for a streamlined distribution model in this brave new world of internet commerce. Instead of a manufacturer sending goods to a distribution centre, where they are shipped to stores, unpacked and displayed, why not send them to an online "fulfilment centre", ready to send wherever wanted? Myer is doing that already for 15,000 commonly ordered items. So far it's not quite profitable, but Myer chief Bernie Brookes says it should be soon when annual sales hit $50m, from 100,000 items. A long-term buy. INDUSTRIALS 38 Bradken (BKN) BRADKEN makes industrial products and offers maintenance services to the mining, minerals processing, rail and industrial markets. The company's products include ground engaging tools, mill liners, crusher liners, freight wagons, bogies, wear plates, crawler systems and mining services and rail maintenance gear. Noting a potential pick-up in orders, BBY has a buy on it and a 12-month target price of $7.50 a share. 39 Mermaid Marine (MRM) MINING and exploration service companies have been hit this past year, but Mermaid Marine is a hold for Patersons. Commentary at its annual meeting suggests that 2013-14 earnings will be in line with 2012-13, despite delays in several key projects. 40 Cardno (CDD) CARDNO is an engineering consultancy for the construction, infrastructure and natural environment industries worldwide. It's expecting a steady year with perhaps an increase in activity levels later. BBY thinks Cardno is a buy, based on its proven management team, solid organic growth, low capex and strong cashflows, plus acquisition-fuelled growth and a gross yield of 7-8 per cent. BBY has increased its 12-month target price for Cardno from $7 to $8 a share. 41 Energy Action (EAX) ENERGY Action has a procurement platform that allows energy suppliers to bid against one another to supply energy, plus a portfolio of products and services that complement the Australian Energy Exchange. New chief executive Scott Wooldridge has a background in IT, management and marketing. BBY thinks the technology is robust and scalable and in the next year or so there is an opportunity to win market share as contracts negotiated during a period of uncertainty about carbon tax come up for renewal. The energy broker market remains fragmented and ripe for consolidation. BBY has it as a buy with a price target of $4.80 a share. MATERIALS 42 Fortescue Metals Group (FMG) THE Pilbara-based iron ore miner is producing at a rate of 55 million tonnes a year, which should grow to 155Mtpa by June, following the ramp-up of Christmas Creek and Solomon operations. BBY has a 12-month price target of $6.75 a share, on the thought that these two mines will lift production to 162Mtpa from 2016, given some easing of bottlenecks and with mining costs down 10 per cent. 43 Silex Systems (SLX) LISTED uranium processing pioneer Silex Systems is a step closer to its long-term quest of persuading a cabal of heavy-hitting US nuclear companies to build a full-sized power station using its next-generation enrichment method. A consortium, Global Laser Enrichment, has completed a first-stage "test loop" at its facility in Wilmington, North Carolina. If the US Nuclear Regulatory Commission agrees, a commercial plant might be built at the North Carolina city. At home, its solar-panel manufacturing is preparing to build a full-scale 100MW plant, enough to power 40,000 houses, at sunny Mildura. A unique clean-energy company, and a speculative buy. SOMETHING DIFFERENT 44 Equity Trustees (EQT) HAVING been beaten by the National Australia Bank for control of Trust Company, Equity Trustees itself could be vulnerable to a takeover bid. A long-term buy. 45 TFS Corporation (TFC) ITS share price has more than doubled after the company's first harvest in the Ord River region of Western Australia, and it has the potential to become the world's leading producer of Indian sandalwood, used in perfumes, pharmaceuticals and wood carving. Cannacord Genuity rates the stock as a buy with a price target of $1.37. 46 McMillan Shakespeare (MMS) THE salary packaging provider was hit when the previous federal government suggested big changes to fringe benefits tax rules. While the changes did not come to fruition ahead of the change of government, the share price has remained depressed - but not the business. 47 Money3 Corp. (MNY) A SHORT-TERM lender, Money3 fills a gap created by a dearth of lenders servicing clients with less than pristine credit histories or limited assets available for collateral. It offers loans from $100 to $40,000 over periods of up to 36 months, and has an auto finance and car rental business. With the acquisition of the Cash Store chain, it will have 70 branches nationwide, which means a near-doubling of its potential loan customers. Despite a run-up in share price, Patersons rates it a buy with a price target of $1.48 48 Slater & Gordon (SGH) A NATIONAL law firm, it operates in commercial, family, employment, asbestos-related and personal injury law. The company entered Britain in March last year and five acquisitions later is ranked No 2 with a 5 per cent market share in the British personal law services market. Despite the usual acquisition risks, BBY thinks more will come in the fragmented British market and it will be a key driver of value. BBY has a buy on it and 12-month price target of $5 a share. 49 Tox Free Solutions (TOX) A COMPANY poised to benefit from a period of upheaval in Australia's waste management industry. A successful turnaround program before the financial crisis allowed the company to expand at a time when competitors were suffering fiscal pressures. It has spent $140m acquiring competitors including Dolomatrix and Wanless during the past two years. A subsequent transition period is now nearing completion, and the integrated operations have the potential to deliver significant profit and capital growth. A Wise-owl pick. 50 Nearmap (NEA) AN aerial mapping specialist, with an income cashflow from subscribers. Customers have included the Public Transport Authority of Western Australia, Sydney's Hornsby Shire Council, WA utility Western Power and engineering firm Cardno. A plus is cash on the balance sheet, and a licensing agreement with Google. The company has its eyes on international growth. 51 Quickstep Holdings (QHL) A PROVIDER of carbon-fibre components to the new American joint strike fighter aircraft now under development. An order book is beginning to build for parts such as wing spars and tail sets. Quickstep was recently given $1m under the Department of Defence's industry support program. INFORMATION TECHNOLOGY 52 UXC Limited (UXC) UXC has acquired Keystone Management Solutions, Australasia's largest reseller and services provider for ServiceNow, which is a provider of cloud-based solutions that automate and standardise enterprise information technology operations. It has a reported annual growth rate of about 70 per cent. UXC thinks it will provide increasing annuity revenue over the next three years to become more than 30 per cent of total revenue. Patersons has it as a buy with a 12-month price target of $1.21 a share. TELECOMS 53 Telstra (TLS) STILL the biggest provider of local and long-distance telephone services, mobile services, dial-up, wireless, DSL and cable internet access in Australia. Under new legislation to structurally divide the telco into two separate entities, retail and wholesale, Telstra is looking into a deal to sell its wholesale business to the National Broadband Network operator, NBN Co. After its a strong run, BBY sees limited near-term upside. BBY has it as a buy and a price target of $5.30 a share. 54 Amcom Telecommunications (AMM) THE company has a strong track record for growth building, and could leverage further scale benefits from its core fibre network in WA, further supported by a recent acquisition of three data centres. Lincoln Indicators expects that the ability to cross-sell hosted services and IT solutions will bode well for the future. 55 TPG Telecom (TPM) GOOD business in the consumer broadband segment has given TPG robust cashflows in recent years, allowing it to retire all debt and leaving it well poised to deliver results ahead of guidance. Its proposal for a fibre-to-the-building network could be an earner, though the big question is whether the federal government will allow a challenger to the NBN. It recently agreed to acquire AAPT from Telecom NZ. Liked by Lincoln, Patersons has it as a hold, with a price target of $4.24 per share. HEALTHCARE 56 CSL (CSL) A STRONG product pipeline will continue to underpin its growth, particularly albumin sales in China and specialty products sales growth. Lincoln Indicators expects strong operational performance to continue with margin improvements likely in the future. Settlement of an anti-trust claim against it in the US and the announcement of an extension of a further $950m on-market buyback also support its positive outlook. 57 Fisher & Paykel Healthcare (FPH) THE New Zealand company makes devices used in respiratory care, acute care and the treatment of obstructive sleep apnoea. Sales are up nearly 70 per cent over the past year. Its genesis lies in an everyday household appliance - a pump used in a washing machine - that has been turned into a ventilator now used in hospitals around the world. On the downside, according to Morningstar, it needs a steady flow of willing buyers and it may need new products in future and diversified markets outside the US. 58 NIB Holdings (NHF) OUR only listed health insurer, with a market share nudging 8 per cent, NIB is challenger to Medibank Private and Bupa with products such as its Whitecoat online service, which allows fee comparisons and reviews of physiotherapists, dentists and chiropractors. In the past year it acquired Tower Medical Insurance - New Zealand's second-largest health insurer - and continued to grow faster than the industry rate, which has pushed its share price to an all-time high of $2.60 in November. Macquarie Research rates NIB an outperform, citing core business growth and opportunities from new businesses. 59 Ramsay Health Care (RHC) A HOSPITAL owner and operator, the fundamental drivers for RHC remain largely unchanged, among them an ageing population in Australia, Britain and France, and increasing demand for quality hospital care in Asia. Its Asian operations are a relatively minor part of RHC's overall earnings, but its joint venture with Sime Darby has substantial growth opportunities in the medium to long term, in the view of Lincoln Indicators. Its French subsidiary, Ramsay Sante, has acquired a psychiatric hospital group, Medipsy, making it now the third-largest hospital operator in France. 60 Sirtex Medical (SRX) THIS developer of cancer treatments has a new one for liver cancer that employs an irradiated microscopic bead inserted into the patient via a catheter that directly targets the liver to deliver a high dose of radiation to the tumour. Its popularity is growing around the globe. Looking at commercial risks, a superior technology or treatment may come along in time, and with limited free float in the stock, liquidity is low. But Morningstar thinks the large upside potential of the stock compensates for these risks. 61 Regeneus (RGS) A REGENERATIVE medicine company that is commercialising cell-based therapies for treating conditions such as arthritis in humans and animals. BBY suggests it is well placed to benefit from legislation passed by Japan's Upper House in early December that allows fast-track approval of stem cell therapies. The new legislation opens the way for RGS to launch an off-the-shelf human stem-cell therapy for osteoarthritis in Japan within three to four years, if it can demonstrate safety and efficacy in clinical trials. BBY has it as a spec buy with a target price of 76c a share. 62 Mayne Pharma (MYX) HAS enjoyed a huge rebound since buying the US-based Metrics for $US120m, though it is still off its high of 77c in early 2011. Fund managers LHC Capital has been a big buyer and a backer of chief executive Scott Richards and Metrics, which is a manufacturer, developer and marketer of generic drugs in the US. It specialises in narcotics, or sedatives, which are heavily regulated and can only be produced domestically. It has other drugs in the approval pipeline with the US Food and Drug Administration. 63 Mesoblast (MSB) A BIOTECH company that develops adult stem cell technologies for a range of diseases. The company has a focus on cardiovascular and spinal applications, but is also addressing diabetes, eye and neurological diseases and bone marrow transplants. BBY has a buy recommendation on it and a price target of $7.60. DIVIDEND DIVAS 64 Commonwealth Bank (CBA) THE bank had cash earnings of $2.1 billion for the September quarter, which points to annual earnings as much as 7 per cent higher than last year. BBY thinks that is enough for the share price to go to $81. It has a buy on CBA. 65 ANZ Bank (ANZ) ANZ will continue to provide an above-market sustainable dividend yield. While earnings growth is likely to be modest over the next 12 months, Lincoln Indicators expects the dividend payout ratio to remain at the top end of the company's target range. The stock continues to provide an attractive income stream, with the bonus of long-term growth emanating from its investments into Asia. MANAGED FUNDS Income investing 66 Cromwell Property Group (CMW) THE Australian Real Estate Investment Trust (A-REIT) and a property fund manager is in a robust financial position despite sizeable acquisitions in the year. Lincoln Indicators suggests Cromwell will continue to deliver like-for-like property income growth, with earnings contributions from acquisitions made during FY2013. A recent asset sale will see proceeds deployed to invest in its fast-growing funds management business, as well as to fund future property acquisitions. GREEN AND ACTIVE 67 Generations Global Share Fund THE international equities fund focuses on sustainability principles, in the belief that they drive long-term share prices. Generations Investment Management, the manager of the fund, was co-founded by former US vice-president Al Gore. It begins the investment process by creating "road maps", which seek to identify industries that will benefit from global trends, then drills down to the company level. The fund is available on the CFS Firstchoice platform. 68 Sandon Capital Activist Fund THIS is a unique offering in Australia but activist investing has a long history in the US. Activist funds invest in companies where they see the opportunity to unlock value by persuading the board or shareholders to make necessary changes. This is a new fund but the manager has been managing money this way for private investors since 2009. The fund returned 29.2 per cent net of fees in the 12 months to October 31. INFRASTRUCTURE 69 CFS Global Listed Infrastructure A MIX of globally diversified infrastructure securities based on roads, airports, rail, utilities, energy pipelines and storage. A selection process is based on fundamental value, augmented by contact with managements. Minimum investment is $25,000 and the annual management cost is 1 per cent of the investment. It was the best-performing infrastructure asset for Australian investors in the year to November, returning 23.7 per cent over one year and 16.9 per cent a year over three years. 70 AMP Capital Core Infrastructure Fund THE fund has a blend of Australian and global unlisted infrastructure assets and listed infrastructure securities. It is a way to enter infrastructure without the large capital outlay that's generally associated with this type of investment. Investors, particularly self-managed super funds, like the potential for stable long-term yields and capital growth, often with inflation-linked returns. The fund has achieved consistent returns during the past five years, with performance for the year to October running at 9 per cent. The total return after fees over five years is 8.2 per cent a year. LARGE CAP AUSTRALIAN EQUITIES 71 UBS HALO Australian Share Fund THE fund returned 34.3 per cent and 12.6 per cent over one year and three years, respectively. It's actively managed on a high-conviction basis with typically less than 20 stocks in the portfolio. The UBS approach is to value stocks with a long-term view on a company's ability to generate future cashflows, while not being distracted by short-term news flow. A minimum initial investment is $20,000 and it is recommended by Lonsec and Zenith. 72 Pengana Australian Equities Fund THIS is a "benchmark unaware" Australian equities fund, which means it does not try to measure its performance against the market index. It focuses on giving investors absolute returns; that is, it tries to make positive returns in all kinds of market conditions. It is not prevented from holding significant amounts of cash if it thinks there are no investment opportunities available and aims to preserve investors' capital when markets fall. Van Eyk rates the investment skill of the manager and the depth and quality of research it does on stocks very highly. The fund returned close to 24 per cent (after fees and tax) for the year to October and is recommended by Lonsec and approved by Zenith. 73 Bennelong Concentrated Australian Equities Fund THE top performer in its field, returning 40 per cent in the past year to November and 19.9 per cent a year over five years. Portfolio managers Mark East and Paul Cuddy typically hold between 20 and 35 stocks, largely taken from the ASX 300. Annual management fee is 0.85 per cent and there is a performance fee of 15 per cent of any amount by which the fund's return is more than 2 per cent greater than the return generated by the S&P/ASX 300 Accumulation Index. An initial minimum investment is $50,000. Highly recommended by Zenith and recommended by van Eyk. SMALL CAP AUSTRALIAN EQUITIES 74 BT Smaller Companies Fund ONE of only two Morningstar gold ratings for small cap funds. Managers Paul Hannan and Noel Webster travel widely for firsthand knowledge of their prospects, which has allowed good performance across market cycles. The lack of performance fee is a further boon for investors, given how easy beating the benchmark has proved. It has delivered 23.5 per cent over one year to November, 10.6 per cent a year over three years and 20.2 per cent a year over five years. 75 NovaPort Smaller Companies Fund NOVAPORT is a three-man team led by portfolio managers Alex Milton and Sinclair Currie, who use a fundamentals-based, benchmark-unaware, bottom-up process, with the aim to deliver 50 per cent upside over a period of three years. It has delivered 34 per cent over the past year to October, and 19 per cent a year over the past three years, net of fees. Recommended by Lonsec, Zenith and Morningstar. 76 Schroder Australian Smaller Companies RATED silver standard by Morningstar for its "high-quality team, thorough research and well-balanced portfolio" under senior portfolio managers Matthew Booker and Marcus Burns. Moderate portfolio turnover of 30-40 per cent shows they are prepared to wait patiently for their themes to play out. It has delivered 12.4 per cent over one year and 6.7 per cent a year over three years to outperform the market by 12.5 per cent and 11.5 per cent, respectively. GEARIN' A GO GO 77 Perpetual Wealth Focus Geared Australian Fund THE best performer over the past year, with a whopping 67 per cent over one year. Over three years it's done 23.5 per cent a year. Minimum initial investment is $2000. The management fee is a shade under 2 per cent a year, but there are no performance fees. The fund invests in big companies at attractive valuations. With gearing, of course, risks as well as rewards can be exaggerated. MARGIN LOANS And would you like a margin loan to go with that? 78 Investment Funds Multiplier LEVERAGED Equities has a margin loan that facilitates gearing investments in approved unlisted managed funds and ETFs without the risk of a traditional margin call. In the event of such a call, repayments are set at 1 per cent of the loan balance per month. INCOME PROVIDERS Need an income and capital stability? Think bonds. 79 Portfolio One IN times of market nerves, a fistful of bonds may be the answer to retirees' needs. Typically a $250,000 investment can deliver as much as $15,000 a year in income, in a mix of fixed and floating-rate bonds with varying maturity dates. Here's a model suggested by FIIG Fixed Income Specialists: Bank of Queensland (floating bonds); G8 Education (fixed); National Wealth Management (floating); Stockland (fixed) and Sydney Airport (inflation-linked). 80 Index annuity bonds THESE bonds work like a reverse mortgage and are perfect for retirees wanting known cashflows that are protected against inflation. Investors pay a lump sum up front, then the entity issuing the bond repays principal and interest (linked to the CPI) until maturity. Two favoured index annuity bonds are NSW Schools 2035 and Australian National University 2029, with projected returns of 6.58 per cent and 5.99 per cent based on inflation at 2.5 per cent, the Reserve Bank's target mid-point. Buy them through a broker. There are no ongoing fees and the bonds form part of your estate should you pass away before maturity - and regardless of the long maturity date. 81 Foreign currency bonds BONDS can be bought in foreign currencies, providing a hedge against the Australian dollar or better use of foreign currency held in overseas accounts, for higher returns than offered by banks. For example, Origin Energy has a euro-denominated bond with expected 2018 maturity paying 5.53 per cent a year and QBE a US dollar bond with expected 2021 maturity paying 6.39 per cent a year. These bonds are only available to wholesale investors - generally those with $100,000 and more to invest at a time. 82 Bentham Asset Management Global Income Fund BENTHAM is an investor in global credit that delivers income: more than 10 per cent over one year and more than 15 per cent a year over three years. Led by head portfolio Manager Richard Quin, it delivers a conservative growth strategy through global and domestic credit markets, with focus on protecting investors from downside risk. Recommended for investors seeking higher returns than fixed-income markets in the medium to long term. Recommended by Lonsec, Zenith and van Eyk. INTERNATIONAL SHARES 83 Independent Franchise Partners Global Franchise Fund A CONCENTRATED global equity strategy with a strong bias to quality companies. It aims to buy companies with strong franchises at favourable valuations, focusing on identifying dominant intangible assets, high return on capital employed and high free cashflows. The fund has a high rating from van Eyk and has delivered solid returns in the past three years against the background of a weak international economy. 84 Five Oceans Asset Management Wholesale World Fund FIVE Oceans invests globally in a non-index-chasing style that has delivered a 35 per cent return in the year to November. Strong focus on global sharemarkets and bottom-up research to support portfolio construction. It uses long investing positions with a five-year investment horizon, and it is denominated in Australian dollars. Recommended by Zenith and Lonsec. 85 MLC Horizon 4 - Balanced Portfolio The MLC Horizon 4 - Balanced Portfolio aims to grow an investor's long-term wealth by delivering above-market returns while carefully managing risk. The portfolio invests mainly in growth assets. It's widely diversified across asset classes and strategies to provide many ways to achieve returns and manage risk, and benefits from the insights of many specialist investment managers from around the world. It returned 19.2 per cent after deducting fees for the 12 months to October 31 and 9.7 per cent for the five years to that date. Recommended by both Lonsec and Zenith. 86 Bendigo Conservative Wholesale Fund AN actively managed fund of funds from Sandhurst Trustees with a conservative risk profile. Has turned in 12.45 per cent over one year, 9 per cent a year over three years and 7.33 per cent over 10 years, to rank first among its peers over 10 years, according to Morningstar. Total fees are a low 0.72 per cent a year, and it can be accessed via nominated platforms or directly with a minimum investment of $50,000. AUSTRALIAN LISTED PROPERTY 87 BT Property Investment A BEST-IN-CLASS offering, according to Morningstar, which gives it a gold rating. Portfolio manager Peter Davidson and his team rarely buy stocks outside the S&P/ASX 300 AREIT Accumulation Index, a strategy that has delivered roughly two percentage points better than its passively managed rivals. Retail investors pay 1.63 per cent a year, roughly on par with the average. AUSTRALIAN FIXED INTEREST 88 UBS Diversified Credit Fund THE UBS Diversified Credit Fund is a consistent performer, delivering 5.6 per cent over one year and 8.2 per cent a year over the past three years. The fund provides investors with exposure to a diversified portfolio of local (corporate bonds and hybrids) and international securities (US high yield) to gain exposure to credit markets over the medium term. The minimum initial investment is $20,000. It is recommended by Lonsec and Zenith. 89 Vanguard Australian Fixed Interest Index ETF (VAF) HAVING an exposure to investment grade bonds should provide income through regular coupon payments, capital stability through the return of the principal at maturity and valuable diversification to equity holdings. These benefits persist in any interest rate environment. This exchange traded fund is an efficient way to introduce this defensive asset class to a portfolio. It offers access to a diverse range of fixed income securities including Australian government, semi-government and corporate bonds, at a low annual management cost of 0.2 per cent. HEDGE FUNDS 90 UBS Dynamic Alpha Strategies Fund THROUGH asset allocation and currency trading, it seeks to provide investors with an absolute return over a full market cycle of bank bills of plus 3.5-5.5 per cent a year. A secondary objective is to limit drawdowns. The fund is managed by more than 90 investment professionals around the globe, and it offers daily liquidity and a lower fee of 85 basis points a year. Its performance - over one and three years, respectively - has been 12 per cent and 10 per cent a year, net of fees. A minimum initial investment is $20,000. 91 Kapstream Absolute Return Income Fund A LONG-ONLY boutique bond fund that focuses on producing a "cash plus" return for its investors. It has a very knowledgeable and experienced investment team and a disciplined and consistent investment philosophy. The fund has relatively low interest rate risk, which is important at a time when the future path of interest rates is highly uncertain. The fund has been able to consistently return 200-300 basis points above the cash rate. This fund is popular with van Eyk. EMERGING MARKETS EQUITIES 92 Vanguard FTSE Emerging Markets Shares ETF (VGE) A LOW-COST exposure to emerging markets, with an expense ratio of 0.48 per cent a year, this one tracks the FTSE Emerging Index, which comprises about 850 shares listed on the exchanges of 22 of the world's emerging economies. It's one way to diversify a portfolio. EXCHANGE-TRADED FUNDS 93 UBS IQ Research Preferred Australian Share Fund ETF OFFERS exposure to a diversified portfolio of Australian listed companies rated by UBS equity research analysts. It combines the liquidity and flexibility benefits of an exchange-traded fund with an underlying portfolio constructed with UBS's equity research analysts' insight and expertise. This ETF can be bought on-exchange with a minimum investment requirement of $500, via a broker. Performance over 12 months has been 19.8 per cent. It is recommended by Zenith. 94 State Street SPDR S&P Global Dividend ETF (WDIV) WITH exposure to over 100 leading dividend-paying companies worldwide, including Coca-Cola and Vodafone, the SPDR S&P Global Dividend ETF provides investors with a high-dividend, tax-efficient and administratively simple international investment option. It offers answers to the search for yield, diversification across regions and the ability to participate in rising equity markets with potentially less volatility. H OME LOANS Rates are low; pick and choose the features 95 HSBC combination home loan HSBC has a one-year fixed rate of 4.49 per cent - the lowest of any bank at the time of writing - and a standard variable rate of 4.9 per cent that includes full offset capabilities for new borrowings of $500,000 or more. Meanwhile ANZ's Breakfree Package offers discounts of up to 0.9 per cent on the ANZ standard variable rate and 0.15 per cent on ANZ fixed-rate loans, waived annual credit card and monthly transaction account fees and discounts on home and contents insurance. Its fixed-rate home loan offers a 100 per cent offset facility on a one-year fixed-rate loan, currently 4.79 per cent, and a further discount of 0.15 per cent for those taking the Breakfree Package. CAPITAL PROTECTION When markets chill 96 MLC Investment Protection A WAY to protect savings and maintain a comfortable retirement for those approaching or in retirement with savings of more than $30,000. Capital or income can be protected for terms of 10 years, 20 years or for life. One variant - protected income - provides a minimum guaranteed withdrawal value through a specified term, while another - protected capital - gives a minimum guaranteed capital value at the end of a term. In both cases, the minimum value may rise with positive market performance. It is recommended by Lonsec and Zenith. 97 ANZ Cobalt AN option and lending facility for those looking to invest in Australian or international securities with capital protection. ANZ will provide individuals and self-managed super funds with up to 100 per cent of funds to buy an index or portfolio of shares. The investment is protected at the protection level at maturity and there are no margin calls. It allows investors to use any dividends received to pay all or part of the interest cost. SUPER 98 Bendigo SmartStart Super A LOW-COST, simple superannuation plan for all stages of life. From January 1 there will also be an employer-sponsored plan and a MySuper lifecycle investment option. Flexible insurance arrangements include default and tailored cover for death, total and permanent disablement, as well as income protection. An alternative might be ANZ Smart Choice Super, which claims fees lower than any other Australian retail or industry superannuation fund, and life-stage investments that adjust with your age. 99 AMP SuperEdge LOANS for self-managed super funds wanting to buy a residential investment property or refinance an existing SMSF loan. The loan is repaid by the property's rental income and contributions paid into the fund. Variable loan rates start at 6 per cent with competitive one, two, three and five-year fixed rates at 5.64 per cent, 5.44 per cent, 5.44 per cent and 6.04 per cent, respectively. AGED CARE 100 Challenger Care Annuity GOT parents thinking about aged care, and wondering whether they need to sell the family home to fund the move? As well as providing the income to pay mandatory fees, this product helps to minimise care fees while maximising age pension entitlements. A buyer must have Aged Care Assessment Team (ACAT) approval that specifies either low-level or high-level residential care is required, or must live in an approved residential care facility. It can be withdrawn any time during the 10-year withdrawal period, subject to an early withdrawal adjustment to reflect market conditions. It pays 100 per cent of an initial capital investment to your estate if you die within the first 10 years.