Question 1: What are your thoughts on QRI, the Qualitas Monthly income fund? It pays a monthly distribution that’s yielding around 9% pa.
Answer: The Qualitas Real Estate Income Fund is an ASX listed credit fund that invests in commercial mortgages, construction loans, mezzanine construction loans and other property securities. Around $750 million in size, it targets a distribution return to investors of the RBA cash rate plus 5% to 6.5%. Currently, it is distributing at around 9% pa, which is marginally below the lower end of the target range. On the ASX. It is trading around $1.61 which is pretty close to its NAV (net asset value). Back in 2018, the ASX price was around $1.70, so there hasn’t been any capital growth over the period, although it has recovered from the lows of 2022 when it hit around $1.35. I quite like QRI. However, it is higher risk as it is investing in low grade securities and loans and is relatively concentrated. In a diversified portfolio focussed on income, a small exposure would suit many investors.

Question 2: Can I have your thoughts on the new ETF from Global X, BANK, which invests in the debt of the major banks?
Answer: Global X has launched the Global X Australian Bank Credit ETF. It invests in a diversified portfolio of Australian banking debt across the full capital structure excluding shares. It comprises fixed and floating-rate bonds, senior and subordinated debt (Tier 2 Capital), and hybrid securities (Additional Tier 1 Capital). It tracks an index from Solactive. It is currently yielding around 6.0% pa, with distributions paid monthly. The management fee is 0.25% pa. The points to note about BANK is that invests in investment grade securities issued by Australian Banks. These comprise about 40% senior bonds, 30% hybrid securities and 30% subordinated debt. Issuer risk is concentrated, with securities from the 4 major banks comprising more than 80% of the holdings.
Because most of the securities are floating rate (or repriced every 90 days), the duration of the index (and portfolio) is quite short at just over 1 year. This means that if interest rates fall, the distribution yield on the ETF will also fall. It is very early days for the ETF, but potentially, this could be a very interesting way for retail investors to get access to the bank debt market and earn attractive but “relatively secure” returns. The ASX code is BANK.

Question 3: Is ZIP doing a share purchase plan?
Answer: Yes, details will be announced shortly. Potentially, you will be able to apply for up to $30,000 of ZIP shares at a price of $1.56 (or if the market falls out of bed, 2% lower than the ASX traded price in the week up to 14 August). With ZIP’s shares currently trading at $1.82, this looks like a bit of a “no-brainer” to participate in. If you don’t want to own any more ZIP shares, sell on the ASX and replace in the share purchase plan.

Question 4: I am interested in Ampol (ALD) which is paying a fully franked dividend of over 6%. What do the brokers say?
Answer: The brokers are marginally bullish on the stock. According to FN Arena, there is 1 “buy” recommendation and 3 “neutral” recommendations. The consensus target price is $35.94, which is 8.6% higher than the last ASX price of $33.10. Ampol has pre-announced its half year profit of EBIT of $500m to $510m. They cited improved margins on their convenience retailing, but the refining margin of US$10.28 was less than the analysts were expecting. Dividends this year will be lower than last year.