Leanne Pan says that when people find out she is a fund manager, they invariably ask her what the hot new stock is that could net them enough cash to pay for their dream holiday, their children’s school fees, a renovation, or even a house deposit.
A portfolio manager at the Melbourne-based Prime Value Asset Management, she has to let them down gently because her tip is usually something like BHP, rather than an exciting tech unicorn or artificial intelligence start-up.
But her slow-and-steady approach has paid off during what has been a torrid time for investors as the Middle East conflict has compounded high inflation and pushed the Reserve Bank of Australia to keep raising interest rates.
Not to mention this month’s brutal share price falls at blood plasma giant CSL and hearing devices company Cochlear, triggered by earnings downgrades. And the so-called SaaSpocalypse, which had software stocks pummeled by fears that AI would disrupt their business models.
Amid all this carnage, Pan’s equity income fund has returned 19.9 per cent in the past year, outperforming the S&P/ASX 300 Accumulation Index’s return of 10.1 per cent in that time. It has also outperformed the benchmark by 1.9 percentage points a year since its inception in 2001.
“I’m not one of those high-flying or sexy stock pickers who always know the big new thing,” Pan says. “My approach is steady as she goes – I’m not chasing three-baggers,” she adds, using the market lingo for a stock that triples in value.
Pan was born in Taiwan and grew up in Tainan, which is about three hours south-west of the island’s capital, Taipei. Her family moved to Malaysia when she was in high school, after her father, an agronomist, got a job based in Ipoh, a former tin mining town known for its colonial-era architecture.
Pan then moved to Australia for university, following a group of friends who wanted to study Down Under. Her father, who specialised in sugar cane, had also given Australia a strong rap after a posting in Bundaberg.
Pan studied accounting and economics at Monash University, before picking up an MBA at the University of Melbourne.
And after stints as a portfolio manager for the Shell Australia Superannuation Fund and the Orica Superannuation Fund in the 1990s, she joined Prime Value, which manages about $1.2 billion in assets, in 2004.
She focuses on companies that offer a high dividend yield, on top of growth.
Dividend stocks – typically mature companies with stable earnings like the big banks, supermarkets, utilities, and insurance providers – don’t always capture the imagination of investors the way AI players and tech unicorns do.
But the Albanese government’s capital gains tax reforms have, according to UBS equities strategist Richard Schellbach, made the Australian sharemarket’s high-growth tech and medical stocks less attractive to traders, while turning the focus back on to dividend stocks.
Budget impact
That’s because the budget has abolished the 50 per cent CGT discount for investments held for more than 12 months and reverted to the pre-1999 system of inflation indexation. The change will apply to all asset classes and taxes real gains adjusted for inflation over the life of the investment.
“From my perspective, having dividends as part of your portfolio is a no-brainer,” Pan says. “The index has returned on average about 8 to 9 per cent a year for the last two decades. And in that, you have about 3 to 4 per cent in dividends, so it is a very important component.”
Her largest position is the big miner BHP, which offers an annual dividend yield of about 3 per cent. BHP’s share price has also rocketed nearly 40 per cent so far this year, as the Middle East conflict sent the price of iron ore up by even more than the cost of diesel, resulting in a net gain for the resources giant.
But Pan says BHP’s pivot towards copper, which is used in everything from electric vehicles and data centres to household appliances, means the company is exposed to broader electrification and AI themes that have years to run.
BHP has also been on a 20-year journey to enter the market for potash, a potassium-rich product sold to farmers as a crop nutrient, since acquiring its first tenements in Canada in 2006. Pan says potash will become only more important in the 2030s amid the potential for a global food crisis, mirroring copper’s expected key role in the AI boom.
“BHP might sound boring from an investment perspective,” Pan says. “But they do tick a lot of boxes – strong management, good cash flow, exposure to iron ore, copper, and potash, and you get to pocket a dividend.”
Pan’s other winners this year have included oil and gas giants Woodside and Santos, both up more than 25 per cent, gas pipeline company APA Group, up nearly 20 per cent, and the world’s largest gold miner, Newmont, which has carved out a solid 8 per cent gain this year after doubling in 2025.
The fund has also benefited from a near 30 per cent share price gain over the last year in Dalrymple Bay Infrastructure, the world’s largest metallurgical coal export terminal, which came amid a successful $1.07 billion refinancing.
“They have a very predictable cash flow,” says Pan.
Still, there’s always one that gets away, and Pan regrets selling out of Codan – which manufactures metal detectors and communication systems – too early to benefit from its 140 per cent jump over the past year. The stock was powered by strong demand from the defence sector and prospectors looking to cash in on the surging gold price.
Pan now has her eye on Stockland.
The company, like other residential developers, faces headwinds from higher interest rates and rising construction costs, and its share price is down more than 30 per cent this year.
But Stockland was highlighted by UBS’ Schellbach as one of the winners of Labor’s CGT reforms, alongside APA Group, given they both pay out about 6 per cent of their share price in annual dividends. And beyond the allure of dividends, Pan says the structural theme of the housing supply crunch will benefit the out-of-favour developer at some point.
“Some of the housing stocks look very interesting to me, especially since nobody seems to like them given all the macro headwinds. But the housing shortage is not going away, so I think those stocks will come back,” Pan says.
“I tend to be drawn to hard assets,” she says, referring to Stockland’s purchase last year of a portfolio of 12 master-planned communities from Lendlease. “They have a strong land bank as well.”
Source: Financial Review