Page 2 - SMA changes rationale_Specialist Income Assertive

Changes to Underlying Investments

Why we are making the change

We have reviewed the underlying holdings to ensure the portfolio continued to contain our highest
conviction picks and their associated blending (portfolio construction) remained appropriate
considering our expectations of the forward period. This review resulted in the following changes to
the investment lineup:

Insurance Australia Group (IAG) – Sold - the company’s share price has moved above our expectations
and our assessment of fair value, more importantly. As such, we’ve sold this stock to allocate to new
ideas with better upside opportunities. These are the stock sales we like.

Downer Edi (DOW) – Sold – the company’s share price has recovered strongly from recent lows in
February 2023. We expected a recovery. However, the dividend recovery has been slow which was a
sensible approach from the company given issues they were trying to resolve. Whilst we expect the
dividend to increase in the forward period, we think there are better income opportunities available
with additionally better upside.

Metcash (MTS) – Bought – a company we’ve been tracking for some time waiting for an opportunity
to buy. We’ve struggled to include stocks from the consumer staples sector in the portfolio (additive
given they provide an element of defence to the portfolio) given their general lack of yield, but
Metcash’s yield is healthy, and we expect this to remain. We think management have done a great
job with the company and like the small bolt-on acquisitions which provide increased scale.

Transurban (TCL) – Bought – a company we’ve been tracking for a long time waiting for an entry point
given heightened valuations over time. The company has consistently grown their dividends by 5-10%
per annum over a long period of time. Management is very strong and there’s current capacity for the
business to expand their road network here in Australia and offshore. We like the defensive nature of
earnings and the potential for growth in their dividend.

Betashares Australian Bank Senior Floating Rate Bond ETF (QPON) – Bought – this investment has
been included in the portfolio as part of the increase in defensive assets discussed above. The ETF
provides exposure to some of the largest and most liquid senior floating rate bonds issued by
Australian banks. There is little to no interest rate risk here with an attractive yield and high level of
security given issuers are only Australian banks.

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Advisory Services Pty Ltd (ABN 30 008 587 595) AFSL #234656. This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to
consider your financial situation and needs before making any decisions based on this information.