Morningstar Model Income Equity Portfolio Overview
The Morningstar Model Income Equity Portfolio, established in 2001, is a theoretical portfolio showcasing potential returns from a concentrated selection of high-quality, income-producing shares. This model focuses on generating a dividend yield greater than the S&P/ASX 200 Accum Index, which serves as its benchmark.
Key Characteristics of the Model Income Equity Portfolio
Holdings: The portfolio typically aims for 15 to 30 holdings, with limited trading activity.
Company Selection: It heavily features companies with narrow or wide economic moats and low to medium uncertainty ratings. This selection strategy prioritizes businesses with predictable cash flows, stable dividends, and generally lower share price volatility.
Benchmark Comparison: The Morningstar Model Income Equity Portfolio is generally invested in similar classes of equities as the S&P/ASX 200 Accum Index, sharing common investment objectives, types of investments, and market exposures. While both are subject to normal investment risks like foreign exchange, sector, manager, and liquidity risk, they are not exposed to risks from derivatives. Both are equity investments and may experience asset class volatility, though the portfolio aims for lower long-term risk by focusing on high-quality, undervalued, and sustainable dividend-yielding investments.
The Morningstar Model Income Equity Portfolio is updated and published monthly. Performance reports are typically released by the 15th of every month. For example, the performance for October 2025 will be released by November 15, 2025.
How Performance is Calculated
Performance for both the Morningstar Model Income Equity Portfolio and its benchmark is calculated under specific assumptions to ensure a consistent comparison:
Fees and Taxes: Performance is presented before the deduction of any fees (such as entry, exit, performance, or management fees), costs, and taxes payable by either the portfolio/benchmark or the investor.
Franking Credits and Cash Interest: Calculations do not account for franking credits or interest earned on cash balances.
Dividend Reinvestment: Notional dividends received are theoretically reinvested without any tax deduction.
It is important to note that if this model is offered as an investable option by third-party providers, management fees (typically between 0.44% and 0.85% inclusive of GST) may be charged. Performance fees (ranging from 10%–15% of outperformance) may also apply, and third-party providers might impose their own additional fees.
Accessing the Model Income Equity Portfolio
You can access the Morningstar Model Income Equity Portfolio report through your premium Morningstar account.
Steps to Access the Report:
From the menu located on the left, click Discover Investments, then select Stocks.
Once you are on the Stocks page, look to the right side of the screen to locate the Model Income Equity Portfolio section.
Click View all beneath the reports if you want to access historical versions of the Model Income Equity Portfolio.
You can also directly access the Morningstar Model Income Equity Portfolio via this link: https://premium.morningstar.com.au/insights/topic/morningstar-model-income-equity-portfolio
Disclaimer:
Performance results represent modelled performance only. Past performance of any investment is not a reliable indicator of future performance and the performance described here is of a theoretical model. The model performance will differ from actual performance which follows that model depending on actual fees, taxes and other factors including transaction timing and divergence from constituent weightings, rounding adjustments and minimum trade sizes.