Category: Funds

A fund refers to capital belonging to numerous investors used to collectively purchase securities while each investor retains ownership and control of his own shares. An investment fund provides a broader selection of investment opportunities, greater management expertise, and lower investment fees than investors might be able to obtain on their own. Types of investment funds include mutual funds, exchange-traded funds, money market funds, and hedge funds.

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Funds Funds

Franklin Income Fund Class C- a solid yield generating fund

The fund seeks to maximize income, while maintaining prospects for capital appreciation, by investing in a diversified portfolio of stocks and bonds. The fund tracks Linked Blended 50% MSCI USA High Dividend Yield Index + 25% Bloomberg High Yield Very Liquid Index + 25% Bloomberg US Aggregate Index

Process:

This fund aims to deliver income and capital appreciation using a flexible, valuation-conscious approach. Management invests in a mix of dividend-paying stocks, bonds, bank loans, convertibles, and equity-linked securities. But a heavy reliance on credit risk and the lack of an identifiable edge warrant a Process rating of Average. Management has significant flexibility to shift the portfolio, relying on bottom-up security selection, and yield in particular, to drive asset allocation without regard to sector weights or credit quality. The portfolio has averaged roughly 40% in equities. Within equities, management gravitates toward large-cap dividend-payers, which often results in big slugs of utilities, materials, and energy stocks. While this approach has consistently produced a relatively high yield and, at times, solid total returns, it has done so by relying heavily on high-yield bonds.

People:

This fund is backed by veterans, but the team doesn’t possess a clear advantage. Its People rating remains Average. Lead manager Edward Perks has helmed this fund since 2002 and Franklin Managed Income FBLAX since 2006. His comanagers possess complementary experience.

The equity and credit analyst teams the managers rely on for ideas boast a wealth of experience, but our confidence in them is muted. And Franklin Equity Income FISEX, an all-stock fund that invests in some of the same dividend-payers as this offering, is backed by the equity analyst team that generates ideas for a broad range of mandates rather than tailored recommendations.

Performance:

This fund’s substantial risks have resulted in high volatility relative to peers and middling risk-adjusted returns. This fund tends to be much more sensitive to equity markets than its typical allocation – 30% to 50% equity category peer because of its hefty dose of credit risk and its often-double-digit combined stake in equity linked notes and convertible bonds.

Price:

The expenses are critical to evaluate as they come directly come out of the expense. The analysts at Morningstar suggest that this share class will not be able to generate positive alpha relative to the benchmark index.

Asset Allocation:

About Fund:

The Fund aims to maximise income while maintaining prospects for capital appreciation by investing primarily in equity securities and long & short-term debt securities. The Fund may invest up to 25% of its net assets in non-U.S. securities. It’s three properties are: a balanced portfolio with exposure to the US markets, best of equity and fixed income teams and attention to risk elements.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds Research Sectors

Bennelong ex-20 Australian Equities Fund: distils returns of the 20 largest companies on ASX

The Fund is suitable for investors seeking to distill out the influence of the returns of the largest 20 listed companies on the ASX and looking to tilt towards growth. As a result, the fund invests in stocks outside of the top 20 subsets of the market but with at least a minimum of $250m market cap. The manager is more of a purist stock picker who seeks to invest in companies he feels are on a genuine earnings growth path and feels that such companies are not common and to find these companies requires thorough and focused bottom up research process.

Investment Team:

The BAEP investment team consists of Mark East: Chief Investment Officer and Portfolio Manager, Keith Hwang: Director, Quantitative Research, Neale Goldstone-Morris: Senior Investment Analyst, Strategy, Kieran Sisson, Doug Macphillamy, Brad Clibborn, Jack Briggs: Senior Investment Analyst and Todd Briggs: Investment Analyst

Key Highlights:

  • The manager conducts deep dive, bottom-up research on companies it invests in. With a thorough understanding of their stock positions, the manager takes high conviction and genuinely active bets relative to the benchmark.
  • The fund has been investing since 2009 – the immediate aftermath of the global financial crisis. Since then, there have been several periods where market volatility has tested the manager’s ability to generate returns while following their investment process.
  • The Fund’s focus on stocks outside of top 20 ASX listed companies provides investors an opportunity to diversify and distil growth from typical core domestic equity strategies that are heavily influenced by the performance returns of shares in the top 20 listed companies.
  • The team of eight experienced analysts includes the PM.
  • The fund’s macro analyst provides top down insights on the macro and guides the team to where the team should focus their research.

Downside Risks: 

• An economic recession in Australia/globally, leading to earnings recession

• Stock selection fails to yield alpha 

• Key man risk – the PM (Mark East) departs – given he has the ultimate responsibility of running the strategy

Investment Process:

  • From all of the stock listed on the ASX, BAEP applies a screen to derive an Investment Grade Universe from which to find investment opportunities. The filters include a market capitalisation of greater than $250 million, sufficient liquidity, an earnings track record.
  • Idea Generation aims to identify those stocks within the Investment Grade Universe that warrant particular attention, thereby focusing research efforts on the most prospective candidates. The ideas build up into the Focus List.
  • Stock analysis is extensive and includes quantitative and qualitative analysis including field research.
  • Portfolios are constructed on a stock-by-stock basis. The inclusion, sale and weighting of a particular stock is determined by reference to a number of factors
  • The portfolio is constantly monitored, tested and optimised with ongoing changes.

Performance:

Fund Positioning:

About Fund:

The Fund’s objective is to outperform the S&P/ASX 300 Accumulation Index excluding the portion of return attributed to the S&P/ASX 20 Leaders Index, by 4% p.a. after fees on a rolling 3-year basis. The Fund invests primarily in Australian shares with high quality business models, strong growth, and underestimated earnings momentum and prospects.

(Source: Banyantree)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds

SPDR S&P/ASX 200 Listed Property Fund: Decent option for A-REIT investments in a competitive market

About The Benchmark

A sector sub-index of the S&P/ASX 200, this index tracks the performance of Australian real estate investment trusts (A-REITs) and mortgage REITs.

Fund Objective

The SPDR S&P/ASX 200 Listed Property Fund seeks to closely track, before fees and expenses, the returns of the S&P/ASX 200 A-REIT Index.

Process 

SLF aims to fully replicate the S&P/ASX 200 A-REIT Index. REITs are listed vehicles that own and operate property. REITs are required to pass on the majority of their income to investors to enjoy favourable taxation arrangements, and distributions are not franked. High payout ratios and an absence of franking mean that REITs typically offer a high headline yield relative to other stock market sectors. SLF is by far the longest running, with an FUM of AUD 650 million as at September 2021, which helps it to maintain trading levels far above most rivals. SPDR doesn’t participate in securities lending for Australian ETFs.

Portfolio

With the relatively short list of A-REIT names in the S&P/ASX 200, the portfolio is understandably concentrated. As at September 2021, the index consists of 24 holdings, with the top 10 accounting for over 85% of the total portfolio. The exposure to the largest current holding, Goodman Group, has ballooned significantly over the past five years to 27% from around 11%. Seeing that the index is relatively untouched by any reconstitutions, portfolio turnover is quite low at 5%. However, in case of an eventual entry or exit of the constituents, the concentrated index is susceptible to reconstitution, which may lead to a meaningfully altered portfolio.

Top 10 HoldingsWeight (%)
GOODMAN GROUP27.07
SCENTRE GROUP11.52
DEXUS/AU8.59
MIRVAC GROUP8.17
STOCKLAND7.98
GPT GROUP7.27
CHARTER HALL GROUP5.93
VICINITY CENTRES4.91
SHOPPING CENTRES AUSTRALASIA2.20
CHARTER HALL LONG WALE REIT2.06

Sector Allocation

Sub-Industry BreakdownWeight (%)
Diversified REITs34.79
Industrial REITs28.49
Retail REITs23.96
Office REITs9.46
Specialized REITs1.90
Residential REITs1.41

People

The Global Equity Beta Solution team that is responsible for managing this ETF has undergone a leadership transition recently. Effective September 2021, John Tucker has been appointed as the new chief investment officer, replacing Lynn Blake, who has taken retirement. Tucker is a State Street veteran who has been in multiple senior leadership roles within GEBS for the past 20 years. The ecosystem and structure of the investment team is well-defined, where research and trading functions are centralised and spread out globally; however, portfolio managers are based locally. Australia-domiciled passive products are managed by a core team of Tucker and four portfolio managers: Alexander King, Lillian Poon, Andrew Howson, and Elda Dong.

Performance

The fund has managed its tracking difference well, matching up to the benchmark after accounting for management fees. SLF has recorded a return of 6.54% since its inception in 2002. As at the close of 2019, the annualised five-year returns for the fund stood at an attractive 10.55%, outperforming the category returns of 9.87%. The rally was mainly driven by the strong returns of Goodman Group in the latter half of the five-year period.

Total Return1 Month3 Month6 Month1 Year3 Year p.a5 Year p.aSince Inception  p.a
Fund (%)0.384.2712.0730.259.578.636.54
Index (%)0.424.3812.3430.879.878.966.78

(Source: MorningStar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds Sectors

Allspring Diversified Income Builder Fund – Class C: A fund providing high income

Fund Objective

The investment seeks long-term total return, consisting of current income and capital appreciation.

Approach

The strategy targets a yield of 4%-5% and allocates 60%-90% of assets in fixed income, with the remainder in stocks. The team may also employ tactical shifts, vetted by the firm’s tactical trading council, by trading currencies or equity sector indexes, but these can be difficult to execute well consistently. Since introducing a multisleeved approach in early 2018, this strategy has undergone three prospectus benchmark shifts that signal it continues to experiment with its profile. The most recent adjustment (February 2020) decreased the equity exposure by 10 percentage points to 25% in order to make room for a more diversified bond sleeve. Other adjustments include the removal of a REITs sleeve in September 2018, the addition of a securitized bond sleeve in March 2019, and the introduction of an options sleeve in January 2020.

Portfolio 

As fixed-income markets have proved richly priced, the portfolio managers cited more attractive capital appreciation and dividends in the equity space, prompting an uptick in the equity holdings to roughly 38% here by September 2021. Within that equity sleeve, technology stocks (Microsoft MSFT is a holding) and healthcare stocks (such as Bausch Health Companies BHC, DaVita DVA, and AbbeVie ABBV) occupied roughly 27% and 17% of assets, respectively. 

High-yield bonds dominate the fixed-income portion of the strategy (59% of the portfolio as of September 2021), and it is worth noting that these are more sensitive to equity markets than the investment-grade fare employed by many peers for downside protection in stressed markets. Other bond sleeves here are modest but diversifying relative to the portfolio’s historical profile and include municipal bonds (3%) and securitized bonds (2%).

People

Kandarp Acharya as co manager alongside Margie Patel, who was the sole manager since 2007 but is departing this strategy (though she remains on Allspring Diversified Capital Builder EKBYX) as of Dec. 13, 2021. This move is accompanied by the arrival of quantitative researcher Petros Bocray, a 15-year firm veteran and Acharya’s collaborator on Allspring Asset Allocation EAAIX.

Performance

Over the strategy’s short tenure with its new contours (January 2018 through November 2021), the 5.5% annualized return of its R6 share class modestly outpaced the 5.3% return of the Morningstar Conservative. Target Risk Index and trailed the 6.7% return of its custom benchmark (60% ICE BoA U.S. Cash Pay HY Index, 25% MSCI ACWI, and 15% Barclays Aggregate Index). From an absolute return perspective, the strategy also generated a higher return than the 5.0% median of its typical allocation–15% to 30% equity Morningstar Category peer.This strategy has a riskier profile than many strategies in the category, particularly during stress periods, resulting in risk-adjusted returns (as measured by the Sharpe ratio) that trail all comparative points (typical category peer and benchmark as well as custom benchmark) over the aforementioned period. In three recent stress periods (when energy prices plummeted from June 2015 to February 2016, the 2018 fourth-quarter high-yield sell-off, and the coronavirus-driven market panic of Feb. 20-March 23, 2020), the fund lagged its category index by more than double and trailed its typical peer.

Top 10 Holdings

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About the fund

The Fund seeks high current income from investments in income-producing securities. The Fund will normally invest at least 80% of its assets in income producing securities, including debt securities of any quality, dividend paying common and preferred stocks, convertible bonds, and  

derivatives. The strategy targets a yield of 4%-5% and allocates 60%-90% of assets in fixed income, with the remainder in stocks. The team may also employ tactical shifts, vetted by the firm’s tactical trading council, by trading currencies or equity sector indexes, but these can be difficult to execute well consistently.

(Source:Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds

Resolution Capital Global Property Securities Fund: A diversified portfolio of stocks of real estate sectors

wherein individual Portfolio Managers hold 25 to 35 stocks each. The Fund’s objective is to exceed the total returns of the Benchmark (FTSE EPRA/NAREIT Developed Index (AUD) Net TRI) after fees on a rolling 3-year basis.           

Downside Risks:

  • Deterioration in Global economy, especially the property market (deterioration of property prices and fundamentals). 
  • The Portfolio Manager/analysts miss-calculate their bottom-up valuation. 
  • Softening in bond yields negatively impacting pricing. 
  • Key person risks, i.e. Andrew Parsons, Marco Colantonio, Robert Promisel, Julian Campbell-Wood and members of the investment team.
  • risk.

Fund Performance & Current Positioning:

(%)FundBenchmarkOut-performance
1-month 2.64%1.90%+0.74%
3-months 14.10%12.29%+1.81%
1-year 26.67%34.93%-8.26%
3-year (p.a.)9.68%7.18%+2.50%
5-year (p.a.)8.65%6.16%+2.49%
Since Inception (p.a.)13.48%12.33%+1.15%

(Source: Resolution Capital)

Fund Positioning:

StockSectorListing% of portfolio*
PrologisIndustrialUS8.10%
Invitation HomesResidentialUS6.50%
WelltowerHealthcareUS4.70%
Kimco Realty CorporationRetailUS4.20%
EquinixData CentresUS4.10%
Essex Property TrustResidentialUS3.60%
Canadian Apartment PropertiesResidentialCanada3.10%
Kilroy Realty CorporationOfficeUS3.10%
CubeSmartSelf-StorageUS2.90%
Mitsubishi Estate CompanyOfficeJapan2.80%
Total43.10%

(Source: Resolution Capital)

Key Highlights:

  • Investment Team:

The investment team is well-resourced with strong credentials and investment experience and is appropriately aligned and remunerated. The PMs have strong credentials and lengthy experience in real estate: Andrew Parsons, Marco Colantonio, Robert Promisel, have at least 30 years industry experience whilst Julian Campbell-Wood has 17 years’ experience. Performance reviews are conducted twice per year and based on Investment performance of all client Funds strategies, Research analysis and outcomes, Compliance with mandate guidelines and Adherence to ESG policies.

  • Investment Philosophy and Process:

In our view, the Fund adopts the bottom-up stock picking fundamental process that most other peers typically follow. A key advantage in the fund’s investment process is the utilisation of their proprietary database to collate their research that enables cross comparisons among regions and sectors to highlight any discrepancies. 

  • Performance:

Although past performance is not an indicator for future performance, it is an indicator of whether the Fund’s strategy has worked in the past. Although the Fund has performed well on an absolute basis, the Fund has underperformed relative to its benchmark in the past year by -8.3%. Nevertheless, over 3- and 5-year, and since inception, the fund has performed well relative to the benchmark.

  • Association with Pinnacle is a positive: 

ASX-listed Pinnacle Investment Management holds a minority 44.5% stake in Resolution Capital whilst key staff own the remaining 55.5%. Pinnacle provides support via distribution and administration services, which is viewed as positive.

About the Fund:

The Resolution Capital Global Property Securities Fund (Unhedged) – Series II provides exposure to a diversified portfolio of stocks within a range of real estate sectors across developed markets (North America, U.K, Europe, and Asia Pacific). The Fund’s objective is to exceed the total returns of the Benchmark (FTSE EPRA/NAREIT Developed Index (AUD) Net TRI) after fees on a rolling 3-year basis.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds

AMP Capital Specialist Property and Infrastructure Fund: A fully listed real assets portfolio

The AMP Capital team also decides on strategic weights to each manager and allowable tactical deviations. Managers are assessed on such criteria as business structure; experience of the team; their alignment of interest, investment merit, and performance; and capacity and fees. The team is also responsible for portfolio review and rebalancing. Portfolio monitoring is undertaken using FactSet and Cortex risk systems.

Portfolio:

AMP Capital Specialist Property and Infrastructure is a multimanager portfolio designed to bring together a mix of Australian and global managers to produce a diversified portfolio of listed real estate and infrastructure. The strategy removed its last direct property asset in May 2021. The portfolio’s composition of the underlying managers had been fairly stable since its inception in 2014, but an October 2019 strategic asset allocation review spurred the decision to remove exposure to unlisted property from its prior 15% allocation (increasing the global listed infrastructure by 15%). AMP Capital has shown strong conviction and patience with the underlying strategies in the listed space, with listed investments now comprising the total portfolio. Both global listed property and global listed infrastructure are represented by internal AMP Capital managers, with allocations of 32% and 47%, respectively, as at July 2021. Australian listed real estate exposure of 20% is managed by passively in the UBS property index. This vehicle makes a suitable supporting holding, and it managed around AUD 259 million as at 31 July 2021.

People:

AMP Capital’s multimanager team sits within the shop’s Multi-Asset Group. MAG is headed by CIO Anna Shelley, who joined in AMP Capital in July 2021. Duy To was appointed head of public markets in August 2021. Day-to-day management of the strategy lies with Rebecca Liu and Trent Loi, who is also portfolio manager for the International Share strategy. External consultant Willis Towers Watson is used at times to work on specific projects and provide research on existing and potential strategies.

Price:

Analysts find it difficult to analyse expenses since it comes directly from the returns. The fees levied by the share class is under middle quintile. Analysts expect that it would be difficult to generate positive alpha relative to its benchmark index for this fund.

Performance:

AMP Capital Specialist Property and Infrastructure lagged its blended benchmark after fees to June 2021 since its December 2014 inception. The passive Australian listed property strategy (UBS Australian Property Index) has closely closely tracked the S&P/ASX 200 AREIT Index over time. The AMP Capital global property securities portfolio has delivered returns ahead of the FTSE EPRA NAREIT Developed TR AUD Hedged Index over the trailing three and five years to June 2021.

(Source: Factsheet from https://www.ampcapital.com/)


(Source: Factsheet from www.schwabassetmanagement.com)           (Source: Morningstar)

About the Fund:

While AMP Capital Specialist Property and Infrastructure’s move to a fully listed real assets portfolio is well received, a period of team instability continues to hinder. This is a multimanager strategy combining Australian and international property and infrastructure managers to build a diversified core portfolio of real assets. The managers are assessed on various criteria such as business structure, team and its alignment, performance track record, and fees and capacity. Its inception date is 01 July, 2014. Total Assets under this fund are 264.9 AUD Million.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds

Alphinity Sustainable Share Fund: An impressive sustainable strategy with strong foundations

ESG characteristics and contribute towards the advancement of the UN Sustainable Development Goals, or SDGs. The investment process implements negative and positive screens and is based on a sustainable charter developed by the Sustainable Share Fund Compliance Committee. The negative screen seeks to eliminate companies that are involved in activities that are harmful to society. The positive screen aims to discover companies that make a constructive impact on society in areas of economic, environmental, and social development by making a net contribution to one or more of the UN SDGs. The fundamental research focuses on discovering undervalued companies in or entering an earnings upgrade cycle.

Portfolio:

The portfolio typically contains around 35-55 companies, which support the UN Sustainable Development Goals and have strong ESG practices. However, the stocks selected for the portfolio must also have attractive investment fundamentals and underestimated earnings growth potential. A composite research model houses the overall research process, blending ESG evaluations, qualitative analysis, and quantitative assessments. Stocks that score highly in the composite research model populate the biggest active weightings in the portfolio, though the maximum position is restricted to plus or minus 5% of the index weight. Companies that are involved in gambling, alcohol, and tobacco or mine fossil fuels, uranium, and gold are excluded from the portfolio.

People:

Johan Carlberg, AllianceBernstein’s former director of Australian equities, leads Alphinity, and his former AllianceBernstein colleagues Andrew Martin, Stephane Andre, and Bruce Smith all share investment duties. Andre and Smith are the portfolio managers of this strategy. In 2020, two new fundamental analysts were employed: Andrey Mironenko and Jacob Barnes. In addition, an ESG & sustainability manager, Jessica Cairns, was hired in 2020; she supports the strategies’ assessment and integration of ESG-related matters. Cairns also supports the strategy’s Compliance Committee and is involved in its efforts to define an investment universe that considers companies’ contribution towards achieving the UN’s Sustainable Development Goals.

Performance:

Alphinity took over investment management of this fund in late 2010. Alphinity Sustainable Share has outperformed the category index (S&P/ASX 200) and most category peers over three, five, and 10 years to 31 July 2021, on a trailing returns basis. Stocks that played a role in this solid performance include IDP Education, Fortescue, CSL, Goodman Group, and Lifestyle Communities.

(Source: https://www.alphinity.com.au/performance/)

Price:

Analysts find it difficult to analyse expenses since it comes directly from the returns. The share class on this report levies a fee that ranks in middle quintile. This share class is expected to deliver positive alpha relative to the category benchmark index. 


(Source: Morningstar)                                                                       (Source: Morningstar)       

About Fund:

Alphinity was founded in 2010 by Johan Carlberg, Andrew Martin, Bruce Smith, and Stephane Andre, with Stuart Welch joining in 2017. The team structure is relatively flat, with all five senior team members being portfolio managers and undertaking company research. However, for more than a decade, Andre and Smith have made the major decisions on stock selection and portfolio construction for this strategy. The portfolio managers on stock research are capably supported by two fundamental research analysts, senior quantitative analyst, and senior trader. Alphinity Sustainable Share’s strong foundations–including experienced portfolio managers, disciplined multifaceted process, and comprehensive commitment to environmental, social, and governance-focused investments.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds

PIMCO Global Bond Fund attracts well – resource to the investment team

Well established and methodical investment Process

PIMCO’s investment process entails three main buckets: (1) the economic forum (top down analysis), which meets four times a year to debate the state of play on short and long – term basis. (2) the investment committee develops the strategic parameters for portfolios and set the risk parameters such as interest rate exposure, yield curve positioning and sector positioning. (3) Portfolio management (bottom-up analysis) consists of PIMCO’s rigorous analysis and research of securities.

Downside Risk

  • Interest rate risk – (bond price and yields are inversely related)
  • Credit risk (the risk of downgrade and default) & Inflation risk
  • Personnel risk – significant turnover among the 3 lead PMs

Fund Performance 

(%)Fund (net)BenchmarkOut-performance
1-month -0.15-0.22+0.07
3-months1.081.53-0.45
FYTD0.871.03-0.16
1-year1.690.55+1.14
2-years (p.a.) 2.541.53+1.01
3-years (p.a.)4.384.28+0.10
Since inception (%p.a.)3.863.84+0.02

Source: PIMCO

Sector Exposure

Source: PIMCO

About the fund

The ESG Global Bond Fund is an actively managed portfolio of global fixed-interest investment which incorporates PIMCO’s ESG screening. The portfolio predominantly invests in governments, corporate, mortgage and other global fixed interest securities.

  • The ESGGlobal

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds

Top pick within global listed property

of stocks within a range of real estate sectors across developed markets (North America, U.K, Europe, and Asia Pacific). The Fund’s objective is to exceed the total returns of the Benchmark (FTSE EPRA/NAREIT Developed Index (AUD) Net TRI) after fees on a rolling 3-year basis.

Approach

Resolution mixes top-down thematic and bottom-up fundamental research to arrive at a relatively

concentrated 40- to 60-stock portfolio with little resemblance to the benchmark. The first step filters the 450- plus stock universe down to a manageable size. Macroeconomic drivers play a part, based on the team’s company visitation schedule. Resolution also uses its proprietary screening database to filter out stocks with undesirable characteristics such as high debt/EBIT ratios and balance-sheet risk.

Portfolio

Resolution has managed global property since 2006, but this vehicle was founded in 2008 during the depths of the global financial crisis, when some low-quality REITs flirted with bankruptcy. Resolution didn’t avoid all the underperformers, but it did better than rivals at avoiding the worst offenders. Its focus on sustainability and corporate governance helped, as did the chosen UBS Global Investors Index, which focused more on rent collectors and less on risky development. Being brand new gave Resolution a clean slate, helping the team to buy quality REITs at bargain prices. The quality preference also keeps a lid on portfolio turnover, which oscillates between 30% and 55%–not as low as an index fund but lower than the average active strategy. However, Resolution has been willing to make occasional substantial portfolio shifts. In the first half of 2019, Resolution saw some industrial property such as Goodman as expensive and was underweight in this name, favouring industrial exposure through ProLogis and Segro. During the following 12 months (to 30 April 2021), Resolution preferred residential, data centre, and tower exposure, specifically in the US. The strategy managed AUD 14.4 billion as at 30 April 2021.

Source: Morningstar

General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Funds Funds

Pendal Sustainable Conservative Fund: An effective asset allocated fund with ESG overlay

It is noted that the investors would be comfortable as the ESG considerations mirror with those of the Manager’s approach- the strategy does not invest in tobacco or weapons manufacturing as well as the Fund has negative screens (alcohol, gaming, pornography) with activities materiality caveat. The fund utilises internal as well as external fund managers in order to make effective decisions while allocating its assets. The fund size is $345m.            

Downside Risks:

  • ESG breaches by investments in the portfolio.
  • Underlying managers fail to deliver performance or breach mandates.  
  • Personnel change – turnover in the team or portfolio managers. 
  • Broader market risk.

Fund Performance & Current Positioning:

(%)FundBenchmarkOut-performance
1-month 1.07%0.74%+0.33%
3-months 3.62%3.09%+0.53%
6-months8.17%5.89%+2.28%
1-year 9.46%7.40%+2.06%
3-year (p.a.)4.82%5.28%-0.46%
5-year (p.a.)4.10%4.76%-0.66%
Since Inception (p.a.)+7.15%+3.86%+3.29%

(Source: Pendal; Past performance is not an indicator of future performance)

Fund Positioning:

 % of Portfolio
Australian shares9.0%
International shares13.0%
Australian fixed interest17.2%
International fixed interest16.2%
Australian property securities3.4%
International property securities 3.1%
Alternative investments15.9%

(Source: Pendal)

Key Highlights:

  • Investment Team:

The Pendal Multi-Asset team is headed by the very experienced Michael Blayney. The team is made up of 4 members- 3 Portfolio Managers and 1 Analyst. The team is also supported by Edwina Matthews who is Pendal’s Head of Responsible Investments.

  • Investment Philosophy and Process:

The Fund’s core belief is that markets are inefficient, and that active management can improve risk and return. The process basically consists of three approaches namely; Strategic Asset Allocation Approach (SAA), Environmental, Social and Governance (ESG) integration and construction of benchmark using neutral’s asset allocation position and index returns.

About the Fund:

The Fund is an actively managed multi-asset portfolio across a range of asset classes and incorporates a range of sustainable, ethical and financial considerations. The strategy aims to provide real return over inflation over the medium term. The strategy’s neutral target asset allocation is 75% defensive assets and 25% growth assets, which is suitable for ESG focused conservative investors.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.