Ben James

Escala, an Australian private wealth investment and advisory firm, working with high-net-worth individuals and families, family offices and not-for-profit organisations, says investors need to place greater emphasis on understanding the country-level drivers shaping global markets, as differences between economies play a larger role in outcomes.

The firm works with clients who have complex financial needs, and where their investment decisions extend beyond markets to structure, timing and long-term objectives.

Escala says that while broad regional exposures such as ‘Europe’ and ‘emerging markets’ remain a useful foundation, they are increasingly being complemented by a more granular view of the underlying exposures within those regions.

Ben James, Chief Executive Officer at Escala, said the shift reflects how portfolios are being constructed rather than a change in overall direction.

“For most clients, this is not about moving away from global exposures,” Mr James said. “It is about understanding them more clearly and understanding where capital is actually deployed, what is driving returns, and how the different countries interact.

“The difference is not access. It is a judgement of what risks we want to take, what to avoid, and how it fits together in a portfolio.”

He said that as markets become less synchronised, investors are spending more time on how portfolios are structured and how risks are distributed across them. “Advice is considered over years, not quarters.”

Escala said the growing dispersion between countries in growth, inflation, policy settings and sector composition is making it more important to look through regional labels, rather than relying on them in isolation.

Tracey McNaughton, Chief Investment Officer at Escala, said recent market behaviour has reinforced the value of that approach.

“Japan is a good example,” Ms McNaughton said. “Corporate governance reform and changes in capital management have supported a distinct investment case that is not captured by a broad ‘Asia’ allocation.”

She said a similar divergence is evident across emerging markets.

“Broad market indices can give the impression of consistency where that does not exist.

“The differences between countries such as India and China in terms of growth, policy direction and capital flows are meaningful. Even within Asia, markets like South Korea are being influenced by their own mix of reform and sector exposure.”

South Korea was among the strongest-performing equity markets globally last year, as semiconductor demand and corporate reform momentum helped offset concerns around US tariffs.

This divergence pattern has continued into this year.

“The MSCI World Index returned 5.2% year-to-date to 30 April 2026, while the MSCI Emerging Markets Index returned 13.9% over the same period. In US dollar terms, these figures mask significant dispersion between the strongest and weakest country markets inside those indices,” Ms McNaughton added.

“In some cases, technology-exposed markets have advanced sharply, while others tied more closely to energy, financials or domestic demand have lagged, despite sitting within the same regional grouping.

“The same pattern can be seen in geopolitical tail risks. Looking at exposure at a country level helps clarify where risk is concentrated, which markets are absorbing those risks, and which are less exposed.”

Escala said a more granular understanding of geographic exposure can improve portfolio construction by helping investors better assess diversification and identify where risks and opportunities are concentrated.

“Diversification is not only about how many regions you hold,” Mr James said. “It is about how those exposures behave together.”

He said this is particularly relevant for clients making long-term decisions across generations or managing capital against defined objectives.

“The aim is to build portfolios that hold up over time, and make decisions that clients remain comfortable with.”

Escala emphasised that this approach is underpinned by a disciplined investment process, including country-level macro and policy analysis, identifying structural drivers of return, and implementing exposures through carefully selected managers with a focus on risk, liquidity and portfolio fit.

Ms McNaughton said the value ultimately comes down to execution. “Identifying a market that looks attractive remains extremely important. As important, is to understand its role in the portfolio and how it contributes to overall outcomes.”

Escala expects this more considered approach to global investing to remain vital as the world shifts from a rules-based order to one dictated more by state-backed industrial policy.

“In a more complex environment, clarity becomes more important,” said Mr James.

“Broad exposures remain part of the solution, but understanding what sits beneath them, and where adjustments need to be made, is where the real value is added.”

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Stanford is an experienced private markets investor with a career spanning more than two decades across asset consulting, direct investing and venture capital strategies.

One of his most significant roles was as Head of Private Equity and Venture Capital at Hostplus, where he established the fund’s direct co-investment program and positioned Hostplus as a recognised leader in venture investing. He has also worked at the Clean Energy Finance Corporation, led the Venture Capital investment strategy at Breakthrough Victoria and as JANA Consultant was responsible for consulting and investment research. He began his investment career at Russell Investments as a private equity, infrastructure and alternatives researcher.

Ben James, CEO of Escala Partners, said Stanford’s appointment reflects Escala’s increasing focus on sophisticated strategies beyond traditional markets. “We are pleased to have Neil join our team at a time when we are increasingly offering our clients access to high-quality alternative investments. The landscape for investors is changing and our clients are no longer satisfied with traditional exposures to equities and bonds. They want exposure to private markets, venture and alternative strategies that can drive returns whilst balancing risk. Neil’s deep experience in structuring co-investments and identifying value in complex markets will be instrumental in delivering that.”

James added that Escala’s strength lies in bridging advice with execution. “At Escala, our advisors and investment specialists work hand in hand to ensure that our clients are not only aware of the forces shaping global markets but also have access to practical solutions that can enhance their portfolios. Neil will play a central role in building that bridge between research, strategy and execution.”

Chief Investment Officer Tracey McNaughton emphasised the importance of alternatives in the firm’s client offering. “At Escala, we are strengthening our commitment to alternative investments given the asset class’s ability to enhance returns, reduce volatility and offer meaningful diversification. Private markets can provide access to growth opportunities that are less correlated to public markets, but thoughtful portfolio construction is critical. Neil brings not only a proven track record, but also the ability to align opportunities with the long-term wealth goals of our clients.”

McNaughton added that Stanford’s venture capital experience would be a strong complement to Escala’s existing capabilities. “Venture and private equity are not just about chasing the next big thing; they are about identifying businesses and assets that can compound value over decades. Neil has demonstrated that discipline throughout his career, and we are excited to bring that expertise to our clients.”

Stanford said he was excited to join Escala at a time of growing demand for alternative investments. “What drew me to Escala was its commitment to delivering truly bespoke solutions for clients. Alternatives are no longer on the fringe, but a core part of sophisticated portfolios. I look forward to bringing my experience in building co-investment programs and venture strategies to help Escala’s clients access opportunities that are differentiated, resilient and aligned with their long-term wealth ambitions.”

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Ed Brooke

In an environment marked by persistent geopolitical uncertainty, Escala Partners investment advisor and partner Ed Brooke has underscored the importance of preserving liquidity and ensuring portfolios remain nimble enough to adapt quickly to changing conditions. Brooke believes investors must avoid complacency and focus on portfolios that can withstand multiple scenarios, with particular attention paid to the defensive side of investments.

“The key message for our clients is to be diversified so that your investment portfolio can do well in a lot of different scenarios. And make sure you understand what’s in the defensive part of your portfolio. Because that’s what will matter most if things do turn around- you don’t want to see the defensive part of your portfolio down 15 per cent when equity markets are down 30 per cent,” Brooke said.

He warned against overconcentration, especially as recent market gains may have pushed equity allocations beyond original targets. “If Aussie equities are now 5 to 10 per cent above your strategic asset allocation, our recommendation at the moment would be bring it back to at least neutral weight,” Brooke said.

He noted that such conversations with clients can be challenging, particularly when asking them to rotate from an asset class delivering outsized returns into others that appear less compelling in the short term. “I’d say the hard conversation is when you talk about Australian equities, and it’s up 20 per cent year to date, and we want you to diversify into some assets that are up 10 to 12 per cent year to date. So that conversation can be interesting,” he added.

Brooke emphasised the need to think long term over a horizon of five years or more, warning that equity markets could correct if price gains are not underpinned by earnings growth. “It’s better to start reducing now and rotating into some of those asset classes that will, likely, over the next five years, provide a much better risk return,” he said.

On the defensive side, Brooke highlighted the role of cash and investment-grade bonds as a stabilising buffer. He said a diversified portfolio of floating rate corporate bonds has historically offered around 2.5 per cent above cash, with minimal volatility and high liquidity even during periods of stress. “We typically use corporate bonds as the anchor in portfolios either through direct positions, good quality funds, or a blend of the two. The key is to avoid over concentration in this part of a portfolio and understand how the portfolio will perform during times of stress. Stick with high quality,” Brooke said. When reviewing bond funds, his team scrutinises the share of sub-investment grade holdings and any exposure to private debt as those can underperform or freeze liquidity in a downturn.

While corporate bonds remain a core anchor, Brooke pointed out that clients comfortable with sacrificing some liquidity are increasingly turning to alternative assets. Global private debt, private equity, hedge funds, and uncorrelated strategies such as royalties are generating strong risk-adjusted returns.

He noted that although the balance between growth and defensive assets remains broadly unchanged, growth allocations are becoming less equity heavy as private market assets gain prominence.

Diversification within growth allocations, he said, can significantly reduce volatility in times of policy shifts, inflation shocks or recession risks. “We saw this play out in April this year, in the week post “Liberation Day” when our growth portfolios were less than half as volatile as pure direct equity portfolios,” he said.

Escala’s asset allocation framework typically advocates around 30 per cent in diversified alternatives, 30 to 35 per cent in defensive assets such as cash and investment-grade bonds, and about 35 per cent in equities with a global tilt.

For Brooke, this balanced and diversified approach is the foundation for protecting wealth while retaining the agility to adjust in uncertain times.

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Simon Dawkins

The Australian Prudential Regulation Authority’s (APRA) decision to phase out $44 billion worth of additional Tier 1 (AT1) bank hybrids by March 2032 will mark the end of a product income-focused Australian Securities Exchange (ASX) investors have largely embraced. While many will remember the hybrids era fondly, Simon Dawkins, Partner and Head of Capital Markets and Fixed Income at Escala Partners, says there’s an even better option in plain sight for those who qualify as wholesale or sophisticated investors.

“With AT1 hybrids set to disappear, many investors will need to rethink how they generate income from this part of their portfolio,” Dawkins says. “For eligible investors, high-quality, investment-grade Australian floating-rate notes (FRNs) available in the wholesale over-the-counter (OTC) bond market are not just a substitute for hybrids but a more superior proposition.”

To be considered a sophisticated investor, an individual must have a gross annual income of at least $250,000 for the past two years or net assets of at least $2.5 million. Through Escala’s managed discretionary account (MDA), these investors can access a curated portfolio of direct fixed-income securities traded in the wholesale market under information memorandums rather than retail prospectuses.

The MDA portfolio typically holds senior debt, subordinated debt, covered bonds, mortgage-backed securities supported by residential or commercial property loans and corporate bonds issued by Australian and global companies.

While most securities are issued in the Australian wholesale market, some are structured under US SEC Regulation S, making them available globally but not to US buyers. Dawkins notes the portfolio may also include kangaroo bonds, issued in Australian dollars by offshore entities, and, from time to time, selected hybrids.

The appeal of this market lies in its scale and liquidity. “The Australian OTC bond market trades $3–4 billion a day on average. In normal market conditions, transactions settle in T+2, meaning clients can have cash in hand within three business days. That’s a stark contrast to the ASX hybrid market, where selling a substantial holding can take days or even weeks,” Dawkins says.

This liquidity advantage also addresses frustrations with term deposits (TDs), which became harder to break after the GFC due to APRA rules designed to protect bank funding stability. “Many investors don’t want their capital locked away. If you’ve just sold a property and have a tax bill in a few months, the penalties for breaking a TD make it unviable. An OTC bond portfolio offers the yield you need and the liquidity to access funds quickly,” Dawkins explains.

While OTC bonds don’t carry franking credits, Dawkins says the trade-off is worth it. “With investment-grade FRNs, capital prices are relatively stable and the downside risk is minimal – you receive your coupon payments and principal back at maturity. By contrast, hybrids can be forcibly converted to equity, often at the worst possible time, and their capital value can swing more sharply.”

“This is about embracing a better investment that’s been hiding in plain sight. The OTC bond market makes perfect sense as an asset allocation tool, as an income strategy, and as a liquidity strategy.”

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The advisory and investment teams will remain largely the same but will now be more aligned with, and supported by, Focus Financial Partners. Clients will continue to benefit from industry-leading investment advice delivered by the expertise and guidance of seasoned advisors.

As part of this integration, Escala has enhanced its leadership structure to include:

• Ben James, who has been appointed CEO. Mr. James, who is a founding partner of the firm, previously served as its Head of Advisory.
• Torty Howard, who has been appointed COO.
• Simon Dawkins, who will continue as Escala’s Head of Capital Markets and Fixed Income Division.

In addition, Travis Danysh, Chief Corporate Development Officer at Focus Financial Partners, is expected to be appointed Executive Chairman of Focus’ Australian businesses, further strengthening the alignment between the two organisations. Mr. Danysh brings deep cross-functional experience that supports long-term value creation for clients. Prior to his current role, Mr. Danysh held other roles at Focus and has led various strategic initiatives across multiple Focus firms. Before Focus, Travis had a career in investment banking.

Mr. Dawkins will continue in his role leading Escala’s Capital Markets division, ensuring consistency and continuity within one of the firm’s most critical arms. Escala clients will also continue to benefit from leading investment insights delivered by the dedicated and experienced CIO team, led by Chief Investment Officer Tracey McNaughton.

James highlighted the significance of the integration, stating, “This integration completes the journey by formally bringing us into the fold of Focus Partners Australia. This is more than a structural change, it’s a strategic evolution. Joining forces with Focus Partners Australia allows us to set the foundation for our continued growth and evolution, through which we will deliver expansive solutions and a differentiated client experience through a unified and integrated global organization.”

“As part of the evolution of—and commitment to—Focus’ presence in the Australian market, we are excited by the opportunity to collaborate with our other businesses in Australia to build a scaled, premier wealth management organisation capable of delivering comprehensive services, deep expertise, and a personalised experience,” said Danysh. “The addition of Escala to Focus Partners Australia is an important step towards solidifying our position within the Australian market through a leading operating and growth platform, capable of delivering holistic solutions to our clients and their advisors.”

Ms. Howard reinforced the firm’s commitment to its founding principles while embracing the advantages of global integration, improved technology and reporting, and expanded operational scale. “Our investment philosophy remains unchanged, but it will be significantly enhanced by access to global resources and international investment solutions,” she noted.

“Escala will continue to deliver tailored investment offerings through a collaborative, team-based approach that is now further empowered by the expertise and capabilities of Focus. We are more aligned than ever to showcase our deep commitment to long-term client success.”

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Scott Carmichael

In the face of ongoing market volatility, Scott Carmichael, founding partner and investment adviser at Australia’s leading private wealth and investment advisory group, Escala Partners, is reminding investors that this isn’t a new phenomenon but part of a familiar cycle.

“Market volatility today is no different to any other upheaval over the past few decades,” says Carmichael. “What sees investors through these times is following the golden rules – long-term investment in high-quality, diversified assets across, and within, asset classes.

“That is the way for long-term outperformance. The risk of short-term underperformance comes from making the wrong decisions at the wrong time, that is making emotional, behavioural type decisions.

Carmichael’s investment commandments include steering clear of speculation, avoiding concentration risk and having a deep understanding of personal liquidity needs, income requirements and a clear view of the client’s family circumstances. “Investment planning goes hand in hand with succession planning around the type of assets that families have,” he adds.

One principle he lives by is the “4 per cent rule” or its inverse which is multiplying your annual living expenses by 25 to determine the corpus required for retirement. “The rest of your portfolio basically runs for free,” he says.

Ben James, fellow Escala co-founder and investment adviser, echoes Carmichael’s focus on fundamentals. He notes that valuation metrics are notoriously difficult to use as timing tools. “Timing getting in is hard, but timing to sell is even harder,” says James. “In periods of volatility like we saw in April, we reflected on our long-term rules to stick with high-quality investment managers, let capital compound, use asset allocation as your key defence and trust the process.”

Both advisers emphasise the dual role they play- not just guiding portfolios but providing emotional counsel during market swings.

“Advisers often act like psychologists,” says Carmichael. “We need to make sure that we’re communicating in both good and bad times, and stress-testing our client portfolios.”

That means asking clients tough questions like, “How would you feel if you faced a 20 per cent correction?” and ensuring portfolios are structured to survive those scenarios.

For Carmichael and James, the message is clear: in a world of unpredictable markets, discipline, communication and a robust strategy trump any crystal ball.

Ends

Media contact

Simrita Virk, Capital Outcomes

simrita@capitaloutcomes.co

About Escala Partners

Founded in 2013, with offices in Sydney and Melbourne, Escala Partners is a premier private wealth investment and advisory group dedicated to delivering sophisticated, high-quality investment solutions to high-net-worth individuals, family offices and institutional clients. The firm is committed to providing objective and tailored investment strategies, leveraging deep expertise and innovative technology to create long-term wealth for its clients.

Discover more about Escala:  https://escalapartners.com.au/

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Torty Howard

Escala Partners, one of Australia’s leading private wealth investment and advisory firms, has significantly strengthened its alternatives investment capabilities with the launch of an end-to-end investment platform. The platform, which will support Escala’s alternative offerings for its wealth clients, is designed to streamline operations and enhance the investment experience.

The Escala alternatives platform, set up in collaboration with the One Investment Group, will offer bespoke solutions to optimise operational workflows, including document processing, onboarding, subscriptions, performance reporting, tax management, investment calls and distributions processing.

Torty Howard, Co-CEO of Escala Partners, said, “The wealth management industry is undergoing a pivotal transformation, embracing alternative and private market investments at an increasing pace. We continue to see growth in this space as family offices and high-net-worth investors look to allocate more capital to alternatives to enhance diversification, hedge against inflation and achieve superior returns. At the same time, technological advancements are making these investments more accessible, efficient, and customisable.”

Howard added that the alternative investment lifecycle for clients involves a complex process spanning pre-investment (education, research, sourcing and due diligence), investment (strategy customisation, onboarding and subscriptions) and post-investment (performance reporting, tax management and capital distributions) processes.

“End-to-end capability like this is critical because it allows us to build, manage and maintain an entire alternative investment program while eliminating operational and administrative complexities – all through a single, integrated system. This will enhance the workflows of our Chief Investment Officer (CIO) teams, wealth advisors and operational staff, providing clients with a holistic view of their wealth, encompassing both public and private investments,” she added.

Ben James, Head of Advisory, Investment Advisor and Partner at Escala Partners, added, “Our clients are increasingly looking for sophisticated investment strategies that go beyond traditional asset classes. This capability provides them with a seamless and transparent investment experience, offering access to high-quality alternative investments with greater ease, efficiency, and clarity. By reducing operational friction and enhancing customisation, we are empowering our clients to diversify their portfolios in a way that aligns with their long-term financial goals.”

The alternative asset market has continued its strong momentum, with total assets now estimated at $16.3 trillion. Demand remains robust for private equity and private credit, while uncorrelated strategies are gaining traction as investors seek greater diversification amid an increasingly challenging economic environment.*

James also pointed to the continued expansion of private markets, fuelled by their low correlation to traditional asset classes. “Private markets are now an essential source of capital for innovation and economic activity worldwide, creating long-term tailwinds for investment in this space.

“As the number of publicly listed companies declines globally, the opportunity set in private markets continues to expand. Private investments are no longer just a niche allocation; they are becoming an integral part of sophisticated investment portfolios.”

———–

*Source: Escala Agenda https://escalapartners.com.au/insights-news/agenda/agenda-2025-alternatives/

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 “We are thrilled to announce that five members of our team have been recognised amongst the top 150 financial advisors in Australia by the prestigious Barron’s,” Escala Partners Co-Chief Executive Officer and Partner, Torty Howard, said.

“This incredible honour is a testament to our laser sharp focus on providing unparalleled service to our clients and highlights our vision to excel in the delivery of wealth management services,” she added.

Partner Ben James was ranked eleventh on the list of the top 150 advisors in Australia. James has been with Escala for over a decade and has 27 years’ experience as a financial advisor, during which time he has built up a wealth of clients. This is the seventh time he has been recognised in the top 20 advisor list.

“We would like to extend congratulations to all these outstanding advisors. Their dedication, expertise and ability to build trusted relationships with clients is truly inspiring. We are proud that their efforts to provide exceptional advice to their clients has been recognised by Barron’s,” Howard said.

Other partners included in the list were Amanda Fong (ranked 49th), Travis Pitt (ranked 75th), Tom Meagher (ranked 79th) and Ed Brooke (ranked 105th).

The Top 150 Financial Advisors List is a collaboration between The Australian and American investor magazine Barron’s, also owned by News Corp.

Advisors are ranked based on three general categories – client assets managed by the adviser, fees and revenue generated by their business, and the quality of the adviser’s business – and the listing is based on a survey of 55 questions.

“We will continue to build on our two pillars of growth – to put our clients’ interests first and support the future leaders in the wealth management space. That is our point of difference, offering a completely new experience in wealth management.”

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Travis Pitt has over twenty years of industry experience as a tenured financial adviser providing customised investment and wealth management solutions to ultra-high net worth individuals and families. He is a nationally ranked adviser, having been named to the Barron’s list of Australia’s Top 100 Financial Advisers in 2021 as well as in prior years. Through this transaction, Escala will further increase its presence in the Melbourne market and add to the depth and breadth of its investment advisory team. By joining Escala, Pitt will gain access to Escala’s specialised investment management capabilities and operational infrastructure, continuing his commitment to provide best-in-class services to his clients.

“We are excited to partner with Travis, whom I have known for many years and respect as an outstanding adviser with a commitment to personalised, high-touch client service,” said Pep Perry, CEO and Partner at Escala. “This transaction elevates our organisation with the addition of high caliber leadership and further deepens our presence in the attractive Melbourne and Sydney markets. We welcome Travis and his clients to the Escala family.”

“We are very pleased that Travis has joined the Escala team. Talent acquisition is a central component of the value-added support that we provide to our partner firms, particularly in facilitating the addition of highly experienced advisers who have a long track record of success in serving ultra-high and high net worth clients,” said Rajini Kodialam, Co-Founder and Chief Operating Officer of Focus. “Helping our partners build scale and accelerate their organic growth are essential elements of our value propoposition.”

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