Linda Da Silva

Linda Da Silva appointed Chief Information Officer (CIO) of ING Australia and member of ING Australia Executive Committee.

Linda moves from Westpac where she was previously CIO of BT Financial Group. She joined Westpac Group in 2008.

With more than 20 years’ experience in IT consulting and leadership roles in Australia, Asia, Middle East and the UK, Linda has managed significant technology functions and has extensive experience in delivering large-scale transformation programs across different industries.

ING Australia CEO, Uday Sareen, says the appointment comes at a good time for ING as the business grows strongly and scales digital capability across products and services.

“I welcome Linda to the team. She has the experience and skills to help accelerate our digital transformation and further differentiate our offering to customers.”

Linda takes over the CIO role from Ani Paul, who is now ING’s global chief data officer, located in Amsterdam.

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Mark Woolnough

According to ING DIRECT’s latest Financial Wellbeing Index, property still holds strong appeal for investors with one in every five (20%) Australians saying they own an investment property.

Despite tightened investor lending and signs that the property market is slowing, investor demand has continued to grow with the number of Australians investing in property growing by three per cent since mid-2015.

Demand high in NSW and WA while SA appetite diminishes

NSW and WA continue to lead the pack in terms of the highest percentage of residents with at least one investment property (22% each), both growing year on year by four per cent.

WA has also taken the crown from NSW and Victoria in terms of those with multiple investment properties more than doubling in the past year from four per cent to nine per cent.

The only state where appetite for investment property has dampened is South Australia, in which approximately one in every 10 (11%) people owns an investment property, down from 15 per cent in 2015.

Younger investors lead property demand

Looking across the generations, Mark Woolnough, Head of Third Party Distribution, ING DIRECT, commented: “What’s interesting is that while there are continued questions around affordability and the challenges for younger generations in getting onto the property ladder, it’s actually Gen Y that is leading the property investment pack.”

22 per cent of Gen Y (18-34 year olds) own at least one investment property, followed by 20 per cent of Gen X (35-49 year olds) and 19 per cent of Baby Boomers (50-64 year olds).

Mr Woolnough added: “Ultimately we’re seeing that Australians still hold faith in the long term investment benefits of property. Property is a great opportunity to build wealth, but it definitely pays to do your research, take your time, speak to the experts such as a mortgage broker or buyers’ agent, and focus on the financials of the investment rather than the emotions of a purchase.”

The latest property trends across the nation are available through ING DIRECT’s Autumn Property Guide 2016 which is now available for download.

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John Arnott

ING DIRECT is expanding its offering for Australian home loan borrowers with the launch of home and contents insurance.

Initially ING DIRECT will be offering home, contents, and home and contents packages to customers who have come through the bank’s broker network, with a variety of optional cover available including landlord, flood, accidental damage and personal valuables.

In early 2017 the offering will be expanded to direct home loan customers and as stand-alone product for existing and new customers.

John Arnott, Executive Director, Customers, at ING DIRECT said the launch of insurance was about making the home loan journey as smooth and simple as possible for customers:

“We’ve been helping Australians into their homes for two decades with our home loans, and now we’re helping them to protect their homes and providing peace of mind.

“Buying a home is both an exciting and incredibly busy time and we want to make the process as simple and efficient as possible for our customers so they can focus on the excitement of settling into their new home. It’s about understanding their broader needs at this time and making sure we can meet them – effectively offering a one stop shop.”

ING DIRECT’s insurance proposition will be fully digital, with an insurance estimate automatically generated and emailed to the customer upon formal approval of their home loan application. The customer will be invited to view the details of the estimate and provide additional information for a full quote, with the option to purchase the insurance instantly online.

ING DIRECT has teamed up with Auto & General to develop its insurance proposition.

Ram Kangatharan, MD & CEO at Auto & General said the company was proud to be ING DIRECT’s insurance partner of choice.

“ING DIRECT is a market leader in digital innovation and Auto & General has been developing smart data driven solutions tailored to meet their customers’ needs through their preferred purchase channels,” said Mr Kangatharan.

Mr Arnott added: “We have a shared ‘customer-first’ focus; clear through our digital approach, which is all about making sure we’re providing the right offer to our customers at the right time to make their home buying journey as smooth as possible, and clear through how we manage claims. We’re very happy to be working with Auto & General to bring insurance to our customers.”

Ninety per cent of ING DIRECT’s home loan customers are referred through mortgage brokers and the bank has a mortgage portfolio of more than $40 billion.

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Gen x and Yers not keen on robo-advice.

A new report by ING DIRECT, The truth about Gen X and Gen Y, quashes the assumption that younger generations are more likely to embrace robo-advice, with almost 80 per cent wanting a face-to-face advice relationship.

Mark Woolnough, Head of Third Party Distribution at ING DIRECT, commented: “Relationships have always been the cornerstone of successful and sustainable advice partnerships and it’s refreshing to see that the more digitally-savvy younger Australians recognise the value of face-to-face financial advice.

“This shows that while there is a place for online solutions, they should complement personal advice relationships and not be at their expense.”

A strong appetite for advice among young Australians

While less than five per cent of Gen X and Gen Y currently have a financial adviser, the report found that they recognise the value and importance of advice with more than half intending to seek advice in the future.

Those whose parents use an adviser most strongly recognise the value of advice, with 68.7 per cent stating that advice delivers benefits.

Mr Woolnough commented: “The net wealth of Gen X and Gen Y is approximately $1.4 trillion[1], and coupled with an intergenerational wealth transfer of $2.4 trillion[2] occurring during the next three decades, that’s a huge opportunity for advisers.

“The recognition of the value of advice, particularly among those whose parents are advised, means that there is a rich pipeline of new clients among the existing retiree and pre-retiree client base of most advisers.”

Fees holding young Australians back

The key factor holding Gen X and Gen Y back from seeking advice is the perception of high fees. Both generations expect to pay a maximum of $250 for comprehensive face-to-face advice, demonstrating a clear imbalance between the cost of advice and what young Australians think is appropriate to pay.

While this may be an unrealistic expectation, it bodes better than for robo-advice, which the majority believe should be free.

Mr Woolnough commented: “While $250 may be far off the mark in terms of the true cost of personal advice, this presents an opportunity for advisers to educate and take these younger Australians on a journey, demonstrating the real value that advice can add.”

[1] ING DIRECT analysis based on McCrindle demographics data and ABS Household Income & Wealth data
[2] ING DIRECT Women & Finance Report 2015

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ING Investment Management Australia’s business provides a number of investment strategies and products directly to the Australian institutional and wholesale markets.

The business had EUR 24.8 billion (AUD 34.0 billion) in assets under management as of 31 March 2011, the majority of which is managed on behalf of ANZ’s wealth management business, OnePath.

In a letter announcing the sale, CEO Steven Billiet writes “the  transaction supports ING‘s objective to actively manage its capital and portfolio of businesses to ensure an attractive and coherent combination for the announced potential IPOs of its insurance and investment management activities.

“ING has previously said it plans to divest its insurance and investment management operations by the end of 2013 through a base case of two IPOs: a European-led IPO including the European and Asian insurance and investment management businesses, and a U.S.-focussed IPO.

“With a strong presence in Europe, the Americas, and nine Asian countries, ING Investment Management remains well-positioned in relation to the attractive Australian market.
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“We continue to manage an array of off-shore strategies in our various international investment centres, which are available to our clients domestically, regionally, and globally.
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“The transaction is subject to regulatory approval by the Dutch government and is expected to close in the fourth quarter of 2011. ING IM will be working with UBS Global Asset Management to ensure a smooth transition for all clients, but there will be no changes to client relationships or the way funds are managed in the short-term.
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“We understand that you will likely have questions or need additional information and we remain committed to keeping you updated on developments. In the meantime, our focus remains on delivering superior investment returns and servicing the needs of our clients.”

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Greg Michel, head of fixed income at INGIM said the global appetite for Australian bonds is likely to continue with investors drawn to current yields of 5% to 6%, outstripping available yields available from global alternatives.

“The Australian economy has proven to be resilient to the effects of the GFC and continues to expand at a robust pace. The bond market has been in a bear market phase since early 2009 and bond yields are now close to long term average levels,” he said.

Global bonds are a different story, and INGIM expects flat to negative returns in 2011.

While the major European economies are expanding strongly, aided largely by a weak currency and accommodative monetary policy, the peripheral Euro markets continue to be held down by the large levels of sovereign debt and associated funding challenges.

“On balance we believe the combination of improving economic growth and high sovereign debt levels will result in Euro bond yields continuing to head higher in 2011,” said Mr Michel.

Credit best performing sub-sector

Turning to fixed income sub-sectors, INGIM said credit is expected to be the best performing assuming the default cycle pans out as expected.  While underlying interest rates will rise, continued credit spread contraction should see credit perform in a relative sense.

“The rally we have seen in credit markets over the past two years has been strong, supported by improving fundamentals and monetary and fiscal stimulus in the economy.  That being said, there is a sense the rally has overshot the fair value mark and there are few catalysts to drive spreads tighter,” INGIM’s head of credit research, Scott Rundell said.

For issuers, Mr Rundell said offshore markets continue to be more competitive than the Australian bond market with some suggesting several large players are demanding unpalatable spread levels.

“It’s relatively easy for investment grade credit to issue long dated loans or bonds into the US market.  New issuance is likely to be low and we expect few first time local issuers in Australia,” he said.

Global government bond yields on rise

Looking to Australian government bonds, INGIM is expecting limited further tightening in monetary policy in 2011 and now expects government bond yields will remain at or near current levels for the rest of the calendar year. Demand for local government bonds will continue to be dominated by offshore investors.

Despite recent geo-political tensions in the Middle East and North Africa, global government bond yields are expected to continue to rise over the medium term.  US government bonds yields are also expected to continue their upward rise as the market prices in the recovery.

“We’re now seeing ongoing evidence of a broad based economic recovery in the US and government bond yields are set to continue to rise through 2011 as the global economic recovery gathers pace,” said Mr Michel.

World issues cause headwinds

Meanwhile European sovereign debt challenges will continue to cause headwinds for fixed income. In particular, forced losses (or ‘haircuts’) on Irish senior bank debt could create contagion risk to other EU banks, causing the cost of bank funding to spike.

“We also advise monitoring changing bank regulatory regimes and structures as they will impact capital flows and the cost of credit in general,” Mr Rundell said.

Other world factors to watch include Chinese growth and demand for raw materials and the impact of recent events in the Middle-East and North Africa on oil prices.

“The management of many global companies may look to appease shareholders who have experienced negligible growth with capital initiatives aimed at increasing their returns. This could also be a negative credit event,” Mr Rundell said.

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According to the report, total returns from REITs are expected to be in the 8-12% range this year, as dividends grow and continue to be an important component of total return. The primary driver of real estate company returns will be growth in cash flow per share.

Rising interest rates need not be feared, as listed real estate often delivers positive returns in periods of economic improvement, even if interest rates rise, according to the report. The year will also see large scale IPOs emerging out of the US.

Region by region, in Asia Pacific, Hong Kong property companies are expected to outperform over the next 12 months, growing earnings by 15-20% and producing dividend yields of 2-3%. Japan should deliver a total return of 5-10% and Singapore 10-15%.

In Europe, Western and Northern Europe are believed to represent more attractive investment opportunities compared to Southern and Eastern Europe, with a 5-10% total return expectation across Continental Europe over the next 12 months and a 5-6% dividend yield. The UK is expected to deliver a total return l of 8-12% over the next year.

North America should see total returns of 8-12% in the US and Canada. In the US, property investment is predicted to be helped by economic recovery as a result of fiscal and monetary stimulus, although the continued depressed housing market and high unemployment remain as obstacles.

While property markets are at different stages in the real estate cycle, the earnings growth trend remains positive according to the report.

Click here to download the full report (pdf)

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ING Investment Management (INGIM) Australia has positioned its wholesale business for the next stage of growth, with the final two hires of this year and a four star rating for its Extended Alpha Australian Share Fund.

INGIM has made a concerted effort to build its wholesale business this year with more than seven key hires including industry veteran Jim McKay as head of sales.

“INGIM now has a complete team of experienced professionals including a Melbourne office, allowing us to focus on bringing the best of both our local and global strategies to advisers,” said Mr McKay.

These best of breed strategies include the ING Extended Alpha Australian Share Fund and ING Wholesale Global Property Securities (GPS) Fund, which has just had its ‘Highly Recommended’ rating reaffirmed by
Lonsec.

Experienced BDMs to take on Northern Region

The two new hires are both BDMs for the Northern Region: Heath Branigan, who has 10 years experience in asset management in the United Kingdom and Australia and Jenine Hayman, an experienced business
development and research relationship professional with 19 years experience in the financial services industry.

Both will report to Natalie Grey, the recently announced Northern Regional manager.

“We are very pleased to be working with these highly experienced professionals, who are the final pieces of the puzzle in developing our wholesale team and whose experience will help us develop key relationships in this area,” said Mr McKay.

Ms Hayman most recently worked for Mediascape Analytical & Research Services as a client relationship and business development manager. She has also worked for AXA Australia as a business development manager and spent 11 years at Goldman Sachs JBWere Asset Management as a research and platform support manager.

Mr Branigan joins from Hedge Harbor in the UK where he worked in institutional sales for Europe and Australia, and was responsible for relationship development across a diverse international institutional client base. He has also worked for AMP Capital Investors in Australia and JP Morgan Asset Management in the UK and is a chartered alternative investment analyst.

Four stars for Extended Alpha fund

INGIM has just received a four star rating for the ING Extended Alpha Australian Share Fund from S&P – its first rating of the fund. S&P said the rating “reflects our high conviction that the manager will consistently generate risk-adjusted returns in excess of relevant investment objectives and relative to peers”.

“After significant market dislocations such as the GFC, history shows markets move sideways for long periods of time. With the increased volatility experienced in the last 18 months, and which we expect going into 2011, capturing alpha to generate returns is absolutely imperative for portfolios,” Mr McKay said.

The Extended Alpha fund also has a ‘Highly Recommended’ rating from Lonsec and a ‘Recommended’ rating from Zenith.

Meanwhile Lonsec has reaffirmed the ING Wholesale Global Property Securities (GPS) Fund’s ‘Highly Recommended’ rating which it has maintained since 2006.

According to its report, Lonsec retained this rating due to the fund’s “extensive and stable investment team” and its “clear and comprehensive investment process, which can be consistently applied on a global basis”.

The GPS fund also has a five star rating from S&P and is ‘Highly Recommended’ by Zenith. The fund recently also won the property category at the 2010 S&P Fund Awards for the fourth year in a row.

“The ratings reflect our efforts and performance as well as the strength of our team, and we are pleased to be recognised appropriately,” said Mr McKay. “Since launching Extended Alpha this year we have seen a strong response and the fund is going from strength to strength.

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Global investment manager, ING Investment Management (ING IM), says global economic growth is forecast to be significantly lower in 2011 with a widening divergence in the performance of emerging versus developed economies, high volatility in markets and rising uncertainty over macroeconomic issues.

It warned that untested policy prescriptions from governments and central banks – which it has termed ‘test tube policies’ – could further contribute to significant market volatility. ING IM also said that much of the developed world has made only 30% – 40% of the adjustments needed to adapt to the new environment and challenges, and estimates there is a 60% chance that global economies and markets will muddle through 2011.

Eric Siegloff, Global Head of Strategy and Tactical Asset Allocation, said: “We are likely to face a tough and volatile economic and investment environment next year with the divergence between the emerging and developed economies widening further. Companies and investors will also need to brace themselves for unexpected consequences from the ‘test-tube’ macroeconomic strategies being employed by governments and central banks.”

ING IM expects real global GDP growth to be around 3.8% in 2011, compared with its forecast of 4.8% for 2010. GDP growth in the emerging economies is projected at 6.5% (2010: 8.1%) while forecast developed
world GDP is 1.6% (2010: 2.2%), widening the economic performance gap between the two further.

These forecasts could be further modified by the 25% possibility that the world could lurch into another serious downturn, compared with a 15% chance of a surprise on the upside with strong economic growth. Developed economies may continue to be dominated by deleveraging and output gaps that would lead to deflation and low nominal growth.

“Investors will need to take a much more dynamic approach to their investment strategies in the more turbulent and divergent financial market conditions we predict in 2011. This means a greater focus on growth, and in particular dividends, income and yield – or what we call ‘DIY’, added Mr Siegloff.

“With such a high degree of uncertainty, investors need better risk management and a total return approach instead of focusing on benchmarks. In the low return world we are predicting, beta alone will not deliver. You need to place a greater focus on asset managers who can consistently provide alpha,” he said.

Australian economy remains well positioned

The Australian economy is growing solidly with output and income growth strengthening and unemployment falling. While growth in the major advanced economies is expected to slow, the emerging economies of Asia are continuing to grow strongly.

As a result, Australia’s major trading partners are expected to grow at their fastest pace in over 20 years and this is boosting global demand for commodities and driving Australia’s terms of trade. According to INGIM, this surge is expected to provide substantial impetus to domestic growth, supporting rising incomes and activity, underpinned by strong growth in exports and business investment as we move froward into 2011.

James Wright, Chief Investment Officer and Head of Australian Equities said: “We expect the Australian economy to grow more strongly than the rest of the developed world in 2011. While inflation is expected to rise, the withdrawal of monetary and fiscal stimulus and the appreciation of the Australian dollar will help to contain demand and inflationary pressures.”

2011 equities outlook

Global equities

ING IM believes the key drivers for global equity markets in 2011 will be positive earnings growth, attractive valuations, abundant liquidity and strong corporate wealth. These will underpin three strong themes for next year – sustainable income and growth, increased corporate spending, and emerging markets.

Sustainable income and growth: Here, dividends will become an even more important income generator, while low payout ratios, strong balance sheets and high profitability will support further growth.

Corporate spending: Corporate confidence is rising, and strong cash flows and balance sheets will lead to increased activity in buybacks, dividends, M&A activity and capital expenditure.

Emerging markets: There are still many attractions here for investors, including low public and private debt levels and high economic growth. ING IM still believes that emerging market equity valuations are not in ‘bubble’ territory as some market commentators claim.

“The 2011 outlook for global equities is good and we expect returns to be in line with earnings growth. However, investors will need to focus on yield and also on growth markets,” said Mr Wright.

Australian equities

ING IM. believes solid population growth and the demand for raw materials, as well as robust employment will be positive for Australian equities

Just like the two-speed world expected in 2011, in Australia the two-speed economy is expected to continue, with the industrial sector more closely tied to developed market demand and the buoyant resources sector tied to emerging market demand.

“Strong business investment, rising commodity exports and robust income growth supporting household consumption will continue into 2011 which will support the local markets. However, we do expect continuing volatility which will create value-capture opportunities for active managers,” said Mr Wright.

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ING Investment Management (INGIM) Australia has boosted its wholesale business with the appointment of Mark Harper as Senior Business Development Manager for the southern region, marking the fourth hire this year for INGIM’s newly opened Melbourne office.

Mr Harper will be responsible for building relations with platforms and dealer groups by leveraging the strong relationships he has built up at the corporate level around Victoria, South Australia, Tasmania and Western Australia.

Mr Harper joins INGIM from AXA Australia where he held the role of National Sales Manager of group life insurance. Prior to AXA, he held roles at NAB as a Senior Project Analyst and Team Leader and has experience across project management, transformation projects and managing end to end tender processes.

The appointment follows INGIM’s earlier announcements regarding its plans to expand its investment manufacturing and distribution activities in Australia via dealer groups and platforms. Mr Harper will report to
Stuart Devlin, Southern Region Manager who was hired in August this year.

Mr McKay, Head of Sales at INGIM in Australia, said the appointment of Mr Harper marked further progress for INGIM’s wholesale platform as it ramps up activity to target advisers.

“We are delighted to have someone of Mark’s broad experience appointed to the southern region and compliment Mr Devlin’s skill set. His strong business acumen and his previous experience in project management as well as identifying new business will ensure INGIM’s wholesale platform is well placed to grow from the ground up,” he said.

“This segment of the market is a key area of focus for INGIM’s strategy here in Australia. Our recent hires in both southern and northern regions all have proven track records in producing results in servicing advisers and their clients. We are already seeing strong interest by dealer groups in our recently launched Australian equities funds designed to capture alpha. New offerings are also in the pipeline for 2011 allowing INGIM to continue delivering alpha generating solutions in the competitive adviser industry,” Mr McKay concluded.

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