Jason Teh

Financial advisers may need to consider allocating more to defensive equity strategies for retiree clients to defend their income, according to Vertium Asset Management, a Copia investment partner.

In its June quarter research paper, the equity income fund manager compared the past seven sharemarket corrections during global slowdowns since 1990 to the most recent correction in December 2018. For each correction the average decline in the sharemarket index was 19% and the recovery time (from low to high) was 1.4 years.

But the most recent December 2018 equity market dip has been different, recording only half of the historical decline (11%) and one third of the recovery duration (5 months). The question is then will the market continue its unusually quick recovery, or will it follow the more common scenario of protracted recovery with possibly even another downward correction.

Vertium Chief Investment Officer Jason Teh said “one effective way retirement portfolios can be better shielded from a correction is lowering the sensitivity to equity market movements. An efficient way to achieve this is to allocate more to funds with low correlation to the market, so if the market declines, that portfolio is not fully tethered to the decline in capital values.”

For example, the Vertium Equity Income Fund has one of the lowest sensitivities with the sharemarket among equity income funds in its peer group. Vertium has calculated its volatility risk measure is half that of the S&P/ASX 300 Index, with a Beta measure of 0.5. When the sharemarket dipped in the December 2018 quarter, the low sensitivity was put into practice and the Fund’s capital value was cushioned by about 50%.

John Clothier, General Manager of Distribution for Copia said “our financial adviser clients are increasingly expressing concerns about of a lack of attractive income options for retirees, as well as the likelihood of a pull-back in equity markets. We have had increased interest in the Vertium Equity Income Fund due to its very low equity market sensitivity that can help protect capital, without denting any of the income potential for investors.”

The Vertium Equity Income Fund is currently expected to deliver 6% income over the next twelve months.

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Tomas has over 15 years’ experience in equity research. Before joining Vertium, Tomas was an Equities Analyst at Investors Mutual for over four years. Tomas has also held similar roles at CBA, ABN AMRO and Aspect Huntley (now Morningstar).

Jason Teh said “Tomas has a proven track record of generating alpha and we are delighted to have him join our team. Vertium aims to deliver a low risk equity income stream to retirees and Tomas has all the right attributes to help us achieve this objective.”

Vertium is an equity income specialist and is one of four boutiques distributed by Copia. There has been increasing interest for Vertium, particularly from advice practices seeking an equity income solution that can provide attractive yield on the upside but also help protect the nest egg when markets decline.

Sam Baillieu, CEO of Copia said “Copia’s mission is to provide high-quality fund managers with the environment and support they need to maximise the outcomes for investors. With Tomas’ appointment we were able to work with Vertium and are extremely confident we have secured the best investment talent.”

The appointment of Tomas follows several key appointments in Copia’s distribution and marketing teams.

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Jason Teh

The Vertium Equity Income Fund has been added to BT Wrap’s IDPS and superannuation menus.

“We’re delighted the fund continues to gain traction among financial advisers through its inclusion on BT Wrap. It’s pleasing to see demand for the fund grow,” said Jason Teh, Chief Investment Officer at Vertium Asset Management.

“Among advisers we’re finding there is an increasing need for equity income solutions like Vertium’s, especially as Australians are living longer and need to draw from their savings for a longer period,” said John Clothier, General Manager, Distribution at Copia Investment Partners, Vertium’s parent company.

“Designed for retirees, the fund gives advisers the opportunity to offer a product that may help meet their clients’ long-term income and growth needs, while aiming to reduce risk relative to the Australian share market,” Clothier said.

Launched last year, the fund is ‘Recommended’ by research house, Lonsec and is also available on FirstWrap and Hub24.

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Jason Teh

The Vertium Equity Income Fund has been added to Hub24 and FirstWrap’s IDPS and superannuation menus.

Launched last year, the triple-objective fund aims to deliver investors more income and higher capital growth at a lower risk.

“We’ve designed the fund for investors looking for lower-risk equity market exposure and, in particular, those drawing down on their savings, such as retirees,” said Vertium Asset Management’s Chief Investment Officer and founder, Jason Teh.

“Pre-retirees and retirees have different investment needs and goals. The fund aims to cater for retirees by investing in attractively valued Australian companies that have the potential to generate more income and reasonable capital growth, but with less risk than the share market.”

“We’re delighted financial advisers will now have access to the fund via both Hub24 and FirstWrap. We think there is an unmet need, particularly in servicing retirees in the decumulation phase, and believe our triple-objective approach gives advisers the opportunity to offer their clients the potential to achieve superior investment outcomes in the lead-up to and during retirement,” Teh said.

Today’s announcement follows the fund’s ‘Recommended’ rating from research house, Lonsec, last year.

Congratulating Vertium, Sam Baillieu, CEO of Vertium’s parent company, Copia Investment Partners, said, “It is a great result for Vertium to follow up their Recommended rating with the fund’s inclusion on the Hub24 and FirstWrap platforms well within their first year of business.”

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Vertium founder and CEO, Jason said, “We are entering an era where people, largely ageing baby boomers, will redefine their investment needs and will demand a different investment approach. Investors approaching retirement or who have already retired have different investment needs.

At Vertium, we have one fund, one strategy and aim to do one thing very well. We aim to preserve retirement savings while delivering regular income, at the same time growing capital in a risk-controlled way so investors may have more for longer.

“Unlike investors accumulating wealth, retirees broadly need: regular income – to cover living expenses and to keep pace with inflation, lower investment risk – to preserve capital and reduce the impact of market downturns, and capital growth – to ensure their savings can adequately sustain them over the long term.

But, with living costs rising and people living longer, there is a real social and financial risk that retirees employing only an asset allocation strategy may outlive their savings. An equity income strategy has the potential to reduce this risk and become an integral part of a balanced retirement investment portfolio,” said Teh.

The Vertium Equity Income Fund is designed to address the needs and satisfy the risk appetite of retirees by providing an attractive mix of income, reduced volatility and capital growth.

In welcoming Vertium to Copia Investment Partners, CEO Sam Baillieu said, “We are delighted to have partnered with Jason and the Vertium team.

Jason’s track record speaks for itself, but it is his passion, integrity and singular focus on meeting client objectives that makes Vertium such an exciting investment manager partner. In addition, we believe there is enormous demand from investors and their advisers for a holistic equity income fund that meets the triple of objectives of more income, less risk and greater returns.”

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