HOPE is the first ever shared equity residential property fund in Australia to obtain this rating, receiving a ‘satisfactory’ evaluation from Evergreen’s assessment of the fund and the manager’s capacity to operate and meet its investment objectives of a 10% return for investors.

HOPE Chief Executive Officer, Tim Buskens, said the rating is a welcome recognition and great outcome for a new fund with limited track record, and that a satisfactory rating was expected for a fund that is pioneering a new form of social impact investing.

“This strong result shows the shared equity model we have pioneered at HOPE is a win for both homeowners and investors. To be the first fund of its kind to receive a rating from Evergreen reflects HOPE’s innovative asset valuation solution and asset selection process,” Buskens said.

“HOPE is a demonstrated and workable solution to the housing affordability crisis facing essential workers – and potentially other middle-income workers who are being forgotten by existing government and private schemes – allowing essential workers to buy a home of their choosing while also protecting and growing the interests of investors.”

Evergreen’s independent analysis saw strengths in the HOPE fund through its access to demonstrable social impact investing, ability to create access to an asset class not typically available to investors at scale, and significant input to substantial investment decisions by the Investor Advisory Committee.

Evergreen Director and Founder, Angela Ashton, said she is pleased to have provided HOPE Housing with its first Fund rating. “Evergreen’s independent analysis highlights HOPE’s robust asset valuation solution, strategic asset selection process, and the notable social impact it creates. This rating affirms HOPE’s position as a leader in social impact investing, providing investors with access to capital growth and diversification benefits in the residential property market,” Ashton said.

The evaluation commended how the HOPE fund enables investors to gain exposure to the capital growth associated with the residential property market, and capture diversification benefits from an asset class conventionally uncorrelated to standard asset classes.

Through careful asset selection, investors in HOPE’s fund can unlock access to potentially superior residential returns, as opposed to traditional property investing.

According to CoreLogic’s most recent national overview of residential properties sold for a nominal loss or gain, returns on owner-occupier properties have seen a ‘far greater rate of profitability than investors’ through not only the September 2023 quarter but in the quarters prior.

HOPE represents a new way of investing in owner-occupied residential real estate, solving a critical social problem at the same time.

The HOPE model was launched in response to mounting evidence that workers who provide critical public services in Sydney and Melbourne are struggling to afford to buy a home near to where they work. 

The HOPE fund co-invests with essential workers in well located, owner-occupied homes, receiving a proportional share of the capital growth in the asset. The fund pays distributions to investors when a property as the homeowner progressively buys out part or all of HOPE’s share.

Read the rating report.

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Jason Brown

Two managed account product suites managed by Evergreen are now available on BT Panorama, tailored to the needs of two separate advice practices who are seeking efficiency to drive further business growth.

Currently there are 372 managed portfolios on BT Panorama, with the addition of 76 products in 2023 so far. Funds under administration in managed accounts comprise 15% of total FUA of $104bn on the platform.1

Jason Brown, Head of Distribution at BT, said: “It’s fantastic to be part of the growth story of our clients. While each advice practice is unique, what they do have in common is they are both thriving and seeking further efficiencies by making the most of product innovations. We aim to be advisers’ platform provider of choice, and are pleased that, together with investment manager Evergreen, we have launched managed accounts that suit the needs of their business and client base.”

Gild Group

Gild Wealth is the financial planning arm of rapidly expanding professional services business, The Gild Group. Originating from Melbourne, the Gild Group has expanded interstate and has offices in NSW and Queensland. The firm takes a multi-disciplinary approach, providing financial advice as well as accounting and legal services, and advice on research and development incentives and grants. Gild Wealth’s revenue has increased by around 20% annually over the last two years.

The new Gild Wealth managed portfolios on BT Panorama include growth and conservative options, and are in addition to the existing managed accounts that Evergreen already manage for the Gild Group.

David Page, Director of the Gild Group, said the business recognised many years ago that the “old-style” model portfolios provided poor outcomes for clients and advisers, due to the time lags in implementation, labour-intensive production of advice documents and processes relating to compliance.

Mr Page said: “Over the last couple of years we have managed to grow Gild Wealth significantly without adding staff. This can only be achieved through efficiency gains, and managed accounts have been a key driver of that. In addition, our reporting to clients is more accurate and meaningful. We are able to manage risk and make strategic tilts quickly and efficiently.”

Thornton

Across two decades, South Australian advice practice, Thornton, has grown to manage $1bn in funds for over 1,500 clients.

The True managed portfolio options, developed for Thornton, include growth, balanced and low growth diversified portfolios.

Rowan Fielke, Managing Director and Co-Founder of Thornton, believes the firm’s transition to managed account solutions is boosting operational efficiencies and business growth, and building stronger client relationships by giving them the best of breed solutions in wealth management.

Mr Fielke added that the enhanced efficiencies of these portfolio options allow Thornton to continually meet the evolving needs of clients by providing dynamic portfolio management to improve transparency, relationships and overall experience with the firm and the platform.

He said: “Our tailored managed account solutions with BT Panorama have been strategically designed to enhance our operational efficiencies, foster innovation and create sustainable business growth, and we look forward to continuing to run our successful client portfolios on this platform.”

Evergreen

Evergreen partnered with both advice practices to build their product suites, employing their deep in-house qualitative and quantitative expertise, which includes exclusive tools such as stress and scenario testing to assist advice practices with their decisions.

Founder and Director, Angela Ashton, said: “We work closely with financial advisers to ensure the tailored investment solutions deliver flexibility, efficiency and an enhanced client experience.”

Ms Ashton continued: “Evergreen prides itself on the depth and quality of its resources, and all of these are targeted at just one thing: helping advisory firms build resilient portfolios.”

With an experienced investment team and asset allocation committee, the investment manager has developed a strong approach to dynamic asset allocation. In addition, the firm has developed sophisticated in-house tools in areas such as style analysis, stress and scenario testing, as well as attribution analysis.

“We’re proud to be partnering with two high quality financial advice practices in Gild Group and Thornton, as well as BT Panorama, to deliver investment solutions we know will make a difference to both the end client and those businesses,” Ms Ashton said.

Evergreen has total funds under management exceeding $1.5bn.

——-

[1] As of 31 October 2023. Managed accounts FUA excludes Adviser Portfolios.

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The Evergreen Responsible Growth Model, issued by Generation Life, an investment bond specialist, has been structured as an investment option within their LifeBuilder investment bond to provide investors with tax-effective, long-term holdings in a portfolio of investments that meet sustainability objectives.

The Generation Life investment bond is also Highly Rated by Lonsec.

The Evergreen Responsible Growth Model has also scored A in Ethos ESG which scores investment products on their responsible investment ability.

It is a multi-manager portfolio, investing in a range of best-in-class investment managers. It has a diversified asset allocation, with benchmarks of 75% in growth assets and 25% in defensive assets.

Investment bonds are tax paid investments, which means that the fund manager pays tax of up to 30 per cent on fund earnings. This is different from the more common unit trust structure, where all income and capital gains are passed through to investors, who are liable for the tax.

SQM says the fund is managed using an investment process that is based on a very clearly articulated investment philosophy, which in turn is based on extensive research.

“The investment process is well structured to support the investment decisions that are required in the management of the fund,” SQM says.

The report adds “The managed fund selection process is one of the most thorough and detailed that has been observed among multi-asset, multi-manager investment managers. It takes advantage of the many years of experience the investment team has in researching investment managers and managed funds.”

The manager selection process includes consideration of a fund’s Evergreen Responsible Investment Grading (ERIG) Index score, which currently grades 670 strategies.

Evergreen Consultants Founder and CEO Angela Ashton says Evergreen is in a position to access investment opportunities that are often missed by other investment bonds, especially in the responsible investing (RI) space.

She adds: “This is the only RI multi manager product offered by Generation Life. Investment bonds are particularly useful in estate planning as they can be set up to pass directly to beneficiaries, providing them with tax-free benefits. This can be a valuable solution for long-term investors who care about their money being invested wisely, as well as doing good for themselves and future generations.”

“To have a Superior rating from SQM on top of being part of the Highly Rated investment bond structure from Generation Life is a good position to be in. We have also recently received an A rating from Ethos ESG, which further cements our Responsible Investment credentials.”

Portfolio holdings include:

• Octopus Renewable Energy Opportunities Fund, which has funded the one-million panel Darlington Point Solar Farm in New South Wales.
• NorthStar Impact Fund, which invests in companies that provide solutions to social and environmental challenges, such as social housing projects, education and health initiatives and better land management.
• Pengana WHEB Sustainable Impact Fund, which invests in companies offering solutions to a range of sustainability challenges, including cleaner energy, environmental services, and sustainable transport and water management.
• Robeco Global Developed Sustainable Enhanced Index Equity Fund, a smart beta approach to passive investing combined with high ESG scores.

Evergreen aims to generate returns of the Reserve Bank cash rate plus 3.5% a year over a seven-year period, after manager fees and tax.

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Angela Ashton

Evergreen Consultants has launched a Responsible Investment Questionnaire that financial advisers can use to help clients select Responsible Investment (RI) products for their investment portfolios.

The RI Questionnaire builds on the successful development of the Evergreen Responsible Investment Grading (ERIG) Index, which was launched a year ago and now houses RI scores for over 670 investment products and 2700 APIR codes.

Evergreen Consultants Founder and Director Angela Ashton says: “With ASIC clamping down on greenwashing and ongoing FASEA requirements, advisers are under more pressure than ever before to have these important conversations with their clients, and we are right there on the journey with them.”

The RI Questionnaire is designed to assist investors in identifying funds that align with their values. It builds and RI Profile for each client, which then produces a list of products that match their preferences.

It asks questions that explore an investor’s attitude to the seven categories of the RI Spectrum that the ERIG Index scores. They are ESG integration, negative screening, norms-based screening, active ownership, positive screening, sustainability themed investment and impact investing.

Using the list of products produced, an adviser can build a portfolio that matches the client’s needs and values.

“Working with advisers is at the core of our business and building this online tool was a logical next step for us on the RI journey,” Ashton says.

“We are hearing a lot in the marketplace that the demands of providing RI advice can be overwhelming. We are in a position to help bridge the gap in RI advice and we are absolutely going to step up and fill that gap.

“Standards 5 and 6 of the FASEA Code of Ethics refer to the need for advisers to ask their clients about their investment beliefs as part of best interest duties. Our client Questionnaire is comprehensive and covers this duty with respect to RI.”

Each RI Profile can be saved and amended as needed or exported as a PDF or an Excel file.

Evergreen is currently offering free one month trials for advisers to familiarise themselves with the Portal. The Portal currently has four Modules – Product Search, Portfolio Construction, Client Questionnaire and Knowledge Library.

Ashton reveals that “We are currently having conversations with various platforms and software providers to further integrate the ERIG Index into adviser workflows, making RI advice even more streamlined.”

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Angela Ashton

Evergreen Consultants endorses the Australian Securities and Investments Commission’s move to rid the superannuation and funds management industries of greenwashing.

ASIC has issued an information sheet for superannuation funds and managed funds, detailing its expectations for sustainability related disclosures.

The regulator said the information sheet simply sets out what was required under existing regulatory obligations, particularly the need to make sure statements about an investment product’s green credential are not misleading. It said being true to label is a regulatory ‘must-have’.

ASIC has reviewed the sustainability disclosures of super and investment products and found there was room for improvement.

Angela Ashton, Founder and Director of Evergreen Consultants, says: “The regulator is determined to have transparency and trust when it comes to representing the extent to which financial products or investment strategies are environmentally friendly, sustainable or ethical. We fully endorse that goal.

“Super and managed funds are keen to present their responsible investing credentials to the market and it is a matter of concern that ASIC has found that some industry participants need to lift their game.”

ASIC said issuers need to use clear labels, define the sustainability terminology they use and explain how sustainability considerations are factored into their investment strategies.

Last year, Evergreen launched a responsible investing index, the Evergreen Responsible Investment Grading (ERIG) Index, which assigns responsible investment grades to fund managers.

Ashton says: “At the time, we noted the absence of a consistent industry approach. Now the regulator has put the industry on notice that it is time for consistency and clear communication. We will do what we can to support that development.”

ASIC has recommended that product issuers use the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) as a framework for disclosure.

It has posed a number of questions for product issuers to use in framing their disclosures, including whether terminology is vague, whether they have clearly stated how sustainability policies are incorporated into decision-making, and whether screening criteria and sustainability metrics have been properly explained.

Ashton says: “Reporting standards in this area are developing quickly, which ASIC acknowledges in the information sheet when it says this is an evolving space.

“Evergreen is ready to work with fund managers to keep on top of these changes.”

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Andrew Davies

Specialist investment manager, AZ Sestante, has launched a series of socially responsible model portfolios in partnership with investment consulting business, Evergreen Consultants, as retail demand for Environmental Social and Governance (ESG) solutions ramps up.

The five Sestante ESG Focus options are on the HUB24 platform with discussions underway for their inclusion on other major platforms.

According to Andrew Davies, AZ Sestante’s Head of Distribution, the same proven investment approach, philosophy and structure that govern the group’s existing model portfolios also underpin the new ESG-focused range, which leverages the Evergreen Responsible Investment Grading Index (ERIG Index) to shape AZ Sestante’s potential investment universe.

Launched in 2021, the ERIG Index includes over 670 strategies, representing around 2,600 managed funds.

Financial advisory firms, fund managers and institutions that subscribe to the ERIG Index can assess the “greenness” of products and build tailored portfolios that reflect the values and beliefs of their clients.

“Over the past 20 years, many Australians have accumulated a significant amount of superannuation and some, particularly those in their late 40s and early 50s, have a different mindset when it comes to how they want their money invested,” Mr Davies said.

“Advisers have told us they like our solutions but their clients are increasingly asking for quality investments that are also responsible and sustainable.”

“They are passionate about issues like diversity and inclusion, climate change and human rights, and the outcome of the recent Federal Election provides another reminder of shifting community values and priorities.”

Angela Ashton, Founder and Director of Evergreen Consultants, said the group applied a unique top-down approach to assessing a manager’s responsible investment (RI) credentials, enabling it to grade across asset classes including equities, property and fixed interest.

“While other research houses and consultants take a bottom-up approach that focuses on a manager’s underlying portfolio, our framework focuses on a manager’s philosophy, strategy and capabilities,” she said.

“A bottom up approach may be useful for assessing equity managers but it’s not easily applicable to fixed income and multi-asset managers. We’re able to consistently apply our approach across multiple asset classes.”

Evergreen’s RI manager questionnaire – a key input in the group’s assessment framework – also leverages intellectual property from the UN Principles for Responsible Investment (UNPRI) and the Responsible Investment Association Australasia (RIAA) to eliminate personal biases.

“There are so many differences of opinion when it comes to social responsibility and how organisations should behave so we adopt the values of the UNPRI and RIAA to ensure an objective, standardised approach,” Ms Ashton said.

According to research by McKinsey, businesses with good ESG practices are linked to higher value creation and higher returns. They also carry less risk.

Based on analysis by Bloomberg, global ESG assets are set to exceed US$53 trillion by 2025, up from around US$20 trillion in 2018.

By 2025, ESG assets are forecast to represent more than a third of the US$140.5 trillion in projected total assets under management.

“Investors and advisers are looking for investment opportunities that will not only deliver strong returns but are also good for the environment and people,” Mr Davies said.

“We are excited to partner with Evergreen to build high quality investment solutions that meet the changing needs of our clients.”

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Angela Ashton

Investors, retirees, and financial planners in the current market need to look beyond the standard asset allocation choices of chasing share market beta through passive equity funds and relying on bonds for diversification, a leading investment consultant advises.

Angela Ashton, Founder and Director of investment consulting firm Evergreen Consultants, says it is time for investors to explore the alternatives, including gold, commodities, private credit, unconstrained total return multi-sector funds and real asset funds with holdings such as infrastructure and real estate.

“What we are seeing is a mix of strong, sustained inflation coming through and interest rates rising, with last month’s Fed rate rise the first since 2018. We have reached an inflection point in the cash and bond markets. Rates are going up,” Ashton says.

Evergreen’s view is that the corporate earnings cycle has peaked and equity markets will be more volatile.

“The war in Ukraine is adding to inflationary pressure, labour costs are rising and profit margins are under pressure. Equity investors should move to value or quality to position their portfolios more defensively,” Ashton says.

Evergreen Consultants’ current Long Term Expected Returns Framework says the key considerations in projecting likely investment returns are higher inflation and volatility. Evergreen is forecasting 7.75% average annual growth for Australian equities over the long term, with annualised volatility of 13.5%. This is based on a view that Australia’s long-term equity risk premium (ERP) of 4.5 % will remain unchanged.

Bonds moved extraordinarily in March, with yields moving sharply in both directions, an overall deteriorating trend and the appearance of an inverse US Treasury yield curve, with yields on two-year Treasuries higher than 10-year Treasuries at the end of the month.

“Investing in bonds will be very difficult this year as we expect a lot of volatility. It would not be surprising to see yields rise further from here and it is very hard to know where they will land. Markets are volatile and there is every chance they will overshoot,” Ashton says.

Among the alternatives, the Long Term Expected Returns Framework highlights the strong risk-adjusted returns on offer from Australian and global credit. The outlook for Australian credit is for average return of 3.95% a year, with annualised volatility of 3%, while global credit is expected to return 3.75% a year, with annualised volatility of 3%.

Ashton says credit has the advantage over bonds of having yields set at floating rates, which will rise as interest rates rise. She cautions that there is a greater likelihood that some credit funds will suffer defaults in the volatile trading conditions ahead and many funds are illiquid.

The appeal of real assets is that they can generate predictable income distributions due to stable earnings derived from the underlying asset. Regulation and/or long-term contracts reinforce stable cash flows and capital stability. For investors, this provides excellent visibility into revenues and dividends.

Gold is reconfirming its role as a safe haven holding, rising out of the range-bound position it was stuck in for much of 2021, in response to the Russian invasion of Ukraine and other global tensions. At its current level around A$2500 an ounce, it is close to a two-year high.

“The old investment rules are not going to work going forward,” Ashton says.

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The Fund is open to wholesale sophisticated investors, with a minimum investment of $50,000, providing access to venture capital for investors who often have trouble getting into that market.

Evergreen Ratings Founder and Chief Executive Angela Ashton says: “OurCrowd 50 Fund invests in companies that would normally be funded by institutional investors or hard to access venture funds. It caters to investors with an appetite for risk and an interest in gaining exposure to unlisted growth companies.”

The Fund’s objective is to generate long-term capital appreciation, through exposure to 50 OurCrowd portfolio opportunities. The investment time frame is 10 years.

OurCrowd invests mainly in technology start-ups based in Israel and North America. Israel has a booming venture capital market, with the world’s highest level of venture capital money invested per capita and the third-largest number of listings on the NASDAQ market.

Ashton says: “In all venture capital exposures there is a high risk of loss from individual investments, requiring a portfolio approach for most investors. Ideally such exposures should be with fund managers that have access to quality deal flow. On the evidence presented we believe that OurCrowd meets this requirement.”

The OurCrowd Platform has US$1.8 billion deployed either in funds or as single investments. Since it was launched in 2013 it has made more than 300 investments, which have resulted in 56 exits so far.

The OurCrowd investment team reviews over 3000 technology companies a year and invests in 1% to 2% of them. OurCrowd employs many levers to access leading technology investments and also offers co-investment opportunities into individual deals.  This allows major institutional investors to choose investee companies from the OurCrowd platform.

Its investment philosophy is based on evidence that shows higher returns come from early-stage investing.

The firm is based in Jerusalem and has 14 offices around the world, including Sydney. It was founded in 2013 by global technology leader and venture capitalist Jonathan Medved.

It has strategic relationships with a number of financial institutions, including Softbank, National Australia Bank, United Overseas Bank (UOB), Hana Bank, NTT Finance, Orix and Stifel

Ashton says: “The network allows for tremendous access to deal flow and access to non-market information. Evergreen sees this as a competitive advantage.

“Evergreen has reviewed a number of early-stage investment opportunities and so far, none has provided global or sector diversification to the extent of the OurCrowd 50 Fund.”

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Angela Ashton

With underlying post-pandemic economic and market conditions, namely concurrent inflation and volatility, being an unfamiliar backdrop for investors, there is risk that the Russia-Ukraine situation won’t play out as a typical wartime market recovery, says Angela Ashton, Director and Founder, at Evergreen Consultants.

“Given the current outlook, in our view, traditional safe-haven assets such as cash, gold, long duration bonds, and some highly traded real assets such as commodities, could be considered for portfolios.”

Ashton notes: “If we are to be guided by history, markets often sell-off in the lead-up to an armed conflict due to heightened uncertainty, but typically recover once war has commenced.

“Current underlying economic conditions could mean that market outcomes are less satisfactory if the conflict cannot be contained, especially if central banks make a policy error.

“The best-case scenario is that any conflict and sanctions are short-lived and energy prices retreat to levels that do not add further impetus to rising consumer and producer prices. This will reduce the risk of a policy error and potential for an economic and market malaise.”

While it is reassuring to point to history as a kind of security blanket for ultimate market outcomes, the present situation could play out quite differently, says Ashton.

“In examining sharemarket behaviour over the past hundred years, we think it is particularly important to note that uncertainty in the pre-war phase is mostly focused on what the response of the superpower nation is going to be (typically, this has been the US) and how this might impact financial market liquidity.

“An ongoing high inflation environment would likely be negative for many asset classes.

“While this is not our base case, we will be watching for further evidence on likely inflation trajectories and exploring measures to insulate client portfolios from the new challenges this would bring,” says Ashton.

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The iPartners Core Income Fund was launched in May 2021. Targeting a return of 6 to 8% a year (after fees), the Fund invests in a portfolio of iPartners co-investments, private credit, asset-backed securities, property finance, cash and a selection of third-party alternative funds and assets.

Evergreen Founder and CEO Angela Ashton says iPartners’ approach is innovative and “makes for a powerful proposition for its target market.”

Ashton says iPartners is nimble and well resourced, and offers a point of difference because of its specialisation in bespoke financial solutions.

“It meets a pressing need for self-driven investors to generate income, when prevailing yields are low. The combination of these traits is attractive, providing a re-bundled basket of risks that offers access to the yields previously only available to institutional lenders,” Ashton says.

Key features of the fund include diversification and liquidity. To reduce concentration risk maximum individual asset weightings are 2.5% to 5% of the total portfolio. Monthly redemptions are offered, subject to available liquidity.

The iPartners approach involves all stakeholders having “skin in the game” to align the interest of staff, clients and investors. Evergreen points out that this can involve management in conflicts of interest but it commended iPartners for the quality of its disclosure.

Some of iPartners’ transactions include three capital raisings for Harvest Hotels, which is building a portfolio of regional hotels, a loan facility for small business lender OnDeck, and a convertible note raising for labour hire company WorkPac.

Established in 2017, the iPartners operation encompasses commercial lending, investment banking (equity and debt capital raising for Australian businesses), funds management and a wholesale investment platform that provides access to third-party alternative assets.

Co-founders Travis Miller and Ron Nankivell both had long careers in financial markets before starting iPartners, including senior roles at leading commercial and investment banks.

The Fund has grown steadily since inception and forms part of the $130+ m FUM for iPartners Funds Management (as at January 2022).

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