The ratings were awarded to the EQT Tax Aware Australian Equity Fund, EQT Ethical Tax Aware Australian Equity Fund, the EQT Flagship Fund and the Mortgage Income Fund. It is the first time the Australian Equity funds have been rated by SQM Research, while the Mortgage Income Fund was upgraded from 3.75 stars.

The Reports noted the strong performance of the funds as well as strong processes and high calibre management. It also noted that the investment process and Asset Management team were experienced, capable and collegiate, enabling robust debate within the team on investment ideas and decisions.

SQM’s High Investment Grade rating views the Funds suitable for inclusion on most Approved Product Lists (APL’s).

Darren Thompson, Head of Asset Management at Equity Trustees, said: “Our Australian Equity investment philosophy aims to identify quality companies at a reasonable price coupled with distinct focus on the after-tax returns offered to investors.

“This rating is affirmation of the experienced team’s quality at a reasonable framework and team and our after-tax returns to our investors – it’s a strategy that is performing consistently above benchmark,” he added.

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The EQT Eight Bays Global Fund will use offshore exchange traded funds (ETFs) to provide investors here with access to growth from sectors not available locally, such as information technology, cyber security, communications services, medical devices and robotics among others.

Darren Thompson, Head of Asset Management at Equity Trustees, said the rapidly growing and highly liquid US$5 trillion ETF market is an efficient and effective way to invest in these industries, and that the new fund had been developed specifically with charities and for-purpose organisations in mind.

“More of the organisations and individuals that Equity Trustees serves are seeking global investments that can grow and diversify their capital.

“We believe it represents an excellent opportunity for investors to access new markets with less stock specific risk.”

Chris Haynes, Head of Equities at Equity Trustees and the team from Eight Bays Investment Management had been working on the concept for the last two years.

“We have spent considerable time in preparing and testing the Global Fund strategy, which is consistent with, and complements the successful investment principles employed in our domestic equity products. We believe this is an innovative way to achieve strong and consistent investor outcomes,” said Mr Haynes.

George Clapham, one of the founders of Eight Bays Investment Management, added: “Industry factors are the most important driver of shareholder value over the longer term.

“The most efficient way for Australian investors to achieve global industry diversification is by investing in overseas industry ETFs.  An actively managed global ETF portfolio can provide superior performance with relatively low volatility and at a lower cost to investors.”

The objective of the fund is to deliver outperformance of 2-3% a year over the benchmark of the MSCI All Countries index over the medium term, by selecting a portfolio of industry ETFs that provide exposure to companies possessing long-term sustainable growth prospects that exceed that of the broader market.

“We add value by narrowing down the investable universe of ETFs and capitalising on changing dynamics of industries by selecting a portfolio which possess the most attractive prospects,” Mr Clapham said.

Equity Trustees has been safeguarding the wealth of Australian individuals, families and philanthropic organisations for over 130 years. The group created its own asset management operation in 2002 and has A$4 billion in assets under management as at end March 2021.

Eight Bays Investment Management is an investment company based in Sydney, which was established in 2019 by Richard Newton, Charles Cropper and George Clapham with the specific purpose of building and managing customised ETF portfolios for Australian retail, institutional and wholesale clients. The group’s global ETF strategy was seeded in January 2020.

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Dividend outlook improving for 2021.

In the wake of a tough year for the not-for-profit sector, which saw sharp falls in much-needed investment earnings, 2021 is set to be a year of recovery, according to Equity Trustees.

Darren Thompson, Head of Asset Management, Equity Trustees said following a 24% fall in the 2019 financial year, corporate earnings were expected to rebound by over 20% this year. This is likely to have a knock-on effect for dividends, which Equity Trustees predicts will rise by 20%, compared to a 38% decline in 2019.

“While we do not expect to be back at pre-pandemic heights until 2024, we do see a rapidly improving outlook, which we know will be welcome news to philanthropic investors who rely on earnings and dividends to meet their ongoing charitable commitments,” he said.

Mr Thompson noted that in early 2020, dividends in Australia fell more than in any other developed nation, due to its high exposure to industries which were more adversely affected during COVID-19, including banks, real estate and energy.

“Australia’s ability to manage the pandemic relatively well, along with the rollout of a vaccine, means that GDP is expected to rebound by around 4% in 2021,” he said.

“This improving economic outlook, coupled with less restrictions and continued monetary and fiscal support, bodes well for a recovery in corporate performance and dividends.”

Mr Thompson said yields from cash and fixed income would remain anchored by ultra-low interest rates around the world.

“Our expectation is that Australian and US 10-year bond yields could end 2021 at between 1.5% and 2% and as such there is real potential for fixed income returns to be negative in the coming year. A rising and steepening yield curve, coupled with low coupon rates, increases the relative appeal of equities as an asset class,” he said.

Looking forward, Mr Thompson noted that equity market valuations had arguably captured much of the expected improvement in economic conditions.

“In this environment, portfolio returns are more likely to be driven by stock selection rather than macro factors. Our focus will therefore remain on identifying attractively priced companies with strong balance sheets and relatively safe dividends.”

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Jodi Kennedy

Equity Trustees has been appointed as investment manager and philanthropic consultant for Bendigo Community Health Services (BCHS).

BCHS is a not-for-profit organisation working to provide communities throughout the Bendigo region with healthcare services for free or at minimal cost.

In addition to a network of GPs across four sites, BCHS also works in partnership with other health services across Central Victoria to cater to specialist needs, such as those living with chronic conditions including diabetes, respiratory issues and heart disease.

BCHS Board Chair Vicki Pearce said: “As a not-for-profit organisation who relies on funding and philanthropic opportunities to continue delivering the quality care our community deserves and has come to expect, it’s essential that we utilise every dollar that comes our way.”

She added that investment and philanthropic opportunities were going to become crucial to BCHS as competition for funding becomes more competitive.

“We were encouraged by the positive and proactive response from Equity Trustees to our tender process. Having an organisation on board that has a Bendigo base and a desire to help regional Victoria grow was very important to us.

“We now look forward to building a relationship with Equity Trustees and using their expertise to ensure all future investment and philanthropic opportunities are used to their full potential, to ensure our services and care for the community can go to an even greater level.”

Commenting on the partnership, Darren Thompson, Head of Asset Management, Equity Trustees said the group would provide BCHS with a range of services, including investment advice and strategy, investment management and philanthropic services.

“Equity Trustees is delighted to have been appointed to work with BCHS,” he said. “Our ability to offer ESG-friendly investment solutions and experience of working with not-for-profit organisations made our proposition a sound fit with BCHS’s specialist needs.

“We recognise that BCHS must balance its funding sources prudently to ensure services can be maintained but can also grow to meet community needs. We aim to facilitate this through our investment strategy.”

Jodi Kennedy, General Manager, Charitable Trusts and Philanthropy, Equity Trustees said in addition to investment expertise, BCHS would also have access to a range of philanthropic expertise and services.

“Bendigo is a strong community and has a number of well-known local philanthropists from the past and as well as the present. We hope to work with BCHS to develop its approach to attracting philanthropic investment to support the important work it is doing to ensure a healthy, thriving region,” she said.

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Darren Thompson will take up the position of Head of Asset Management, and Chris Haynes the position of Head of Australian Equities, on 1 October 2018.  They will be based in Melbourne and bring decades of experience in managing large-scale portfolios and delivering excellent investment returns to clients.

“We’re delighted to announce these appointments following a deep analysis of how Equity Trustees can deliver the best outcomes for clients who entrust us with their funds, and rely on us for income from those funds,” said Mick O’Brien, Managing Director, Equity Trustees.

“Darren co-founded Northward Capital in 2007 after moving from IAG Asset Management. He brings to Equity Trustees 30 years’ experience and proven success in the evaluation, structuring and execution of investments, leveraging analytics and commercial insight to deliver excellent investment returns to clients.

“Chris brings over 25 years’ experience in investment and portfolio management. His proven track record of consistently over benchmark results as well as his people management and team building skills ensures a positive injection of talent to our business,” Mr O’Brien said.

The pair, who have worked together since 2013, will be responsible for the management and development of the Equity Trustees’ asset management business, responsible for $3.6 billion of FUM.  Funds are managed in a customised manner to deliver to trustee clients’ specific investment needs.

“As a contemporary trustee company we must constantly adapt to the changing needs of our clients and markets. We have built our success over 130 years, and these appointments reflect our commitment to continue to invest in our asset management capability for the benefit of our clients,” said Mr O’Brien.

“Equity Trustees has a long and distinguished history of focussing on client needs,” said Mr Thompson. “Chris and I are excited by the opportunity to build on these foundations and apply our expertise and performance-focus to provide bespoke investment solutions across a diverse range of client and beneficiary requirements.”

Mr O’Brien added: “Equity Trustees has been fortunate to have committed leadership in the asset management team as we went through the review period, resulting in maintenance of portfolio performance. It provides a solid foundation for the new leadership who will bring their unique energy and outlook to the asset management team.

“Darren and Chris bring outstanding capability and expertise to our team and I look forward to introducing them to our clients.”

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