David Bryant

The BT Super Board and Mercer has announced they had signed a Heads of Agreement to merge BT’s Personal and Corporate superannuation funds into the Mercer Super Trust to create a $65 billion superannuation fund helping more than 850,000 Australians to invest for and support their retirement.

BT Super Chair, Gai McGrath, and Mercer President Pacific Region and CEO Australia, David Bryant, has welcomed the agreement which will result in significant benefits to the superannuation members of both organisations.

Ms McGrath said: “The Trustee engaged broadly across the industry and after a robust and competitive process this merger will create a larger superannuation fund with the potential to deliver improved performance, lower fees, and broader member services. It also maintains continuity of knowledge and service for BT Super members”.

“Mercer, whose multi-manager funds manage more than A$500bn in assets globally, has been a retirement and investment specialist in Australia for more than 40 years. They are well placed to support our BT Super members and participating employers into the future.”

By being part of a much larger fund BT members will have the potential to benefit from:

• Stronger performance. Mercer’s default investment strategy has achieved top quartile results over three, five and seven years for the majority of members at 31 March 2022ⁱ.
• Lower fees. Most members will enjoy a fee reduction of around 25% off standard fees, making it one of the most competitive super offers in Australia. This includes the elimination of the dollar-based administration fee and reduced percentage-based administration and investment fees.
• More investment choice. Members will have access to an expanded choice menu for those who want to take control, backed by Mercer’s access to a diverse range of investments.
• Broader member services. With Mercer, members will continue to have 24/7 digital access to their super account supported by online calculators and education tools. Australian-based teams will be available to answer their calls and provide limited advice over the phone if they do not have a financial adviser.

In addition, members’ existing insurance arrangements will be retained, providing peace of mind that there is no disruption to their cover or costs.

Fees for most Mercer Super members will also be reduced to match the new lower fees being offered to the transferring BT Super members.

“I look forward to working closely with Mercer to ensure a successful merger and improve the retirement outcomes for our members for many years to come,” Ms McGrath said.

The Heads of Agreement covers BT’s Personal and Corporate superannuation funds including BT Super and BT Super for Life. The merger does not include superannuation held on Westpac’s BT Panorama and Asgard platforms.

Future investment and opportunity

Mr Bryant said: “Our purpose is to make a difference in people’s lives. Bringing the combined expertise and strength of our two firms together enables us to do exactly that, and redefines the competitive landscape of superannuation in Australia.

“Our new proposition will be offered to all members from day one. And, our ongoing commitment to improving our capability and capacity will continue to set a new bar for retirement outcomes for all Australians now and into the future.

“I am very much looking forward to welcoming the BT Super members and BT Super’s people to Mercer Australia.”

Keeping members and customers informed

Members will receive all the relevant information about the merger in the coming months well ahead of its expected completion in the first half of the 2023 calendar year.

The merger remains subject to certain conditions (including regulatory approvals).

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David Bryant

With the prospect of a Donald Trump win in the US elections, and a passive Reserve Bank of Australia (RBA) continuing to hold interest rates at an all time low, the pressure on yield seeking investors such as self-funded retirees is increasing, says David Bryant, head of Australian Unity Investments.

“We are set to be in a low interest rate environment for some time so investors need to accept this fact and make investment decisions accordingly.

“On top of this, markets are continuing to slide as investors sit on the sidelines, waiting until the US election result is known.

“There is unlikely to be any respite until after the US election, and even then the RBA is likely to continue its passive approach for now, with no rate cuts or increases until the picture becomes much clearer.

“One of the biggest risks now facing investors is opportunity risk which happens when one investment opportunity is chosen, and then finding that another better opportunity exists or may arise.

“The opportunity risk for retirees with cash tied up in term deposits, as well as lazy long term investors who keep their savings in interest bearing bank accounts because they have never got round to looking at other investments, is increasing all the time.”

Mr Bryant said that investors and savers can reduce opportunity risk very easily, without taking on high levels of other risk, by seeking other investments and adding diversification to their portfolio.

“For lazy savers this means looking for growth assets that will also add to their capital over time

“For retirees, diversification and increased returns is achieved by adding a number of different yield-producing assets, thus managing risk through diversification and ensuring investors don’t have all their eggs in one basket.

“A major mistake yield-seeking investors can make is moving all their money out of cash and putting it all in whatever investment currently offers the best return.”

He said that the sensible strategy when seeking yield is to balance low returns from fixed interest investments with a mix of higher yield investments, which also manages risk through diversification.

“It means keeping an appropriate position in secure, but currently low interest-producing, fixed interest investments, while spreading investments across a number of other asset classes, including domestic and international shares and property.

“Even within property there should be diversification away from residential, for example into commercial, healthcare or industrial property funds.

“There are also other investment classes that can offer diversity, good returns and access to funds such as the new mortgage funds that have been developed.

“Right now, the best approach for investors is not to keep more money in cash than is sensible for their circumstances.

“For example, for an SMSF in pension mode it makes sense to have a minimum of one year’s pension payments easily accessible, but probably too much more is increasing opportunity risk unnecessarily.

“Cash is simply not a risk free investment in the present climate,” Mr Bryant said.

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David Bryant

Based on this year’s reporting season results and guidance released to date, investors can expect better results for the 2017 financial year as more companies progress through the difficult process of exiting businesses and restructuring operations, says David Bryant, CEO at Australian Unity Investments.

“Across the market as a whole, company earnings for the financial year 30 June 2016, are down on the previous year by around 8 percent, but this reflects the major impact of resource companies where average earnings fell 48 percent. Excluding this, company profits have grown around 5 percent this financial year.

“The big write downs we saw this year, largely in resource companies, shouldn’t be repeated in the 2017 financial year.

“Overall it has been a fairly stable reporting season, without too much unexpected bad news.”

Mr Bryant said if the growth forecast for next year of 6-7 percent is achieved investors should be kept reasonably happy, particularly given the shrinking number of alternative investments given record low interest rates.

“However, we are likely to see continued pressure on dividend yield which will concern some investors, particularly in certain sectors.

“Investors still need to embrace equities, but they need to be very selective in companies and sectors they invest in.

“The resources sector results have been very poor, as expected, and the banking sector is struggling to deliver much growth given low rates, strong competition, and increasing bad debt levels.

“That leaves only around 40 percent of the market to work with, and as this profit reporting season has shown there is a big gap between the best and worst companies.

“If you contrast stocks like Qantas, who embarked on their Transformation program two years ago after a reporting significant write-offs, today they are showing the benefit of that work.

“Companies like Wesfarmers and Woolworths are tackling those issues, but we are in the midst of the write-downs and restructuring work, so their improvement is realistically a year or two away yet.

“The message from reporting season so far, is that investors will need to continue to have lower expectations of returns for the rest of 2016, as low interest rates and limited earnings growth prevail.

“As a result, investors need to be more well-researched and selective than ever, because the easy option of just investing in resources and banks is gone, and the winners and losers in the next couple of years will deliver substantially different outcomes for investors.”

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David Bryant

Australian Unity is set to create a global benchmark for health precincts after the Queensland Government confirmed it as the preferred tenderer for the $1.1 billion Herston Quarter project in Brisbane.

Australian Unity plans to develop and then take an ongoing role in an integrated health, ageing and research precinct in the Herston Quarter, which would provide Queenslanders with access to leading health, hospital and aged care services. The new project, integrated within the existing Herston Health Precinct, is designed to attract, train and retain the best clinicians, health workers, researchers, academics and students.

“The Herston Quarter is an important social infrastructure project for Brisbane and Queensland and we thank the Palaszczuk Government for the opportunity to contribute to the development of a world class health precinct,” Australian Unity Group Managing Director Rohan Mead said.

“As the proposed developer and ongoing operator of key facilities including retirement living and aged care services, we look forward to a long term involvement with the precinct and the Queensland community, ” Mr Mead said.

Australian Unity secured the Queensland Government’s preferred tenderer status for the Herston Quarter after a rigorous selection process. Over the next few months Australian Unity will work with the Queensland Government to document and finalise the contracts and the masterplan.

The Herston Quarter is adjacent to the Royal Brisbane and Women’s Hospital in inner suburban Brisbane. The masterplan for the five hectare site includes a public rehabilitation hospital; a private hospital; residential aged care; retirement living and student accommodation; health research; childcare; a co-working hub and education and training facilities.

“Australian Unity has a demonstrated track record of investing in and developing state of the art hospitals, and of building and operating aged care, retirement living and wellbeing precincts,” Mr Mead said.

“We anticipate the billion dollar plus Herston Quarter project will create 700 jobs in the construction phase and hundreds of permanent jobs when the precinct is in operation,” he said.

“As a 175-year old mutual organisation, Australian Unity has no shareholders. Our focus is on delivering community value, through products and projects that meet individual and community needs. We believe Herston Quarter is one such example for Queensland,” Mr Mead said.

Australian Unity Investments Chief Executive Officer David Bryant said the project would be completed in multiple stages over five to ten years.

“We have a successful history of strong investor support for our healthcare development projects, and discussions with relevant partners to support the funding and operating elements of the Herston Quarter are well-progressed,” Mr Bryant said.

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David Bryant

Investors need to look at alternatives to bank stocks for both yield and growth, argues David Bryant, chief executive officer of Australian Unity Investments.

“Banks are getting a lot of attention this reporting season – not always for the right reasons – raising questions about their position as the yield investment of choice.

“Their profits have been soft and pressure on market growth, margins and bad debt ratios are expected to continue.

“And with such low interest rates there is also pressure on banks’ ability to maintain deposits and stem flows to equities and property, possibly putting further pressure on dividend policy.

“What it means for investors is more uncertainty and they should be looking at alternatives to banking stocks, particularly in areas such as commercial property.”

Mr Bryant says that there are few standout opportunities for yield investors and they would be wise to diversify their portfolio, keeping some liquidity so they can take advantage of any new opportunities.

“This approach also helps to manage risk but even the most cautious investors need to balance risk and return and look at other yield opportunities from reputable asset managers that can add to returns in a low yield environment.”

Mr Bryant says that there are still a number of positive signs for investors – for example with both consumer confidence and housing finance showing a pick-up.

“If these trends continue, the outlook for Australian equities remains positive,” he said.

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David Bryant

Investors in the Australian Unity Office Property Fund voted overwhelmingly in favour of the proposal to list the Fund on the Australian Securities Exchange (ASX) at a meeting in Melbourne last Friday.

Of those who voted, more than 99 per cent voted in favour of all the resolutions to give effect to the listing.

The Australian Unity Office Fund will trade on the ASX on a conditional and deferred settlement basis from 12 noon on 20 June 2016. It will be the first A-REIT to list on the ASX this calendar year. The Fund will trade under the ASX code ‘AOF’.

David Bryant, chief executive officer at Australian Unity Investments, was pleased with the support from investors and their endorsement of the proposal to list the Fund.

“We have been very happy with the high level of interest from both institutional and retail investors to date. The IPO was well oversubscribed.

“We developed the proposal to list because we believed it was in the best interests of investors. The listing will provide access to additional equity for the sustainable growth of the Fund and liquidity to those investors seeking to withdraw.

“The total value of withdrawal requests received during the recent offer was $53.29 million. Pleasingly, all unitholders requesting a withdrawal will be paid in full. ” Mr Bryant said.

The Fund was established in 2005 and owns a portfolio of eight office assets in New South Wales, Victoria, Australian Capital Territory, South Australia and Queensland, with assets valued at $391 million, at 30 April 2016.

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David Bryant

There have been strong signals over the past week that the Australian economy has turned the corner and things are starting to look up, said David Bryant, chief executive officer at Australian Unity Investments.

“Australia seems to be on the cusp of a growth upswing, with the latest GDP and household consumption figures providing good news.

“The GDP numbers released earlier this week were the best in four years, showing GDP is up over three percent for the year. If you excuse last June, which was weak, the last three quarters are running at 3.7%.

“It was also very pleasing to see household consumption added almost half a percent to the GDP increase, and it was widespread across a number of areas.

“The only real area of concern was the lower engineering, construction and business building figures, but these were not really a surprise.

“In my view, the Australian economy has turned a corner, at least at an individual level.

“Employment, consumption, exports, tourism and building approvals are all strong or steadily improving.

“Most encouragingly, it looks like the much-needed transition from mining to housing to the consumer has occurred, now we just need to get business properly on board.

“While there are still some headwinds to the economy that need to be taken into account, the overall picture is one of slow growth and recovery.”

Mr Bryant said that while the ASX was sold off earlier in the week, this was because there was an expectation of lower GDP figures, and the fact there may now not be another interest rate cut saw some profit taking.

“The sharemarket appears to be comfortably trading within a 5,300 to 5,400 range and it seems likely that it will continue within this range for the short term, with some slow move upwards most likely.

“Australian investors should feel reassured by these stronger economic signals,” My Bryant said.

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Ms Barlow joins AUI from the New Mexico State Investment Council, the second largest sovereign wealth fund in the US, where she was head of real return and real estate. In this role, Ms Barlow managed a portfolio of over 60 diverse investments and was a representative on over 20 investor advisory boards.

Ms Barlow will be responsible for overseeing AUI’s various investment strategies and portfolios. A particular focus of the role is on the effectiveness of the governance, policies, processes and resource management related to AUI’s investment management activities.

Mr Bryant said that Ms Barlow’s invaluable experience with the endowment in New Mexico and the quality of her investment knowledge and skills will be particularly useful to Australian Unity Investments.

“Geraldine’s diverse investment background across a range of asset classes and her funds management experience made her the ideal person for the role,” Mr Bryant said.

“She has been involved in all facets of the investment management process including due diligence, acquisitions, capital raisings, asset management and portfolio construction, which will greatly assist the business as we continue our strategic growth plans.”

Prior to joining the New Mexico State Investment Council, Ms Barlow worked for Hastings Funds Management in the US as well as running her own consulting firm there.

In Australia, she has worked for James Fielding Infrastructure, Deutsche Asset Management and Jones Lang La Salle, in a range of portfolio management in investment roles.Ms Barlow holds bachelor degrees in business (economics) and applied science from QUT and a graduate diploma in applied finance and investment from FINSIA. She is a Chartered Alternative Investment Analyst and has completed the company director’s course at AICD.

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David Bryant

Global economic news is largely positive but it seems that Australian investors are increasingly pessimistic, says David Bryant, chief executive officer at Australian Unity Investments.

“Most of the key overseas economies have had good news in the last week but this doesn’t seem to be reaching local investors.

“Consumer confidence in Australia is down, with figures released last month showing it was down two percent to ‘mildly negative’ territory.

“The forthcoming federal budget and election also bring uncertainty.

“But overseas, the news has been brighter. For instance, the China Purchasing Index showed increased expansion, up another two percent, with growth in both manufacturing and services.

“The US services sector also showed healthy expansion and the Eurozone Purchasing Manager’s Index (PMI) was up this week.

“But despite these green shoots, the Australian market is struggling and remains volatile.

“Low commodity prices are spooking investors who continue to wait for a bottom to be reached.

“And concern about banks’ ongoing strength and profitability, in light a potential increase in bad loans, is weighing on investors’ minds.

“This is no doubt exacerbated by this week’s news about the continuing issues with culture within the banking environment.

“These fears aren’t unfounded. Certainly Australian banks are struggling for profit growth, and previous earnings targets of around ten percent are unlikely to continue, and are more likely to be half that.

“Indeed, five percent growth would be a good result in the current environment.

“On top of this is the much lower profits for resource stocks, and it’s hardly surprising that investors are seeing limited options in the local sharemarket.

“The variation between good and bad companies is becoming clearer and, while this means that investors must remain vigilant and do their research, it also presents good opportunities for those investors willing to take the time to find the right options,” Mr Bryant said.

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David Bryant

Market movements in recent times have reinforced the need for portfolio diversification, both within asset classes and by geographic region, said David Bryant head of Australian Unity Investments.

In recent weeks investors with a diversified portfolio and an appropriate investment strategy, would have seen the benefits the discipline of this brings.

“The big losers from the recent equity market volatility would have been investors who have a strong weighting to the Australian equity market, who have not stuck to a long term diversified approach, and who have reacted to the general market nervousness.

“Investors who have maintained a diversified approach and only have a portion of their capital invested in Australian equities would have reduced the impact of any loss.

Mr Bryant said the importance of investing internationally has again been clearly highlighted.

“While there are certainly a number of economic concerns throughout the world, these have been well aired for some time now. Investors should not let this put them off investing outside of Australia as this is where many of the compelling opportunities lie.

“International shares are likely to perform better than Australian shares in the future.

“It is not news that “commodity prices” have been shrinking for a while and that Australian miners are adversely affected. As it is now, resource stocks only represent 14 per cent of the ASX 200, less than half of the 30 per cent it represented in 2008. This percentage has scope to reduce further.

“With the Australian dollar also in long term decline, there is now less risk in international shares than there is in the local market.”

Nevertheless, Mr Bryant also pointed out that a focus on bad news and the market reaction to this has resulted in some of the positive signs for the domestic economy being overlooked.

“While high cost Australian resource producers will continue to feel the pressure, companies in other sectors could do well.

“There is positive news for other sectors, such as the still solid monthly building approvals – even though they are slowing a little they are up 14 per cent on the last year. There is growth in private credit (up 6 per cent); improvement in building loans (up 5 per cent); and an anticipated improvement in retail figures leading up to the Christmas season that could help individual companies do well.

“The Reserve Bank appears to be keeping a close watch on the local economy, adopting a “steady as she goes” approach.

“However, investing only in Australian equities will no longer give investors the returns they need. Those investors with a truly diversified portfolio, both within asset classes and by geographic region, will be the ones who will benefit from positive market movements around the globe.”

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