George Boubouras

K2 Asset Management has announced the appointment of State Street Australia Limited, an indirect wholly-owned subsidiary of State Street Corporation (NYSE: STT), as the fund administrator in Australia for the Cosmos Purpose Ethereum Access ETF (Cboe: CPET).

The partnership sees State Street administering a fund that provides Australian investors with exposure to cryptocurrency via a registered managed investment scheme listed on Cboe (formerly Chi-X Australia). In turn, the scheme invests in a listed offshore fund whose holdings include Ethereum.

“K2 Asset Management have again collaborated with its trusted partner State Street in the provision of fund services in the digital currency space. We are excited to launch the Cosmos Purpose Ethereum Access ETF giving Australian investors access to the world’s first physically settled Ethereum ETF via the Purpose partnership,” said George Boubouras, Executive Director of K2.

CPET’s underlying asset is the Purpose Ethereum ETF which is managed by Purpose Investments and quoted on the Toronto Stock Exchange. The Purpose Ethereum ETF has been established to buy and hold substantially all of its assets in long-term holdings of Ethereum.

CPET will track the total return performance of the Purpose Ethereum ETF, with the unique structure giving investors an efficient way to gain exposure to the Ethereum asset class on an Australian regulated exchange.

“Cryptocurrencies remain a new frontier for investors in Australia and globally, bringing with them unique operating complexities that require deep knowledge, experience and technology,” said Irfan Ahmad, State Street Digital APAC product lead.

“At State Street, we have developed a deep understanding of the complexities that separate cryptocurrencybased assets like the Cosmos Purpose Ethereum Access ETF from the traditional ETF model with which investors are well familiar.”

“Despite recent market turbulence, we also know both institutional and retail investors are looking for efficient and cost-effective ways to give themselves the option of cryptocurrency exposure,” Ahmad said.

“We look forward to developing this expanded partnership with K2 Asset Management, and delivering their investors the benefit of our long and geographically diverse experience servicing ETFs.”

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George Boubouras

K2 Asset Management has announced the appointment of State Street Australia Limited, an indirect wholly-owned subsidiary of State Street Corporation (NYSE: STT), as the fund administrator and custodian in Australia for the Cosmos Purpose Bitcoin Access ETF (Cboe: CBTC), Australia’s first cryptocurrency ETF ultimately backed by physically settled Bitcoin.

The partnership sees State Street administering and providing custodial services in Australia to a fund that provides Australian investors with exposure to cryptocurrency via a registered managed investment scheme listed on Cboe (formerly Chi-X Australia). In turn, the scheme invests in a listed offshore fund whose holdings include Bitcoin.

“K2 Asset Management is very pleased to work with State Street and other key stakeholders to deliver a sustainable solution in the increasingly important digital and crypto segment for investors” said George Boubouras, Executive Director of K2.

CBTC’s underlying asset is the Purpose Bitcoin ETF which is managed by Purpose Investments and quoted on the Toronto Stock Exchange. The Purpose Bitcoin ETF has been established to buy and hold substantially all of its assets in long-term holdings of Bitcoin.

CBTC will track the total return performance of the Purpose Bitcoin ETF, with the unique structure giving investors an efficient way to gain exposure to the Bitcoin asset class on an Australian regulated exchange.

“Demand for cryptocurrencies is growing among Australian investors and ETFs are a cost effective and efficient vehicle to gain exposure to this emerging asset class. However, the nature of cryptocurrencies adds new complexity to the traditional ETF operating model,” said Irfan Ahmad, State Street Digital APAC product lead. “ETF issuers need a trusted partner that has extensive experience servicing ETFs across multiple geographies and understands the intricacies of administering digital assets. We are pleased that K2 Asset Management has chosen State Street to be their partner.”

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Having spent more than a decade at global financial services firm UBS, Ms Morfis brings a highly acute level of regulatory experience and expertise to the recently re-listed investment house.

Her most recent in a range of legal and compliance roles at UBS was Executive Director, Head of Compliance for the Wealth Management Australia operations.

Contango Managing Director and Chief Investment Officer George Boubouras said that Ms Morfis’ appointment is a major milestone, with the business poised to embark on a busy new phase of its growth strategy.

“A high quality addition the likes of Hari is very significant news for the business, our clients, partners and shareholders,” My Boubouras said.

“Having worked with Hari in the past I have had close exposure to her impressive range of skills, and I’m thrilled we’re able to bring her on board at Contango.

“We have made it very clear that we are committed to a high degree of regulatory scrutiny and compliance as we take this business forward. With some new products and services on the horizon Hari’s guiding hand is going to be vitally important.”

Ms Morfis said she was delighted to be joining Contango, attracted by both the ambitious growth strategy and the opportunity to work with its high quality team.

Ms Morfis added that the focus on the long term alignment of the interests of staff, shareholders and investors via an equity and dividend scheme, in place of staff rewards and bonuses, was a compelling factor in joining Contango.

“I’m delighted to join Contango Asset Management. It’s an established business with a very experienced Investment Team and great culture and values – but with a really exciting path ahead,” Ms Morfis said.

“The alignment between the team, investors and shareholders, via the remuneration structure, establishes a strong foundation to support a dynamic and vibrant venture.”

Contango Asset Management Limited is a boutique wholesale and LIC fund manager, with mandates across the entire market capitalisation spectrum.

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Mr Ivers brings an almost unrivalled level of diverse industry experience to the Contango team, having worked on both the funds management and broker sides of the financial sector.

He has also held a number of financial analysis & strategy roles with listed companies, including multinationals such as IBM.

His career began in Melbourne, followed by time in London and Amsterdam, before returning home with his family in 2005, and his appointment continues the recent period of growth for the Melbourne-based fund manager.

Mr Ivers said that he’d always been drawn to funds management, and the role at Contango was the perfect fit.

“Contango is one of Melbourne’s most well-known fund managers, and I’ve seen their expertise first hand, having worked with them on the broking side in a previous role,” Mr Ivers said.

“The process of company analysis, stock selection and delivering strong investment returns is really where my passion lies.”

“My experience with different sides of the industry over many years built my thirst for investing and it’s an exciting prospect to be joining the team,” Mr Ivers said.

“My primary focus will be enhancing our investment returns and if I can make a positive difference for our clients, then that will be satisfying.”

Contango Chief Investment Officer George Boubouras said Mr Ivers’ vast range of experience would prove exceptional value for Contango.

“Over the past year we have continued to add high calibre investment professionals to the team at Contango,” Mr Boubouras said.

“Richard’s addition brings even more variety and depth, and we’re looking forward to his contribution.

“He comes highly regarded, and certainly well endorsed by members of the team of who’ve worked with him before so we’re delighted to have him on board.”

Mr Boubouras added that the busy 2015 – which saw the successful listing of Contango’s second LIC, Contango Income Generator Limited (ASX:CIE), and the launch of a vibrant national investor roadshow program – was only the beginning of the business’s growth program.

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George Boubouras

The recent market volatility is a timely reminder for investors to review their portfolios and expectations of future returns.

Key questions investors should ask themselves are: Is my portfolio performing how it is designed? Should I be targeting income or growth? Is the recent market correction a time to accumulate?

In the current market environment, we believe it is prudent to have a diversified and defensive portfolio that is generally designed to outperform more volatile markets. Also, a 10% total return is still very achievable on a one year view.

Coupled with this defensive tilt, in an environment of sluggish growth, the portfolio should also look to maximise income over growth. The law of averages suggests that targeting high growth companies when the broader economy is sluggish increases the risk of an earnings disappointment. Stock selection is critical. Investors should not simply ‘set and forget’ their portfolio. Following the latest market correction, equity valuations are great value with PE ratios a touch below long run averages (~14x forward earnings). Investors need to be nimble enough to react to opportunities when they arise like the recent correction while also avoiding over trading.

As with all markets, but especially the local ASX, sector and stock selection is very important. Given the relatively large weight of the resources sector in the local market, it is sometimes helpful to look through the latest headline figure to examine the return of the market ex-resources. Despite the headline ASX300 Index declining 6.5% over the quarter, key defensive sectors such as the Industrials, Utilities and Staples actually delivered positive returns. This just highlights how important it is to get your sector and stock selection right.

Looking forward, our portfolios are set to remain defensive with underweights to Metals, Mining and Energy. While an increase in corporate credit spreads is a concern, it is worth noting that corporate gearing is well below 2006 and 2007 levels. Of the defensive sectors, we remain cautious about the outlook for Consumer Staples given the significant structural challenges in that industry. For example, the once relatively safe duopoly of Coles and Woolworths is now not such a safe bet, as high margins have attracted new global entrants.

Following the latest correction, it appears the market has already downgraded the earnings outlook for FY16 as corporate Australia has failed to cyclically recover from the mining slowdown. This offers a buying opportunity but we would caution against expecting a sharp sustainable cyclical upswing any time soon.

On the month ahead, my tip is to keep an eye on the US quarterly reporting season that gets underway in early October. This will be a good litmus test for the health of the US corporate sector which will impact investor sentiment. On balance equity valuations are very compelling compared to long run averages and also in relative terms when compared to cash and bond yields.

Monthly CIO Note – by George Boubouras

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George Boubouras

Investors will need to prepare for their retirement, regardless of the tough measures brought down in the Federal budget, and the focus on dividends is set to remain a feature of pre and post retirement planning, says Equity Trustees chief investment officer, George Boubouras.

“The current economic and political conditions only serve to drive additional investor demand for yield,” Mr Boubouras says.

“The increased emphasis on self reliance in retirement, combined with the ageing demographics and low interest rate environment, mean investors will continue to need a reliable income stream, in the form of franked dividends, from their equity portfolios.”

It is not only retirees who will benefit from a reliable source of income from growth assets.

“Exposure to growth assets, with consistent reinvestment, in the years and decades prior to retirement, will go a long way to meeting retirement income expectations,” Mr Boubouras says.

“The performance of the local equity market, with its tax paid dividends, combined with continued low interest rates, means Australian investors are already accustomed to targeting equity investments that pay a consistent dividend stream over time.

“Importantly, the Australian equity market has historically recorded a higher payout ratio compared to international equity markets, a fact which has rewarded those who invest in the local market.”

Mr Boubouras says an equity portfolio focused on yield will be trading off higher future earnings growth for a higher dividend yield.

“Currently equity market yields are 4.6 per cent. Investors who are focusing on the dividend yield, should be targeting an equity portfolio that is returning a yield of 7.5 per cent, once grossed up for franking credits.

“That is an attractive return for partially or fully self funded retirees.”

He says the sectors set to benefit from this search for yield include telcos, utilities, infrastructure, gaming, consumer staples, banks, diversified financials and listed property trusts.

Mr Boubouras says the tough budget will initially be contractionary, meaning it is less likely that the Reserve Bank of Australia (RBA) will raise interest rates in the near future. Additionally, the high Australian dollar will continue to place pressure on Australian companies.

“The current economic situation, combined with the measures brought down in the Federal budget, mean the RBA is likely to keep rates steady at least until 2015.

“This lower rate for longer outlook will ensure investors will continue to search for more yield elsewhere. Those ASX listed companies providing strong, sustainable yields, greater than the ASX200 over time, are set to benefit,” Mr Boubouras concludes.

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Mr Buckley will work closely with Equity Trustees’ advice and personal services team and his responsibilities will include communicating with private clients as well as wealth management partners about Equity Trustees’ investment approaches and strategies. He is based in Melbourne and reports to George Boubouras, chief investment officer.

Mr Boubouras said that the continued expansion of Equity Trustees’ asset management business made it necessary to add an experienced portfolio manager to the team.

“James has a depth of experience that will be invaluable to our business as we continue to build our capabilities and approaches. We are very pleased to have attracted someone of James’s calibre,” Mr Boubouras said.

Mr Buckley has over 20 years’ experience in investments and financial services, working in Australia and the UK for both private clients and large institutions across asset classes. He joins Equity Trustees from Phillip Capital Australia where he was head of asset management, and he has also worked at NAB Private Wealth as an investment consultant. Prior to this, he held several senior roles at UBS Wealth Management in both Australia and the UK, including head of managed funds.

Mr Buckley holds a graduate diploma in applied finance and investment from the Securities Institute of Australia, and a bachelor of arts from Melbourne University. He holds an Investment Management Certificate (UK) and SFA Securities and Investment Certificate (UK).

Equity Trustees Limited (EQT) is a publicly listed company that provides a range of financial services to corporate and private clients. Its businesses include asset management, distribution, responsible entity appointments, private client wealth management, and corporate and personal superannuation.

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George Boubouras

Equity Trustees distributed more than $14.5 million last year to charities on behalf of the 206 charitable trusts it manages, following the directions and wishes of the trusts’ founders.

The charitable trusts managed by Equity Trustees total more than $490 million in value and are comprised of private ancillary funds, public ancillary funds (including the EQT Foundation) and testamentary or ‘will’ trusts, says Tabitha Lovett, head of philanthropy at Equity Trustees.

“The charitable trusts vary significantly in size and scope, and support a range of issues such as medical and scientific research, environmental protection, children’s charities, educational causes, animal welfare and disaster relief,” Ms Lovett says.

Of particular note in recent years is the increasing demand for funding from charities.

“The number of requests for grants from charities is on the rise, and the ratio of the funds requested against the income we have to distribute is around 8:1. This situation is increasing, not decreasing.

“While government and private sector funding for charities can ebb and flow, the proceeds from perpetual charitable trusts, such as those managed by Equity Trustees, continue to be distributed, regardless of the financial climate or government funding priorities.

“Equity Trustees’ focus is to ensure the trusts are properly administered and the income is distributed following directions and wishes of the benefactors, with prominence given to the trusts’ founders,” Ms Lovett says.

“Where the founders have left discretion with Equity Trustees to select the recipients to receive income each year, we strive to identify the strongest projects which will achieve genuine benefits for those in the community who are vulnerable and disadvantaged.”

Ms Lovett says the funds available for distribution each year depend upon the investment returns of the existing perpetual trusts and the number of new trusts that are set up.

“In the past 10 years many new philanthropic trusts have been established, as more and more people see the benefit of giving during their lifetime.

“This reflects people’s increasing interest in actively supporting the community sector and because of an increasing awareness of the various options available for establishing a perpetual foundation or legacy,” says Ms Lovett.

George Boubouras, Chief Investment Officer at Equity Trustees, says trusts’ assets are invested prudently with the objective of capital and income growth.

“These trusts are perpetual trusts, which means we can take a long term outlook with the investment decisions made. The aim is to return a consistent dividend yield that is greater than the broader equity market, to ensure funds are available for distribution each year.

“The aim is to deliver the best risk adjusted returns for investors with a focus on the dividend yield. The franking credit will continue to be an important component.

“The growth of dividend per share (DPS) was very strong over the past year and we continue to anticipate this trend in 2014.

“EQT is aiming for a sustainable dividend growth strategy which will provide greater income for distribution to charity,” Mr Boubouras says.

“Increasingly, we are finding clients want their financial planning considerations to include a structured and long-term approach to philanthropic giving, which will also provide tax advantages,” says Ms Lovett.

“It is not necessary to be wealthy to donate or to set up a charitable trust. Donations to the Equity Trustees Foundation can be made with as little as $1000.”

She says it is also possible to establish a perpetual charitable vehicle with a donation of around $20,000

“Establishing a perpetual charitable trust doesn’t need to be expensive or complicated and is a way to more meaningfully support a chosen charity, than ad hoc donations,” she says.

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Mr Boubouras was appointed to the role on an interim basis in April this year.

Mr Boubouras has over 20 years experience in the financial services industry, including time at Macquarie Bank, HSBC Asset Management, Challenger Financial Services Group, and Westpac as well as NSW Treasury. He joined EQT from UBS Wealth Management where he was head of investment strategy and consulting, responsible for research & investments across all asset classes.

Robin Burns, managing director of EQT, said Mr Boubouras has already made significant steps in enhancing EQT’s asset management capabilities and approaches.

“George was heavily involved in driving the review of our asset management and risk management activities, which resulted in the appointment of Mercer as asset consultant for both our retail and institutional businesses, and this relationship is working extremely well.

“He has also appointed the respected fund manager Paul Kasian as our head of Australian equities, adding significant strength to our asset management capabilities.

“As the regulatory, economic and political framework for the Australian financial services industry continues to change, we are particularly pleased to have someone of the calibre and experience of Mr Boubouras leading our funds management business,” Mr Burns said.

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EQT made the decision to partner with an external asset consultant to help ensure it maintains consistency in its asset management and risk management activities across its retail and institutional business units, and to assist in meeting its legislative and regulatory obligations.

Robin Burns, managing director of EQT, said that Mercer was selected following an intensive review process.

“Mercer met our strict criteria for delivering asset consultant services, including providing quality research and product recommendations, reporting and monitoring in line with our prudential obligations, and having the breadth and depth of resources, including people and technology on a global scale, to meet the needs of both our institutional and retail businesses.

“The board took the view that Mercer is best placed to assist EQT in achieving industry best practice and further enhancing the services we provide to all our clients.

“In particular, Mercer will work closely with George Boubouras in our newly created CIO role to help deliver consistent returns across all mandates,” Mr Burns said.

For EQT’s institutional business, Mercer will provide assistance and guidance to EQT’s board investment committee including strategic asset allocation advice, reporting and monitoring, and portfolio construction recommendations.

The EQT retail business partnership objectives include: investment research and approved product list construction; model portfolio construction; and adviser support.

Mr Burns said that Mercer demonstrated an in-depth understanding of EQT’s strategy, needs and fiduciary obligations, and therefore the need to provide consistency and rigour across all EQT business units.

“As a trustee company with a 125 year heritage, we take our trust and fiduciary responsibilities very seriously and Mercer showed that it could satisfy our stringent requirements in these areas,” Mr Burns said.

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