Both funds were placed ‘On Hold’ when UBS Global Asset Management proposed the acquisition of ING Investment Management in June 2011, this closed on 4 October 2011. 

ING Investment Management has stated fund assets will be realised and proceeds returned to investors within 10 business days of the termination announcement on 7 October 2011. Proceeds will be calculated and distributed in accordance with the relevant provisions of the fund’s constitution.

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Greg Michel, head of fixed income at INGIM said the global appetite for Australian bonds is likely to continue with investors drawn to current yields of 5% to 6%, outstripping available yields available from global alternatives.

“The Australian economy has proven to be resilient to the effects of the GFC and continues to expand at a robust pace. The bond market has been in a bear market phase since early 2009 and bond yields are now close to long term average levels,” he said.

Global bonds are a different story, and INGIM expects flat to negative returns in 2011.

While the major European economies are expanding strongly, aided largely by a weak currency and accommodative monetary policy, the peripheral Euro markets continue to be held down by the large levels of sovereign debt and associated funding challenges.

“On balance we believe the combination of improving economic growth and high sovereign debt levels will result in Euro bond yields continuing to head higher in 2011,” said Mr Michel.

Credit best performing sub-sector

Turning to fixed income sub-sectors, INGIM said credit is expected to be the best performing assuming the default cycle pans out as expected.  While underlying interest rates will rise, continued credit spread contraction should see credit perform in a relative sense.

“The rally we have seen in credit markets over the past two years has been strong, supported by improving fundamentals and monetary and fiscal stimulus in the economy.  That being said, there is a sense the rally has overshot the fair value mark and there are few catalysts to drive spreads tighter,” INGIM’s head of credit research, Scott Rundell said.

For issuers, Mr Rundell said offshore markets continue to be more competitive than the Australian bond market with some suggesting several large players are demanding unpalatable spread levels.

“It’s relatively easy for investment grade credit to issue long dated loans or bonds into the US market.  New issuance is likely to be low and we expect few first time local issuers in Australia,” he said.

Global government bond yields on rise

Looking to Australian government bonds, INGIM is expecting limited further tightening in monetary policy in 2011 and now expects government bond yields will remain at or near current levels for the rest of the calendar year. Demand for local government bonds will continue to be dominated by offshore investors.

Despite recent geo-political tensions in the Middle East and North Africa, global government bond yields are expected to continue to rise over the medium term.  US government bonds yields are also expected to continue their upward rise as the market prices in the recovery.

“We’re now seeing ongoing evidence of a broad based economic recovery in the US and government bond yields are set to continue to rise through 2011 as the global economic recovery gathers pace,” said Mr Michel.

World issues cause headwinds

Meanwhile European sovereign debt challenges will continue to cause headwinds for fixed income. In particular, forced losses (or ‘haircuts’) on Irish senior bank debt could create contagion risk to other EU banks, causing the cost of bank funding to spike.

“We also advise monitoring changing bank regulatory regimes and structures as they will impact capital flows and the cost of credit in general,” Mr Rundell said.

Other world factors to watch include Chinese growth and demand for raw materials and the impact of recent events in the Middle-East and North Africa on oil prices.

“The management of many global companies may look to appease shareholders who have experienced negligible growth with capital initiatives aimed at increasing their returns. This could also be a negative credit event,” Mr Rundell said.

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According to the report, total returns from REITs are expected to be in the 8-12% range this year, as dividends grow and continue to be an important component of total return. The primary driver of real estate company returns will be growth in cash flow per share.

Rising interest rates need not be feared, as listed real estate often delivers positive returns in periods of economic improvement, even if interest rates rise, according to the report. The year will also see large scale IPOs emerging out of the US.

Region by region, in Asia Pacific, Hong Kong property companies are expected to outperform over the next 12 months, growing earnings by 15-20% and producing dividend yields of 2-3%. Japan should deliver a total return of 5-10% and Singapore 10-15%.

In Europe, Western and Northern Europe are believed to represent more attractive investment opportunities compared to Southern and Eastern Europe, with a 5-10% total return expectation across Continental Europe over the next 12 months and a 5-6% dividend yield. The UK is expected to deliver a total return l of 8-12% over the next year.

North America should see total returns of 8-12% in the US and Canada. In the US, property investment is predicted to be helped by economic recovery as a result of fiscal and monetary stimulus, although the continued depressed housing market and high unemployment remain as obstacles.

While property markets are at different stages in the real estate cycle, the earnings growth trend remains positive according to the report.

Click here to download the full report (pdf)

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ING Investment Management (INGIM) Australia has positioned its wholesale business for the next stage of growth, with the final two hires of this year and a four star rating for its Extended Alpha Australian Share Fund.

INGIM has made a concerted effort to build its wholesale business this year with more than seven key hires including industry veteran Jim McKay as head of sales.

“INGIM now has a complete team of experienced professionals including a Melbourne office, allowing us to focus on bringing the best of both our local and global strategies to advisers,” said Mr McKay.

These best of breed strategies include the ING Extended Alpha Australian Share Fund and ING Wholesale Global Property Securities (GPS) Fund, which has just had its ‘Highly Recommended’ rating reaffirmed by
Lonsec.

Experienced BDMs to take on Northern Region

The two new hires are both BDMs for the Northern Region: Heath Branigan, who has 10 years experience in asset management in the United Kingdom and Australia and Jenine Hayman, an experienced business
development and research relationship professional with 19 years experience in the financial services industry.

Both will report to Natalie Grey, the recently announced Northern Regional manager.

“We are very pleased to be working with these highly experienced professionals, who are the final pieces of the puzzle in developing our wholesale team and whose experience will help us develop key relationships in this area,” said Mr McKay.

Ms Hayman most recently worked for Mediascape Analytical & Research Services as a client relationship and business development manager. She has also worked for AXA Australia as a business development manager and spent 11 years at Goldman Sachs JBWere Asset Management as a research and platform support manager.

Mr Branigan joins from Hedge Harbor in the UK where he worked in institutional sales for Europe and Australia, and was responsible for relationship development across a diverse international institutional client base. He has also worked for AMP Capital Investors in Australia and JP Morgan Asset Management in the UK and is a chartered alternative investment analyst.

Four stars for Extended Alpha fund

INGIM has just received a four star rating for the ING Extended Alpha Australian Share Fund from S&P – its first rating of the fund. S&P said the rating “reflects our high conviction that the manager will consistently generate risk-adjusted returns in excess of relevant investment objectives and relative to peers”.

“After significant market dislocations such as the GFC, history shows markets move sideways for long periods of time. With the increased volatility experienced in the last 18 months, and which we expect going into 2011, capturing alpha to generate returns is absolutely imperative for portfolios,” Mr McKay said.

The Extended Alpha fund also has a ‘Highly Recommended’ rating from Lonsec and a ‘Recommended’ rating from Zenith.

Meanwhile Lonsec has reaffirmed the ING Wholesale Global Property Securities (GPS) Fund’s ‘Highly Recommended’ rating which it has maintained since 2006.

According to its report, Lonsec retained this rating due to the fund’s “extensive and stable investment team” and its “clear and comprehensive investment process, which can be consistently applied on a global basis”.

The GPS fund also has a five star rating from S&P and is ‘Highly Recommended’ by Zenith. The fund recently also won the property category at the 2010 S&P Fund Awards for the fourth year in a row.

“The ratings reflect our efforts and performance as well as the strength of our team, and we are pleased to be recognised appropriately,” said Mr McKay. “Since launching Extended Alpha this year we have seen a strong response and the fund is going from strength to strength.

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ING Investment Management (INGIM) Australia has boosted its wholesale business with the appointment of Mark Harper as Senior Business Development Manager for the southern region, marking the fourth hire this year for INGIM’s newly opened Melbourne office.

Mr Harper will be responsible for building relations with platforms and dealer groups by leveraging the strong relationships he has built up at the corporate level around Victoria, South Australia, Tasmania and Western Australia.

Mr Harper joins INGIM from AXA Australia where he held the role of National Sales Manager of group life insurance. Prior to AXA, he held roles at NAB as a Senior Project Analyst and Team Leader and has experience across project management, transformation projects and managing end to end tender processes.

The appointment follows INGIM’s earlier announcements regarding its plans to expand its investment manufacturing and distribution activities in Australia via dealer groups and platforms. Mr Harper will report to
Stuart Devlin, Southern Region Manager who was hired in August this year.

Mr McKay, Head of Sales at INGIM in Australia, said the appointment of Mr Harper marked further progress for INGIM’s wholesale platform as it ramps up activity to target advisers.

“We are delighted to have someone of Mark’s broad experience appointed to the southern region and compliment Mr Devlin’s skill set. His strong business acumen and his previous experience in project management as well as identifying new business will ensure INGIM’s wholesale platform is well placed to grow from the ground up,” he said.

“This segment of the market is a key area of focus for INGIM’s strategy here in Australia. Our recent hires in both southern and northern regions all have proven track records in producing results in servicing advisers and their clients. We are already seeing strong interest by dealer groups in our recently launched Australian equities funds designed to capture alpha. New offerings are also in the pipeline for 2011 allowing INGIM to continue delivering alpha generating solutions in the competitive adviser industry,” Mr McKay concluded.

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