Elfreda Jonker

Leading Australian and global equities boutique fund manager, Alphinity Investment Management, has appointed experienced client portfolio manager Elfreda Jonker to its Sydney-based team.

Jonker has joined Alphinity from Talaria Asset Management where she was Director of Business Development. She brings two decades of financial markets and corporate experience to the firm, including more than 13 years at Deutsche Bank, where she served as Head of Equity Sales for the bank’s South African business.

Prior to this Jonker spent two years working for Goldman Sachs in New York, where she was a project manager for interest rate, foreign exchange and credit derivatives products. Previously she spent three years at Deloitte, in South Africa and Chicago, where she worked in the firm’s audit division. Jonker holds a Bachelor of Commerce in Accounting (Honours) from the University of South Africa.

Alphinity Principal and Chief Executive Johan Carlberg said Jonker would serve as an important link between Alphinity’s investment and distribution teams.

“Elfreda is a welcome addition and adds significant experience to our team. Her role involves creating investment content for client marketing, representing our award-winning investment experts and working with Fidante to manage retail client relationships,” he said.

Jonker’s appointment follows that of Jessica Cairns to the newly created role of ESG and Sustainability Manager at Alphinity, in a move designed to support the firm’s efforts to more deeply integrate ESG-related matters across its domestic and global equities funds.

Alphinity Investment Management is supported by Challenger Limited subsidiary Fidante Partners, which forms long term alliances with talented investment teams to support and grow specialist investment management businesses.

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Andrew Grimes

Leading Australian and global equities boutique fund manager, Alphinity Investment Management, has appointed a senior investment specialist to meet the needs of its growing institutional and retail client base.

Andrew Grimes, who helped both Platinum Asset Management and Winton Capital Australia successfully deepen their relationships with their investor base, has been appointed to the newly created role of Client Portfolio Manager in response to growing interest from institutional and retail clients.

Andrew Grimes has more than 20 years’ experience in Australian and global financial markets and a strong academic background. He joins Alphinity from Winton Capital, where he spent four years as director and Head of Winton Capital Australia, following five years at Platinum Asset Management as an institutional investment specialist. Mr Grimes has a BA in metallurgy, economics and management from Oxford University and an MBA from the Kellogg School of Management, Northwestern University.

Alphinity Lead Portfolio Manager Johan Carlberg said: “We are very pleased to have recruited a Client Portfolio Manager with Andy’s experience and record of success to help us service our growing client base. With Andy’s support and a continuation of the strong consistent returns we have become known for, we look forward to deepening our relationships and meeting the requirements of our clients going forward.”

Mr Grimes stated: “It is an exciting time to be joining Alphinity. The team’s focus has always been on investment returns and meeting clients’ expectations, and they have certainly proven themselves and their process over a long period of time and across market cycles.  In addition, Alphinity have now also successfully established a high performing global equity business.  My role will be to meet the needs of our investors who are requesting closer partnerships with Alphinity.”

Alphinity has delivered consistently strong returns since it was established in 2010 by identifying opportunities across market cycles and investing in quality, undervalued companies with underestimated forward earnings expectations.

Its four Australian equity funds have all outperformed their benchmark index since their September 2010 inception to 31 January 2018. Alphinity’s Global Equity Fund has done the same over the two years since its inception, including returning 21.4% in 2017, eight percent above the benchmark MSCI World ex Australia Net Total Return Index (net of fees).

Alphinity Investment Management is owned by its staff in conjunction with Fidante Partners, the boutique management business of Challenger Limited.

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Reflecting the successful growth of the firm, Stuart Welch has been appointed to the newly created role of Senior Research Analyst. Stuart has almost 20 years of Australian and global financial markets experience and a strong academic background. Prior to joining Alphinity, he spent seven years as an Investment Analyst at Fidelity International Australia covering a range of sectors, including healthcare, banks, diversified financials, infrastructure and transport. At Alphinity he will continue to cover health care as well as transport and infrastructure. Stuart has a Bachelor of Business from the University of Technology, Sydney and holds a Masters of Management Studies from Cambridge University, as well as being a CFA charterholder.

Richard Hitchens has been appointed to the existing role of Senior Quantitative Analyst, serving both the Australian and Global Equities teams. He replaces Alphinity veteran Shane Kelly who is relocating to the United Kingdom. Richard is well known to both equities teams having been a service provider to Alphinity for a number of years. Richard has spent the past six years working at Credit Suisse Australia, serving as Director of Quantitative Research from 2014. He qualified as an actuary in 1998 and worked for JB Were, Goldman Sachs JB Were and RBS Australia in a range of roles before joining Credit Suisse. Richard is in the final stages of a Masters Degree in Information and Data Science at UC Berkeley in San Francisco.

Alphinity Lead Portfolio Manager Johan Carlberg said: “We are pleased to have recruited such experienced analysts as Stuart and Richard to Alphinity. Their appointments and the growth of our team are indicative of our success and continued commitment to achieving superior outcomes for our clients.

“I’d like to take this opportunity to thank Shane Kelly for his outstanding contribution. Shane was Alphinity’s first employee, joining the company not long after it started in 2010, and he will also be Alphinity’s first ever staff departure. We wish him the greatest success in the United Kingdom,” Johan said.

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Johan Carlberg

It’s time for the Australian share market to stand on its own two feet as tapering by the US Federal Reserve creates a mixed outlook for US equities, according to boutique Australian equities fund manager Alphinity Investment Management. After a few lean years, Alphinity’s research shows corporate earnings in Australia are growing again, and should be supportive of positive returns from Australian equity markets.

Alphinity’s Australian equities outlook for the remainder of 2014 highlights growth opportunities in the housing, consumer and energy sectors. The banking sector is still expected to provide decent returns, however these returns are likely to stabilise, while the housing sector gathers momentum. Conditions in retail and consumer goods are set to gradually improve while resources remain soft.

Alphinity Principal and Lead Portfolio Manager Johan Carlberg said: “Markets have had a good run, but we remain positive on Australian equities and see earnings growth spread out across sectors and stocks. The US economy is still improving with the soft patch earlier this year largely caused by a severe winter. This should be supportive of earnings for companies with international operations there and also in Europe. However, our largest export market China is winding back growth forecasts, with obvious implications for Australian resources and other export sectors.”

Alphinity regularly conducts international research trips to gather insights on local markets, providing it with deep insights which contribute to its fundamental investment approach. Using both quantitative and fundamental research, Alphinity aims to identify ‘earnings surprise’, investing in undervalued companies entering an earnings upgrade cycle.

“You can’t just rely on official data if you want to get the full story. For example, we monitor GDP forecasts for growth in China, but find that we learn more by speaking with Chinese businesses to gain insights into their forward orders.” Carlberg noted.

Alphinity 2014 Outlook

Housing and Property

Companies exposed to Australia’s housing market will continue to gather momentum, as effects of low interest rates, the pick-up in building approvals and net immigration are felt across the industry. Investors can expect activity in housing markets to continue to strengthen.

Principal and Lead Portfolio Manager Mr Carlberg said: “We are seeing strong signals of activity picking up in the housing sector, and we should see two to three years of strong construction activity. Getting pure exposure to housing construction activity in equity markets can be a challenge, so we find that a “basket approach” works best. We see further potential in companies like building materials supplier CSR, and property developer Lend Lease which holds a number of key redevelopment projects in its order book, including Barangaroo and the Sydney Entertainment Centre.”

Banking and Financial Services

Banks have been outstanding performers, returning approximately 20 per cent per annum since June 2009. The superior returns have not only been driven by attractive dividend yields but many other factors have come together to deliver attractive earnings growth. Some of those tailwinds are now easing.

Alphinity Principal and Portfolio Manager Andrew Martin said: “As the only sector to outperform the market in every financial year since the global financial crisis, it’s clear that banks no longer stand out as cheap. While a particular catalyst for a sell off is not immediately obvious, you no longer have the valuation safety net, and even dividend yields are back to relative normality. The real risk to bank stocks usually coincides with a strong downturn in the economy, which is something we are not currently predicting, however competition is increasing and banks’ future profitability will also be somewhat capped by the increased capital requirements being put in place by the regulator. At the same time, the relative earnings growth appeal of other sectors is growing.”

Resources and Energy

Alphinity Principal and Portfolio Manager Stephane Andre’s recent visit to China provided a consistent message of slower growth as new leadership focuses on its five-year plan to become less reliant on property and other infrastructure investments to drive growth.

Mr Andre said: “It’s becoming increasingly clear that we are in a transition period in China. Its government is rightly focused on shifting growth to become more consumer-led. China wants to clean up its environment and business practices in the process, and also address unsustainable losses in industries such as steel which faces significant over-capacity, by restricting lending and encouraging consolidation. All this will result in slower and less commodities-driven growth, unfortunately at the same time resource companies in Australia and elsewhere around the world are poised to deliver increased supply of raw materials. We therefore remain cautious on the resources sector. “

Consumer

The sourcing of goods from Asia has been an important theme for most retailers in recent years, particularly in apparel. While some companies do it better than others, all have experienced significant cost improvements by shifting production, first to China but more recently to other countries in the Asia-Pacific region. However the safety and conditions for workers in emerging economies is increasingly being scrutinised by investors. Alphinity Principal and Portfolio Manager Bruce Smith recently visited Asia to investigate the quality and sustainability of retailer supply chains and concluded that companies themselves are still on a steep learning curve.

Mr Smith said: “Vetting of supply chains will become increasingly important for both company management and investors. It’s a complex process, and some companies still deal with middle men rather than the actual manufacturer who itself will often be using multiple factories. Getting the sourcing process right is an important social issue as well as a critical business success factor.”

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