Kate Mulligan

The Pacific Alliance has the third largest weight in the emerging markets (EM) index, yet is typically under represented, or not all, in Global equity portfolios, according to Kate Mulligan, Managing Director of King Irving Funds Management. This is despite the fact the Pacific Alliance countries have been identified as higher growth global markets, with two of the countries ranking in the top five over the next five years.[1]

Speaking at a media briefing in Sydney yesterday, Ms Mulligan said, “Commentators suggest that the annual returns for the Pacific Alliance are likely to be some of the best in international markets due to the economic, market and regulatory benefits arising from creation of this trade bloc in 2012. One expert has modelled that Pacific Alliance markets will achieve strong double digit returns over the medium to long term.” [2]

Ms Mulligan said currently, domestic portfolios have no or little exposure to the Pacific Alliance through existing Global asset allocations, although it comprises a significant portion of the EM index. The Fund’s strategy of investing in equities in the growing Pacific Alliance Region reflects the developing investor appetite for best in an unrepresented asset class, and regional investment expertise. The Fund’s investment manager, SURA Asset Management, is the leading investment manager in Latin America measured by funds under management (FUM) (over US$100b) and number of investors.

“The King Irving SURA Pacific Alliance Fund allows professional Australian investors to address this gap in their international equity portfolios with the benefits of an Australian domestic vehicle, for the first time,” Ms Mulligan said. “Our proposition for investors is an offer that is different, selective and which brings new growth opportunities to the Australian marketplace”.

Felipe Trujillo, Head of Product Development and Investment Standards at SURA Asset Management said, “With SURA AM as its appointed manager, the Fund invests in these markets with the benefit of over 30 years of investment experience and significant resources.” He added, “SURA Asset Management operates both locally and internationally, with the advantage of having well resourced investment teams located in each country of the Pacific Alliance”.

Unlike Brazil which has a focus on exporting materials to China, the Pacific Alliance allows investors to access different themes, including low cost manufacturing and a growing internal and middle class consumption story. The Pacific Alliance countries enjoy a solid foundation for long-term structural economic growth.

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[1] Wellershoff and Partners, CAPE around the World Update 2015 – Return Differences and Exchange Rate Movement. CIO Joachim Klement

[2] As above, value weighted returns modelled over 5 years

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Kate Mulligan, KIFM Managing Director (R) and Richard Mulligan, KIFM CEO (third from right) with members of the SURA team.

King Irving Funds Management has launched a fund providing Australian investors with their first ever access to a key new Emerging Market.

The King Irving SURA Pacific Alliance Fund (the Fund), has been established to meet the needs of professional investors searching for new sources of growth and diversification. An outcome of this has been an increasing focus by professionals in key emerging markets.

The Fund’s strategy of investing in equities in the growing Pacific Alliance Region of Mexico, Colombia, Peru and Chile reflects this developing investor appetite for best in asset class, and in local and regional investment expertise.

King Irving is a specialist fund manager providing access to International managers not otherwise available in the Australian market. Kate Mulligan, Managing Director of King Irving Funds Management, said that they are delighted to provide access to this significant growth marketplace by establishing an Australian fund managed by a regional expert.

“The growth prospects for Pacific Alliance makes a compelling investment case, particularly when compared to the expected low growth environments of many developed and even some EM economies,” she said.

Reforms adopted by Peru, Mexico, Chile and Colombia – Pacific Alliance member countries – are turning these nations into the economic stars of the region[1] . In Latin America (Latam), Pacific Alliance represents a bigger economy than Brazil and is expected to grow three to four times faster over the next few years.[2]

“With the hunt for growth spurring increased investment in emerging markets in the medium to longer term, the importance of selecting the right EM region with strong governance and regulatory standards is critical for the generation of strong returns for investors,” Ms Mulligan said.

“We are pleased to announce the appointment of the SURA Asset Management Group as manager of the Fund. SURA is the leading pension provider and asset manager of Pacific Alliance. Until now, investment in Latam has been expressed only through Brazil, which does not share a similar economic or governance footprint as the Pacific Alliance, and investors may not have been aware of the potential benefits of investing there.”

Andrés Castro, Chief Executive Officer of SURA Asset Management said, “With our heritage of adding value to millions of local investors for over 30 years, we feel very enthusiastic about providing Australian investors with access to our proven investment capabilities. Countries in the Pacific Alliance Region share a focus on open trade, regulated markets and rule of law. The investment fundamentals combined with these factors make a compelling argument for inclusion of this capability as a strong potential provider of alpha in professional portfolios.”

Afina International Advisors (Afina), a Latin American specialist adviser firm, assisted King Irving Funds Management in the search and selection of the manager for the Fund. Alex Ortiz, Afina Chief Investment Officer, said, “The access to Pacific Alliance underscores the increasing importance of South to South trade and investment routes.”

The Fund has been seeded by SURA Asset Management and commenced operation as a wholesale domestic managed investment scheme earlier this year. State Street Australia Limited is the Fund’s appointed Custodian and Fund Administrator.

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[1]International Monetary Fund (IMF) Managing Director, Christine Lagarde, October 9, 2015
[2] CNBC report, 26 March 2015

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Chris Hamilton

The Australian Payments Clearing Association, the payments industry self-regulatory body, announced the commencement from 1 July of a new, more inclusive membership community and improved governance.

These changes reflect APCA’s growing role in supporting the Australian payments system. Changes include the appointment of two additional independent directors.

Late last year, APCA’s members voted to adopt a new Constitution to recognise the growing diversity of interests in payments arising from structural and technological change. The transition to the new arrangements ended on 30 June 2014.

APCA CEO Chris Hamilton said, “The structure of the Australian payments system is changing fast, and APCA is changing with it. For many years, APCA’s focus was on the basic plumbing of Australian payments – non-competitive payment clearing arrangements. The key players have traditionally been financial institutions.

“But two long-term trends are changing the nature of Australian payments, and bringing new challenges for APCA, notably the growth of new, non-traditional payment providers and the rapid growth of competition amongst payment systems. In this new world, APCA has moved to redefine itself.

“The governance transition, completed on 30 June 2014, gives us the reach and inclusiveness to support the whole payments system and the ability to provide a venue for debate across the full diversity of interests.”

Key elements of the change are:

• Extension of membership eligibility to any participant in any recognised Australian payments system as defined under Commonwealth legislation, not just ACPA-administered systems;
• Creation of a new category of operator membership for organisations that administer a payment network or scheme;
• Significantly revised voting and director election arrangements to promote fair representation of interests across the payments system; and
• The addition of two new independent directors to join the independent chair and the provision of substantial voting power to those independents, thereby broadening and deepening our policy formulation and decision-making.

“I look forward to welcoming a number of important newcomers to APCA membership in the near future,” said Mr Hamilton.

Elected directors

APCA held its first election for member directors. Long-serving Director, Mr Paul Apolony, and new Director, Mr David Carter, were elected as a result and join the six appointed directors representing the four major banks, credit unions and building societies, respectively.

Announcing two new independent directors

In addition to eight member directors and a nominee of the Reserve Bank of Australia, the new Constitution provides for three independent directors with substantial voting power. APCA’s independent Chair, Robert Craig, was appointed in February 2014. He is now joined by two new independent directors to the APCA Board, who attended their first meeting in June 2014.

Jennifer Clark

Ms Clark has over 23 years’ experience as a Non-Executive Director and is currently a Member of the Boards of the National ICT Australia Ltd (NICTA) and the Australian Maritime Safety Authority (AMSA). Ms Clark is also an independent member of a number of Audit and Risk Committees.

Ms Clark has an extensive background in business, finance and governance through a career as a Non-Executive Director since 1991 and as a Banker for over 20 years. In her banking career she specialised in financing major companies and infrastructure projects, as well as undertaking advisory roles to the Commonwealth Government.

Kate Mulligan

Ms Mulligan has more than 28 years’ experience in Financial Services business and the law, including senior roles at Allens, St George Bank and ANZ. She has been Managing Director and sat on the boards of several funds management businesses, including Advance Asset Management and Ventura Investment Management, for over ten years.

Ms Mulligan is currently a Non-Executive Director of Netwealth and its subsidiaries, and is the
Chair of Netwealth’s Group Audit Committee. She is also Managing Director of King Irving
Consulting Group which specialises in financial services, and is a practicing solicitor. Ms Mulligan
chaired the Disclosure and the Retirement Incomes Committees for the Financial Services
Council.

“I am delighted to welcome Jennifer and Kate to the Board,” said Mr Craig. “I look forward to the experience, diversity and depth of perspective they will bring to our deliberations. Their contribution should be critical in helping APCA fulfil its mission of aligning the interests of members and of the public in improving the Australian payments system. Lastly, I would like to pay tribute to the continuing APCA members and their Directors. They have fostered change with a spirit of openness and collaboration.”

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Kate’s appointment brings the number of netwealth non-executive directors to 3 including Jane Tongs, a former PWC partner who is the netwealth chairman and former Mallesons Stephen Jaques managing partner, Davyd Lewis.

Commenting on the appointment Michael Heine, netwealth Managing Director, said: “I am very pleased that someone of Kate’s experience and industry standing is joining our board. Her strategic insights from senior leadership roles in platforms and funds management, as well as in nancial services law, will be a real advantage for us.”

Ms Mulligan said, “I am very pleased to join the netwealth board. As a diversied nancial services organisation, netwealth provides a very attractive proposition to the market place”.

She added, “In light of pressure from FOFA for all planners to provide impartial advice, I expect netwealth’s position as the leading non-institutional platform to be further enhanced.”

Kate has over eighteen years experience in senior leadership roles in the nancial services industry. She was appointed Managing Director on the boards of Advance and Ventura/All Star Funds Management, where she successfully created a boutique funds manager. She has chaired the Disclosure and Retirement Incomes Committees for the industry body, the (now) Financial Services Council, and is a qualified solicitor. She is also the Managing Director of King Irving Consulting Group, which provides services to the financial services industry.

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Mulligan said “From my discussions with the market, it’s clear there is a need for implemented solutions. Companies are experiencing shortages for proven skill sets in establishing and growing businesses.”

She added, “With my experience as a Financial Services lawyer combined with running three successful funds management companies over the last ten years, King Irving is well placed to assist fund managers with establishment, growth and change.”

King Irving specializes in the following key areas:

Establishment and growth of Funds Managers
Selection of outsourced Service Providers
Product development
Marketing and distribution
Investment manager selection
Compliance and risk systems.

Mulligan stated, “Coping with the confluence of FOFA, Stronger Super and tax changes is another pressure point for the industry, exacerbating the need for skilled resource.

King Irving’s clients tell me that being able to access my level of strategic skill with the ability to implement effectively is a high demand commodity.”

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Tony Robinson said  “Kate has done a terrific job over the last 18 months successfully restructuring and simplifying the Ventura/ All Star business. The business has now reached a point where the challenges for Kate will be significantly less over the near term, and the demands of the business on Kate will similarly be materially lower than it has been historically.”

He added, “As a consequence, Kate and I agreed that it was an appropriate time to eliminate the role of CEO Ventura/ All Star and to merge that part of the Group with the platform businesses under Mat Walker into a new merged Product and Platform unit.”

Kate Mulligan said: “I am very proud of the FUM and revenue growth generated from creation of the funds management business, including All Star.  The realignment of Ventura to provide financial advisers with cost effective, best of breed solutions for their customers with additional services has been particularly satisfying.”

She added. “My job is completed here; it’s time to go onto my next challenge.”

Tony Robinson added: “I would like to take the opportunity to thank Kate for her efforts over her time with the Group and I know Kate leaves comfortable in the knowledge that she has successfully realigned the Ventura Multi manager business and established a sound funds management operational capability for the Group.”

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All Star, together with Ventura, is the funds management arm of Centrepoint Alliance Ltd, a diversified financial services organisation listed on the ASX.  The Ventura funds are multi-manager, multi-asset investments, while the All Star funds represent high alpha, single manager funds in a core and satellite approach. 

Harvey Kalman, head of EQT corporate fiduciary & financial services, said that with the ever-more complicated regulatory environment, he is seeing a significant trend in fund managers reverting to independent REs. 

“It is becoming too difficult for fund managers that are not owned or supported by large financial institutions to remain on top of the duties required of REs. 

“Specialist and niche fund managers are quite rightly focused on asset management and distribution and are finding regulatory matters an ever-growing distraction. 

“There is also increasing recognition that having an external RE brings a number of other benefits, such as controlling costs and removing potential conflicts of interest,” he said. 

Kate Mulligan, managing director of Ventura and All Star Funds, agreed that the regulatory environment is bringing additional pressure on the operations of fund managers. 

“After a lengthy review, we decided to outsource our RE functions which we previously managed internally, and appoint EQT as independent RE. 

“We decided that this approach made our funds even more attractive because of the increased investor protection inherent in an external RE capability,” she said. 

Mr Kalman added that EQT has been appointed responsible entity for five funds by another manager in the last two months, and he is in advanced discussions with a number of other fund managers who are interested in EQT’s RE services. 

“Our goal is to be the partner of choice for fund managers seeking external RE services,” he said. 

The Ventura funds that now use EQT as responsible entity are:

• All Star KFM Income Fund
• All Star Maple-Brown Abbott Listed Property Fund
• All Star IAM Australian Share Fund
• All Star IAM Small Companies Fund
• Ventura Conservative Fund
• Ventura Diversified 50 Fund
• Ventura Growth 70 Fund
• Ventura Growth 90 Fund
• Ventura High Growth 100 Fund
• Ventura Australian Shares Fund
• Ventura Australian Opportunities Fund
• Ventura International Shares Fund

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Mulligan said that the initiative was driven by Ventura’s close relationship with advisers, who had provided feedback that cost reductions would be welcomed by many clients who are increasingly cost conscious, but who still wanted to invest in a range of active managers and asset classes. The initiative represents up to a 25 percent discount on previous pricing.

Mulligan believes that the practice efficiencies provided by a multi-manager approach will position advisers strongly ahead of the Future of Financial Advice reforms (FOFA).

“The inherent efficiencies of a multi-manager fund are ideal for FOFA, as they help save advisers’ time and assist in compliance management,” said Mulligan. “For example, auto-rebalancing between asset classes for our diversified funds allows an adviser to maintain consistency between client risk profiles and their investment portfolios, even in times of extreme market volatility.”

Mulligan added, “The Ventura Funds diversify risk, while allowing investors access to portfolios expertly managed by Russell at very competitive prices. We think the new pricing for access to a well-respected investment manager like Russell will encourage nervous investors to dip their toes back into the water at a time when equity markets represent good long term value.” 

Patricia Curtin, Managing Director, Intermediaries at Russell Investments said, “Our close working relationship over the past nine years means we have a deep understanding of the Ventura business and its client needs. We have continually evolved our offering to meet these requirements through challenging market conditions and we are committed to helping investors and advisers navigate regulatory change.”  

“Ventura’s approach is fiercely independent. Its outsourced-model, based on appointing external investment managers, allows it to be completely objective when providing oversight of the Funds,” said Mulligan. “We see this as a great benefit in a competitive environment.”

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Stephen Nicholls, from Netwealth, said that the conservative approach of Maple-Brown Abbott (MBA) was a contributing factor in the decision to include the Fund on the Netwealth platform, “Particularlyat times of market volatility such as now, it is important for investors to have access to well-known managers with a solid and consistent track record,” said Nicholls, “With increasing adviser demand in this space and difficult market cycles, we sought a quality offering.”

Financial adviser, Steven Pugh, attributes the attraction of MBA’s listed property capability to the stability and experience of the team, commenting that “advisers can feel confident that their clients are in safe hands.”

Maple-Brown Abbott portfolio manager, Charles Dalziell, leads the Listed Property team managing the Fund. This capability has been part of the MBA stable for more than 24 years, but has not before been available to the public as a stand-alone capability.

 The All Star Maple-Brown Abbott Listed Property Fund was launched late last year; Mulligan is delighted with recent levels of adviser interest:
“We’re seeing renewed interest in this asset class. Maple-Brown Abbott’s conservative approach resounds with advisers, particularly in light of the impact of the GFC on this sector and recent market volatility.”

The Fund, which has a rating of “Recommended” by Zenith and “Investment Grade” by Lonsec, is currently available on the following platforms for both investments and super/pensions: IX (PIS badged platform); Mentor (PIS badged platform); BT Assemble (PIS badged platform); BT Wrap; Navigator and Netwealth.

*The Lonsec Limited (“Lonsec”) ABN 56 061 751 102 rating (assigned March 2011) presented in this document is limited to “General Advice” and based solely on consideration of the investment merits of the financial product(s). It is not a recommendation to purchase, sell or hold the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to change without notice and Lonsec assumes no obligation to update this document following publication. Lonsec receives a fee from the fund manager for researching the product(s) using comprehensive and objective criteria.

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