Lukasz de Pourbaix

Inflation may become stickier and global economic growth could slow down if the US trade tariffs are imposed, but it is too early to tell whether the world will enter a period of stagflation, according to Lukasz de Pourbaix, cross-asset specialist at Fidelity International.

Following last week’s events around the Court of International Trade ruling that the US tariffs were illegal, and then a US appeals court pausing the trade court’s decision, there is still a level of uncertainty in markets around whether these tariffs will be imposed and at what level.

If imposed, US trade tariffs could lead to rising unemployment and slower economic growth, in addition to higher inflation, said de Pourbaix. The global economic scenario is constantly shifting and the risk of stagflation largely depends on where US tariffs settle.

“If we do get a scenario where US tariffs settle higher, we could certainly see a stagflationary environment where we see rising price and a reduction in economic growth if US tariffs remain high. However, if tariffs do moderate, then inflation may settle down and we enter a period of reflation. A lot will depend on where US tariffs settle,” said de Pourbaix.

“At the moment, we are seeing global trade slow down, but the tariffs are a moving target. The US trade tariffs could create the conditions necessary for stagflation in the US economy, that is, persistent inflation alongside weak economic growth and rising unemployment. The longer these trade tariffs remain in place, the more likely the US economy will experience stagflation,” he said.

According to de Pourbaix, hard data is key to an analysis of the risk of stagflation, a scenario in which inflation rises and economic growth falls. The US labour market will be closely watched in the coming months for any signs of slowing. The US Federal Reserve has held interest rates steady this year in the US, given the solid US economic backdrop and uncertainty about policy changes from the Trump administration, such as tariffs, and their potential impact on the global economy.

However, while the US economy has been strong, the momentum for growth may be easing, said de Pourbaix. “In terms of consumer sentiment and trade, the US was doing much better six months ago, but that has really narrowed now, with Europe doing much better,” he said.

Turning to Australia, the nation is doing much better compared to others following the imposition of US tariffs. Australia isn’t as exposed to US trade, rather more closely tied to the Chinese economy.

“For Australia, much depends on what happens in China in terms of our resource exports. There are still concerns about China’s economic growth such as poor consumer sentiment and the property market, but those situations are starting to improve, though China isn’t out of the woods yet. So, Australia is travelling along reasonably well.

“We have seen emerging positive signs from China potentially aiding Australia’s moderate economic performance. Economic growth too will be aided by official rate cuts and inflation moderating towards the central bank’s two to three per cent target band. Possibly, we will see one more interest rate cut by the end of this year, which will further support Australia’s economic growth.

“Right now, the Australian market is awaiting new data on inflation that will inform when the next RBA interest rate cut is likely to occur,” said de Pourbaix.

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Lukasz de Pourbaix

The global tech sector is set for growth in 2025, as software and service businesses find more opportunities to monetise their products and services, and continue to adopt artificial intelligence (AI) to develop more real-world applications, according to Lukasz de Pourbaix, global cross asset specialist at Fidelity International.

“In 2025, we expect opportunities in the tech sector to broaden out. Tech companies with recurring revenue models and high customer retention should remain resilient in uncertain macro environments, and the non-AI hardware and semiconductor cycle, which has been significantly depressed, should normalise in 2025,” Mr de Pourbaix says.

“Chinese AI startup DeepSeek has demonstrated AI models that offer largely comparable performance to OpenAI’s ChatGPT models and are reportedly relatively more cost-effective. This efficiency advantage has raised a number of questions on the perceived “winners” of the global AI ecosystem.

“This is an evolving picture, and we could see some near-term volatility until it becomes clearer how much more efficient the technology is. But this is good for end users and service providers although it may have negative implications for hardware. It is similar to what we saw during the internet era when people massively underestimated the scale of technology innovation and adoption and the potential for service businesses but massively overestimated the hardware TAM (total addressable market).”

Mr de Pourbaix says investors should focus on services and software businesses that are well positioned to generate durable, long-term earnings from the AI thematic, which can be found in cloud service providers, software, and IT services companies.

“We are finding opportunities in companies that are underappreciated beneficiaries of AI along the value chain. These companies are well positioned to generate durable earnings stream, with AI as a long-term growth driver, but which are not reliant on a rapid pace of adoption.

“It includes IT service companies that could help with AI deployment, cloud service providers that could generate annuity revenue streams once customers build AI workloads in the cloud, software companies that could monetise AI functionality, and customer service software and business process outsourcing companies with domain expertise,” he says.

In the industrial and automotive-exposed analog semiconductor space, new ideas are being added, which Mr de Pourbaix says are trading at attractive valuations.

“While the sector is going through a prolonged downcycle, long-term content growth opportunities and industry structure remain favourable.”

Geographically, Fidelity International sees opportunities in the US market and China. Mr de Pourbaix says the Trump administration and its proposed US policy changes are favourable for the outlook for US tech companies and many non-US companies that have exposure to the US market.

“The geopolitical dynamic and US policy changes around tariffs and trade are favourable for US companies, but pose volatility in Chinese stocks. However, Chinese internet companies retain strong positions and earnings power despite a tough macro environment and any positive impact of the stimulus package would prove favourable.

“China’s industry-leading internet platforms have strong fundamentals with good management teams and prudent capital allocation. These internet companies retain strong positions and earnings power despite a tough macro environment, and the recovery potential is very underappreciated.

“With the current depressed cyclical environment and low valuations, the risk-reward looks compelling in the China internet space,” says Mr de Pourbaix.

The tech sector is diverse, and Mr de Pourbaix points out that there are many opportunities for investors to capitalise on, including ones that will perform well in different market conditions.

“Technology provides opportunities across all sectors, industries and geographies. This theme benefits from long-term structural trends, including shifts towards cloud computing, industrial software, artificial intelligence and gaming, among others,” he says.

“Tech deployment is taking place across all areas of economic activity and has the potential to create value across a diversified pool of businesses. In saying that, we still believe it is important to have a bottom-up investment approach to tap into these opportunities as they arise.”

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Lukasz de Pourbaix

Fidelity International has appointed Lukasz de Pourbaix as global cross asset specialist, effective 19 June 2023. He will be based in Sydney and will report to Lawrence Hanson, managing director, Fidelity Australia.

In the role, Mr de Pourbaix will work closely with clients to communicate Fidelity’s broad investment strategy, market views and performance. He will also help identify new investment capabilities and products to introduce into the Australian market.

Mr de Pourbaix has over 20 years’ experience in the wealth management industry, including with ING Australia and BT Investment Management. He joins Fidelity from Lonsec Investment Solutions where he was executive director and chief investment officer, responsible for investment strategy, portfolio construction, product development and team leadership.

Commenting on the appointment, Mr Hanson said that Mr de Pourbaix had a proven track record in driving business growth and achieving investment outcomes for clients.

“Lukasz has the ideal experience and knowledge to support our business in the Australian market and understands the needs of our clients as they face challenging market and economic conditions. His strong knowledge of portfolio construction, investment analysis and asset allocation will be particularly valuable”.

Mr de Pourbaix is a graduate of the Australian Institute of Company Directors (GAICD) and holds a Bachelor of Commerce and a Diploma of Financial Planning.

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Lukasz will be with the business until mid-June and is working closely with the team to ensure a smooth transition.

In the interim Michael Wright, Lonsec CEO and Managing Director Implemented Portfolios will assume Executive Director responsibilities for Lonsec Investment Solutions.

During this period Lonsec plans to go to market to appoint an Executive Director, Lonsec Investment Solutions and CIO.

Michael has an extensive knowledge of the Lonsec business and investment markets and is extremely well-placed lead the Lonsec Investment Solutions business.

Lonsec’s trusted and experienced team will continue to manage the portfolios.

Lonsec’s managed account portfolio and consulting services continue to be managed by experienced and long-standing members of the Lonsec team who will report to Michael, including:

• Deanne Baker, who has been appointed interim Chief Investment Officer (CIO). Deanne will continue to be the Portfolio Manager Multi-Asset Portfolios, managing the multi-asset, retirement and sustainable portfolios. Deanne has been with Lonsec for 15 years;
• Danial Moradi, Portfolio Manager Listed Portfolios, manages the listed diversified and Australian equities managed account portfolios and has also been with Lonsec for 15 years;
• Veronica Klaus, Head of Investment Consulting who has been with Lonsec for 12 years and leads our investment consulting services including the management of Lonsec’s tailored managed account portfolios; and
• Chris Robertson, Portfolio Manager ESG Aware for Implemented Portfolios (IPL) who has transitioned across with the acquisition of IPL.  Chris has over 30 years’ experience across leading Asset Managers.

They will continue to be supported by the Lonsec Investment Solutions team as well the broader Lonsec business.

Since the inception of Lonsec Investment Solutions, portfolios have been overseen by its Investment Committees. The Committees include its Asset Allocation, Manager Selection, Direct Equities and Tailored Portfolio committees which are all comprised of senior members of the Lonsec Investment Solution and Lonsec Research teams, as well as independent investment experts.

Deanne will chair the Lonsec Investment Solutions Asset Allocation Investment Committee as well join the IPL Asset Allocation Investment Committee as a member.

The IPL portfolios will continue to be overseen by IPL’s Asset Allocation Investment Committee chaired independently by Paul Dortkamp. Tim Farrelly, from Farrelly’s Investment Strategy, also continues to be a member of the IPL AAIC, which he and Paul have served on continuously since the inception of IPL in 2010. Lonsec is also expanding this committee with the additions of Deanne Baker (as mentioned above), Chris Robertson and Nick Field who has recently been promoted to the role of Portfolio Manager, IPL Portfolios. Nick has extensive investment research and portfolio management experience.

Finally, we have bolstered our internal portfolio governance framework with the establishment of a group Product Investment Oversight Committee (PIOC).

The PIOC is a sub board committee to the Lonsec Board and is responsible for ensuring that the IPL and Lonsec portfolios have the necessary personnel, processes and risk management frameworks in place.

The investment governance role that the PIOC discharges is important to Lonsec and our clients. The PIOC ensures that all the portfolios within the Lonsec Group remain managed in accordance with their stated mandates, objectives and have the right resources and capabilities to execute on their investment strategies.

Dr Steve Garth is the independent chair of the PIOC and he has extensive experience in asset management and investment governance.

Lukasz has made a significant contribution to the company having led Lonsec’s Investment Consulting services and establishing and building the Lonsec Investment Solutions business.

Mike Wright says, “Lukasz has made an outstanding contribution to Lonsec and the industry, establishing our strong investment consulting and managed account capabilities.  As Group CIO, Lukasz has overseen the various investment committees used to make medium-term investment decisions based on a clearly defined, common sense research-based investment philosophy.”

“We wish Lukasz all the best with the next exciting stage of his career at a leading global l asset manager and can assure all investors that the team remain absolutely committed to continuing the great work” concludes Mike.

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Lukasz de Pourbaix

Lonsec Holdings has announced the integration of its Lonsec Investment Solutions (LIS) and Implemented Portfolios (IPL) managed account solutions to offer advisers and their clients a broader suite of investment options – with Lonsec’s Listed Managed Portfolios now made available via IPL’s Individually Managed Account (IMA) service.

Advisers and investors using the Lonsec Listed Managed Portfolios via IPL will benefit from similar inclusions of IPL’s regular IMA service, including:

• easy to adopt model portfolios, implemented and managed in collaboration with the adviser by IPL’s trusted and experienced portfolio implementation managers,
• the ability to tailor investments according to individual client preferences, and
• regular, adviser branded economic and investment commentary written and sent to clients.

Speaking of the new offering, CIO of Lonsec Investment Solutions, Lukasz De Pourbaix said, “All of Lonsec’s managed portfolios combine our extensive expertise in portfolio construction, asset allocation and investment selection with our best ideas to offer portfolios that meet the needs of a broad range of investors.”

“Our Listed Managed Portfolios draws on Lonsec Research’s in-depth investment product research, and only invests in listed structures, such as Exchange Traded Funds (ETFs), that are rated ‘Recommended’ and higher.”

“Offering these portfolios via the IPL IMA service will now allow advisers and their clients the flexibility and individual tailoring that the IMA investment vehicle provides.”

IPL was acquired by Lonsec Holdings in August 2022 as part of a strategic aim to enhance the investment opportunities available to investors and further enable the company to meet the changing needs of advisers. CEO of Lonsec and Managing Director of IPL, Michael Wright said, “We are delighted to be integrating both of these best-in-class solutions, and in doing so, offering advisers and their clients, access to more choice and individualisation when selecting appropriate investment options.”

The integrated solution is being offered via the Netwealth platform and has gone live as of today (21 March 2023).

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Lukasz de Pourbaix

A recent webinar, attended by over 700 advisers, on crypto assets investments, indicates the weight of interest advisers and their clients are, in this growing asset class.

Lonsec partnered with specialist manager Monochrome Asset Management to deliver a masterclass, covering the most asked questions on crypto assets such as how to access them, how to keep the assets safely and how to integrate into clients’ existing portfolios.

Lukasz de Pourbaix, Chief Investment Officer of Lonsec Investment Solutions, comments “Crypto assets is increasingly becoming one of the most commonly raised topics we get from Advisers. We understand that there is a great need for education around the asset class and how Advisers can utilise then in their client’s portfolios.”
Recognising that dealing with emerging asset class will be new for many Advisers, the webinar covered the advice and regulatory considerations of discussing crypto assets with clients.

Craig Hobart, Head of Distribution at Monochrome, said “We recently surveyed Financial Advisers and found that 77% had received queries about crypto assets investments from their clients yet only 11% felt equipped to answer these queries. By partnering with Lonsec, we were able to reach a wide audience of advisers and help them access information to enable them to better advise their clients on crypto assets”

The webinar comes a week after Lonsec Research rating its first crypto-related fund, the BetaShares Crypto Innovators ETF, with an ‘Investment Grade Index’ rating.

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Lonsec Investment Solutions has appointed Nick Field as an Associate Portfolio Manager. Nick comes with extensive experience in equities research having previously worked within equity research and asset management roles, most recently at Morningstar. Executive Director and Chief Investment Officer of Lonsec, Lukasz de Pourbaix, said “Nick will be working closely with the Portfolio Manager for our listed portfolios as we continue to support advisers and their clients to access listed vehicles, including direct equities and ETFs, through our range of managed accounts”

In addition to Nick’s appointment, Lonsec Research is also deepening its direct equities capabilities with recent appointments to further support advisers, their clients and the wider Lonsec business.

Lonsec recently expanded its distribution and client engagement team with the appointment of a new Head of Sales and two Transition Consultants. Commenting on the increased support for Lonsec’s Managed Account capabilities, Lonsec CEO, Mike Wright, said “As our managed account business continues to rapidly expand, these appointments further reflect our commitment to supporting Advisers and their clients with industry leading solutions.”

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Bryce Quirk

Australian wealth management group Colonial First State (CFS) has announced an agreement with three of Australia’s leading research consultants to offer financial advisers and their clients a highly efficient way to access professionally constructed managed account portfolios – with no extra research or portfolio construction costs.

The new arrangements have been developed in response to adviser feedback, seeking ways to lower the cost of advice while maintaining the quality of the investment solution.

From today, 23 new Managed Accounts Specialist Portfolios will be available via CFS’s $76 billion FirstChoice Personal Super and Pension platform:

Bryce Quirk, Chief Distribution Officer at Colonial First State, said: “We are thrilled to be working with Lonsec, Morningstar and Zenith – Australia’s leading names in investment research and portfolio construction – to bring a sophisticated, easy to access investment solution to a wider range of everyday Australians.”

“Through our new arrangements we’re packaging up the best investment insights while at the same time helping clients save on fees paid for accessing the managed account structure and professional portfolio management, typically between 10-to-30 basis points per annum,” Mr Quirk added.

“Advisers also save valuable time and effort implementing and administering portfolio changes, allowing them to spend more time on working with clients to meet their goals.”

The new FirstChoice Managed Accounts Specialist Portfolios come at a time when advisers are juggling growing demand for advice by a broader array of Australians – while also facing intense cost and compliance pressures.

The number of unadvised Australians who intend to seek financial advice in the next two years rose to 2.6 million in 2020 from just 1.3 million in 2015, according to Investment Trends’ 2020 Financial Advice Report, which surveyed 4,501 people in July 2020 – a few months into the COVID-19 pandemic.

“COVID-19 has been a wakeup call for many Australians who have taken time during lockdowns to reassess their financial situation. We are focused on finding ways to help advisers come up with more streamlined, more cost-effective solutions that keep the cost of investing as low as possible so that more people can access advice,” Mr Quirk said.

Mr Quirk said the new solution combined the flexibility, convenience and transparency of a managed account with the simplicity and efficiency of the FirstChoice platform. Clients will pay the fees and costs of the underlying investment options, but no additional managed account fee, platform fees or implementation costs will apply.

Growing popularity of packaged solutions

A managed account is a combination of investments managed by a professional investment manager on behalf of investors. Managed accounts are seen as an effective tool for managing multiple client portfolios in a cost-efficient way. These ‘Specialist Portfolios’ aim to suit a range of typical investor needs and preferences – such as 35-50 year-olds looking to actively accumulate funds, or pre-retirees looking to dial down risk while generating income returns.

Research released this month from IMAP showed continued strong demand from Australian investors with managed accounts housing $111 billion in funds under management at 30 June 2021 – an increase of $15.8 billion in the previous 6 months alone and $80 billion in the 5 years to June 30 2021^[1].

Lonsec is a long-time collaborator with CFS having provided model portfolio solutions for a number of advice licensees using the FirstChoice platform for more than a decade. The architect of these original model portfolios, Lonsec Chief Investment Officer Lukasz de Pourbaix, said he was excited at the opportunity to now leverage this experience in a managed account solution.

“Advisers and investors are clearly embracing managed accounts and this partnership allows us to extend our model portfolio expertise via an implemented solution which will be affordable and accessible to a wider range of investors,” Mr de Pourbaix said.

Mr Aman Ramrakha, Director of Manager Selection Services at Morningstar, said today’s announcement is consistent with the industry shift to greater transparency and efficient investment solutions.

“We’ve heard from advisers that they want easier ways to invest client funds in line with our independent manager research. Now they have a pathway to engage in those ‘best ideas’ from our research team,” Mr Ramrakha said.

“Advisers today have to be relentlessly efficient to thrive, and this new agreement is a major efficiency gain for the market. Advisers can now select the best solution for their practice, whether using our research to construct their own portfolios, or investing in our best ideas pre-packaged for them – all while offering full transparency to their clients,” he added.

Zenith Head of Consulting Steven Tang said Zenith was excited to be part of the offer – it being the first time FirstChoice has offered Zenith’s Managed Accounts portfolios to its extensive client base.

Zenith manages around $3 billion in funds across its managed accounts structures and has been running model portfolios for FirstChoice since 2009. The new Zenith Active managed accounts will leverage these underlying model portfolios and are designed to utilise Zenith’s ethos of investing in the best active managers, while remaining resilient to market cycles.

Mr Tang said efficiency gains of the new offer would also be a benefit for both advisers and their clients, with portfolio changes executed on a same day buy/sell basis.

“We see the execution efficiency of the managed accounts structure being even more accentuated on FirstChoice, making portfolio updates easy for advisers and avoiding clients’ money being out of the market for days,” he said.

The new FirstChoice Managed Accounts Specialist Portfolios build on FirstChoice’s existing advantages for advisers. Wealth Insights ranks FirstChoice #1 from advisers in Value and Administrative Support in 2021. Investment Trends’ Planner Technology Report for 2020 ranks CFS FirstChoice #1 as the Best Value for Money: Platform.

——–

[1] Data released on 14 September 2021 by the Institute of Managed Account Professionals Ltd (IMAP) in conjunction with Milliman in its six monthly Managed Accounts FUM Census long term series.

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Lukasz de Pourbaix

Lonsec has partnered with BT Financial Group to make its suite of Listed and Retirement Managed Portfolios available on the BT Panorama platform.

BT Panorama users now have access to all three of Lonsec’s Managed Portfolios, with the Multi-Asset Managed Portfolios already available on the platform.

“We’re very pleased to partner with BT to enable their users to leverage Lonsec’s investment knowledge and resources by utilising our full suite of Managed Portfolios,” said Lonsec CIO Lukasz de Pourbaix.

“This has been the most challenging market we’ve seen in a generation. For financial advisers and their clients, it really emphasises the need for professionally managed investment solutions that can manage risks and take advantage of opportunities as they arise.”

Lonsec’s full suite of Managed Portfolios are also available on the Netwealth, HUB24 and Macquarie platforms. Lonsec’s Listed Managed Portfolios are available on Praemium’s platform, along with Lonsec’s Core and Income Separately Managed Accounts (SMAs).

Lonsec’s portfolios harness the depth and breadth of Australia’s leading research house, incorporating dynamic asset allocation combined with an active approach to investment selection. They are also underpinned by Lonsec’s minimum quality criteria, which selects from a pool of funds rated ‘Recommended’ or higher by Lonsec’s investment research team.

Lonsec’s Listed Managed Portfolios provide investors with capital growth and income by investing in exchange-traded securities and individual stocks across a range of asset classes. Lonsec’s Retirement Managed Portfolios are objectives-based and focused on delivering an attractive and sustainable level of income.

Lonsec’s Multi-Asset portfolios are designed for investors seeking a diversified portfolio aimed at generating growth. They invest across a diversified range of Australian equities, global equities, property, infrastructure, fixed interest, and alternatives.

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Lukasz de Pourbaix

Lonsec has partnered with AMP to make its Retirement Managed Portfolios available via MyNorth Managed Portfolio.

The portfolios harness the depth and breadth of Australia’s leading research provider, allowing users to build high-quality retirement solutions incorporating Lonsec’s best investment ideas. Underpinning the portfolios is Lonsec’s strict quality criteria, requiring funds to be rated ‘Recommended’ or higher by its investment research team.

“Our managed portfolios give financial advisers access to investment solutions supported by one of Australia’s largest investment research and consulting teams,” said Lonsec CEO Charlie Haynes.

“Being able to draw on our investment selection and portfolio construction expertise is a real plus, and we’re proud to be able to extend this access via the North platform users.”

Lonsec’s Retirement Managed Portfolios are objectives-based and focused on delivering an attractive and sustainable level of income while generating capital growth through a diversified portfolio of managed investments.

Lonsec offers three Retirement portfolios: Conservative, Balanced and Growth. Each are designed to achieve different risk and investment objectives over various timeframes. They are constructed using a range of funds that play a specific role, such as income generation, capital growth and risk control, and backed by Lonsec’s rigorous governance and review processes.

“Our Retirement Managed Portfolios have been constructed to manage the risks most relevant to investors in the retirement phase,” said Lonsec’s Chief Investment Officer Lukasz de Pourbaix.

“By diversifying across asset classes, managers and return sources, we aim to manage risks such as capital drawdown, which can materially impact the longevity of a retirement portfolio, particularly in the early stages of transitioning from superannuation to the pension phase of investing.”

“We’re very excited to be working with AMP to make these portfolios available to AMP’s North wrap users.”

Inclusion on North further expands the distribution of Lonsec’s Managed Account offering, following its existing availability on the BT, Macquarie, HUB24, Netwealth and Praemium platforms.

Lonsec’s retirement portfolios have been constructed to meet the income and capital objectives of investors in the retirement phase as well as to manage risks that are specifically relevant to retirees.

AMP’s North platform offers advisers flexible and efficient access to a range of investment products, which now include Lonsec’s retirement portfolios, giving advisers the tools they need to meet their clients’ goals.

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