Harvey Kalman

Equity Trustees (EQT) and its investment manager partner Dundas Global Investors (Dundas) have made the EQT Dundas Global Equity Fund available on the mFund Settlement Service, bringing the number of co-branded funds distributed through Equity Trustees to 15.

The mFund Settlement Service is an ASX initiative that allows investors to buy and sell units in selected unlisted managed funds (mFund), through a process similar to investing in shares.  They can be bought and sold through their ASX stockbroker online, in person or through a financial adviser who uses a stockbroking service on their behalf.

EQT Dundas Global Equity Fund invests in 60-80 leading global companies from developed and emerging markets with a minimum stock capitation of US$1 billion. The objective of the fund is to invest in stocks with high real book value growth and growing dividend income to generate greater compound returns with lower volatility.

The fund aims to deliver rolling five-year returns in excess of 2.5 per cent of the capital return of the MSCI All Country World Index (ex Australia) before fees.

The mFund Settlement Service offers a number of advantages over the traditional way that investors use managed funds, and, in the case of self-managed superannuation funds (SMSFs) in particular, mFund can help with improving portfolio diversification, says Harvey Kalman, Head of Equity Trustees’ Corporate Trustee Services.

“Of the $500 billion in the SMSF pot, $200 billion is already invested through the ASX. But by investing only in ASX equities, SMSF’s have limited the diversification possibility of their funds,” Mr Kalman says.

“With the addition of the EQT Dundas Global Equity Fund investors now have access to all asset classes through Equity Trustees’ co-branded funds including: international equities, fixed interest, Australian equities including large cap, small companies, franchise, dividend income and concentrated as well as global and Australian listed property securities,” Mr Kalman says.

Equity Trustees was one of the first foundation members of the service and, together with its investment manager partners, Dundas, PIMCO, EQT, LaSalle and SG Hiscock & Company, offers a diversified range of funds through the service for retail investors.

Funds available on the service from Equity Trustees and its investment partner managers are:

Equity Trustees:  

• EQT Wholesale Flagship Fund
• EQT Australian Equity Income Fund

Dundas Global Investors:        

• EQT Dundas Global Equity Fund

PIMCO Australia:    

• PIMCO EQT Wholesale Global Credit Fund
• PIMCO EQT Wholesale Diversified Fixed Interest Fund
• PIMCO EQT Wholesale Global Bond Fund
• PIMCO EQT Wholesale Australian Bond Fund
• PIMCO EQT Wholesale Australian Focus Fund
• PIMCO EQT Wholesale Unconstrained Bond Fund

SG Hiscock & Company:    

• SGH 20 (Australian equities)
• SGH ICE (Australian equities)
• EQT SGH Wholesale Property Income Fund
• EQT SGH Wholesale Small Companies Fund

LaSalle Investment Management:

• EQT SGH LaSalle Global Listed Property Securities Trust
• EQT SGH LaSalle Global Property-Rich Trust

“The mFund settlement service can provide portfolio diversification quickly and easily as with even one transaction with one mFund, investors can gain access to a range of underlying investments and asset classes that may have otherwise been out of reach,” Mr Kalman concludes.

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The Australian Securities Exchange (ASX) launched mFund in May, to make unlisted managed funds more accessible to direct investors.

Both OneVue and Allan Gray are foundation members of mFund. OneVue chief operating officer, Lisa McCallum, said the company will act as Allan Gray’s product issuer settlement participant (PISP) and facilitate connectivity to mFund.

“One of the key benefits is OneVue’s connectivity to the ASX’s Clearing House Electronic Subregister System (CHESS) which has automated integration into our core registry system, Trust Architect.”

McCallum added that OneVue is particularly pleased to grow its relationship with Allan Gray and have the fund manager as the first to utilise its mFund capabilities.

“We’re also in discussions with a number of our other fund manager clients that are looking at this functionality and interest is growing rapidly.”

Allan Gray Australia chief operating officer, JD de Lange, said: “We see mFund as an opportunity to expand our nation-wide retail distribution capabilities.”

“We’re delighted to have a registry partner like OneVue who can help us provide another convenient channel through which investors can invest into the Allan Gray products.”

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Harvey Kalman

Equity Trustees is starting to see traction in transactions on the mFund Settlement Service, with applications for PIMCO and Armytage Private Funds being made through Baillieu Holst recently, says Mr Harvey Kalman, Equity Trustees’ Head of Corporate Fiduciary & Financial Services.

The mFund Settlement Service is an ASX initiative that allows investors to buy and sell units in selected unlisted managed funds (mFunds) through a process similar to investing in shares. These funds can be bought and sold through an ASX stockbroker online, in person or through a financial adviser who uses a stockbroking service on their behalf.

“Equity Trustees has successfully received applications on the mFund platform and looks forward to continued support for the service from brokers and investment managers alike,” Mr Kalman says.

Baillieu Holst Director of Institutional Sales, Mr Alex Hay, says as a foundation member of the mFund Settlement Service, the firm has now made a number of applications via the service and is pleased with the progress.

“Our clients like the convenience of tracking their managed fund investments using the same systems they use for shares and other securities, and the service has been well received,” Mr Hay says.

Equity Trustees was the first foundation member of the service and, together with its investment manager partners, EQT Asset Management, PIMCO, LaSalle and SG Hiscock & Company, offers a diversified range of funds through the service for retail investors.

Equity Trustees also acts as a Product Issuer Settlement Participant and was accredited by the ASX in May 2014.

There are 14 Funds available on the mFund Settlement Service from Equity Trustees and its investment partner managers, providing investors with access to all asset classes with the exception of international equities, which will be available soon. The funds are:

Equity Trustees Asset Management: 

• EQT Wholesale Flagship Fund
•  EQT Australian Equity Income Fund

PIMCO Australia:

• PIMCO EQT Wholesale Global Credit Fund
• PIMCO EQT Wholesale Diversified Fixed Interest Fund
• PIMCO EQT Wholesale Global Bond Fund
• PIMCO EQT Wholesale Australian Bond Fund
• PIMCO EQT Wholesale Australian Focus Fund
• PIMCO EQT Wholesale Global Unconstrained Bond Fund

SG Hiscock & Company:

• SGH20 (Australian equities)
•  SGH ICE (Australian equities)
• EQT SGH Wholesale Property Income Fund
• EQT SGH Wholesale Small Companies Fund

 LaSalle Investment Management :

• EQT SGH La Salle Global Listed Property Securities Trust
• EQT SGH LaSalle Global Property-Rich Trust

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ASX mFund Settlement Service is a new electronic processing service that allows investors to use a participating ASX broker to invest in and redeem units in unlisted managed funds.

This will provide investors, advisors and brokers with a simple and electronic-based system for accessing unlisted managed funds, utilising ASX’s CHESS settlements system. Investments can be linked to an investor’s existing Holder Identification Number (HIN), allowing investors to track their managed fund investment using the same system they use for shares and other ASX products.

Bentham Asset Management Managing Director and Lead Portfolio Manager, Richard Quin, says the service is an important step forward in allowing individual investors, including SMSFs, to more easily access professionally managed investment portfolios.

“The mFund service can provide simple access to diversifying asset classes, such as global credit and fixed interest, which have traditionally been difficult to access and are underinvested in by individuals,” he said.

The Bentham Global Income Fund ASX Class and Bentham Syndicated Loan Fund ASX Class will be available via the ASX mFund Settlement Service.

The Bentham Wholesale Global Income Fund returned 11.68 % (net of fees) for the year to 31 March 2014 and 21.35 % p.a. (net of fees) for the five years to 31 March 2014. Bentham’s Wholesale Syndicated Loan Fund delivered a net return of 8.45 % for the year to 31 March 2014, and 17.34 % p.a. (net of fees) for the five years to 31 March 2014.

Bentham Asset Management is a foundation member of the ASX mFund Settlement Service.

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Connie McKeage

The ASX’s new managed funds settlement service will transform the market as it will ultimately reduce administration costs and make it far easier for SMSF investors to participate directly in the managed funds space, according to OneVue.

OneVue chief executive Connie Mckeage said OneVue, which specialises in providing digital SMSF solutions to a range of intermediaries and third parties, is pleased to be one of 60 foundation members of the mFund Settlement Service, as it has now been formally coined.

“A number of impressive fund managers, responsible entities, unit registrars, administrators and brokers have signed on as foundation members, and I think this is just the beginning,” Mckeage said.

“Our sense is that many more organisations, investment managers in particular, will choose to participate in the mFund service sooner rather than later.

“Through mFund we’re redefining the possibilities of the managed funds sector by enabling investors to apply for and redeem units in managed funds under a process similar to how listed securities are currently bought and sold on the ASX.”

Mckeage said most notable was the absence of a number of big name platform providers that had not signed on as foundation members.

“I understand the dilemma they have in trying to protect their existing revenue base but I learned a long time ago that change is inevitable so you may as well embrace it,” she said. 

“A number of industry participants didn’t think mFund would get off the ground but despite what the sceptics thought mFund will launch before the second half of the year and I believe it will be a success.

“There are too many fund managers out there who want to regain control of their businesses and that deserve to have a direct relationship with their clients.

“Platforms take that away from them whereas mFund creates an opportunity for fund managers to reconnect directly with segments of the retail market that until now have been largely intermediated.”

Mckeage said platform providers, including OneVue, now have to adjust their operating models to adapt to this new market offering.

“OneVue is pro-active, not reactive. Any opportunity that can reduce costs, minimise paperwork and provide investors with greater product choice is something we’re going to support and support from day one,” she said.

“Currently managed funds don’t take up a big portion of SMSF holdings, so you can see why tapping into this market, which comprises more than $532 billion in savings, is going to be a huge game changer and fantastic opportunity for fund managers as well as self-directed investors and the advice community.”

Mckeage said she believes organisations that embrace new technologies now are going to be the ones better placed to deliver superior service to clients in the future.

She added that OneVue is equipped to integrate mFund into its solutions when the initiative launches.

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