The product seeks to dynamically safeguard investors against large downside losses while allowing for full participation in domestic equity market gains. It provides investors with a bottom-up, Australian equities portfolio comprised of large and small cap listed companies and uses equity derivatives and cash to dynamically protect the portfolio through market cycles, thereby reducing the magnitude of significant negative returns as they occur.

Called the Perennial Value Wealth Defender Australian Shares Trust, the fund was launched by Perennial Value Management Limited (Perennial Value) in late May 2014. It has subsequently secured a Recommended rating from independent investment research firm Zenith Investment Partners.

Head of Retail Funds Management for Perennial, Brian Thomas said the Zenith rating was a welcome independent validation for the fund. The fund has also resonated strongly with financial advisers in the days since its retail launch.

“The stark reality we all faced during the GFC was that a 50% fall in our share values required a 100% future return to get back to pre GFC levels, and investors are expecting further volatility in the future. According to recent Investment Trends research, 91% of financial advisers are expecting two or more market crashes in the next 20 years and the investors we speak to have similar outlooks, ” Mr Thomas said.

“We believe Perennial Value has created an innovative product that is purpose built for the needs of investors and it brings a unique and dynamic approach to managing downside risk.”

“The fund’s unique design and underlying protection process is unlike anything available to Australian retail investors to date,” he said. Mr Thomas said Perennial Value’s considerable investment management expertise (led by renowned value investor John Murray) coupled with its dynamic portfolio protection strategies adds a new dimension to the management of market volatility on behalf of investors. The fund’s dynamic portfolio protection strategies are managed by Perennial Value’s Dan Bosscher.

Zenith’s report said the fund: “…provides investors with a unique exposure to Australian equities which is intuitively appealing. Through the use of dynamic protection strategies, the fund aims to create an asymmetric return/risk profile that is designed to reduce losses in market downturns by approximately 50 per cent whilst allowing for full participation in market upswings. Zenith believes the fund is an innovative product managed by a highly capable risk expert in Dan Bosscher.”

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Zenith has also elected to maintain the ‘Under Review’ status of the CFS Wholesale Colliers Global Property Securities Fund, following the numerous investment team changes announced this week.

Perennial changes:
Since David Kivell’s appointment as Head of Property at Perennial, replacing the outgoing Steven Hayes, the Perennial investment team has experienced a number of significant changes.

In September 2012, Perennial announced the resignation of Senior Portfolio Manager (Europe), Stuart Pearce. Pearce was effectively replaced by a new addition to the team, Equity Analyst, Erik Salz who is based in Perennial’s Amsterdam office.

Subsequently the following three members of Perennial’s investment team have tendered their resignation over the past two weeks, with the intention of joining Steven Hayes at Colonial First State: Tuan Pham, Regional Head Asia Pacific (and back-up Portfolio Manager for the ARIET Fund); Boudewijn van Loen, Regional Head Europe; and Joseph Daguio, Australian Dealer/Analyst.

Zenith’s View
Given the seniority of both Tuan and Boudewijn, Zenith believes the departures are a significant loss to the investment team. Zenith has decided to place the Perennial Hedged Global Property Wholesale Trust, the Perennial Unhedged Global Property Trust and the Perennial Australian Property Wholesale Trust ‘Under Review’ until further notice.

Zenith intends to meet with David Kivell and any incoming senior investment staff to ascertain more details surrounding the departures and procedure going forward.

CFSGAM changes:
As outlined in Zenith’s Client Release on the 20th of August, Steven Hayes has returned to CFSGAM as Head of Property, with CFSGAM’s former Head of Property, Andrew Nicholas announcing his resignation.

In the short period since Hayes’ return, he has implemented wholesale investment team changes. As mentioned above, three members of his previous investment team at Perennial will be joining him at CFS. Additionally, Daniela Lungu will be joining CFS as a Senior Portfolio Manager focusing on the Europe.

As a result of the changes, the following investment team members have departed CFSGAM: Senior Portfolio Manager, Antoinette Plater; Portfolio Manager, Marco van Bussel; Investment Analyst, Matthew Gulczynski; and Investment Analyst, Miranda Moran.

Hayes has elected to retain the four New York based members of CFSGAM’s property investment team who are responsible for coverage of the Americas. Additionally, Investment Analyst, John Stavliotis who Hayes had intended to retain has tendered his resignation and accepted a role on the sell side.

Zenith’s View
Given both the breadth and significance of the changes implemented by Hayes, Zenith has decided to maintain the ‘Under Review’ status placed on the CFS Wholesale Colliers Global Property Securities Fund in August. Zenith will seek to meet with both Hayes and the broader investment team to get a better understanding of the possible benefits of such a significant restructure, to what Zenith considered a strong investment team.

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Rating Definition: Fund Credit Quality Ratings

Fund credit quality ratings, identified by the ‘f’ subscript, are assigned to fixed-income funds and other actively managed funds that exhibit variable net asset values. These ratings are current assessments of the overall credit quality of a fund’s portfolio. The ratings reflect the level of protection against losses from credit defaults and are based on an analysis of the credit quality of the portfolio investments and the likelihood of counterparty defaults. Fund credit quality ratings are identified by the ‘f’ subscript to distinguish the fund credit quality rating from a Standard & Poor’s traditional issue or issuer credit rating. A fund credit quality rating is not a recommendation to buy, sell or hold the shares of a fund. A ‘AAAf’ rating indicates that the fund’s portfolio holdings provide extremely strong protection against losses from credit defaults. A ‘AAf’ rating indicates that the fund’s portfolio holdings provide very strong protection against losses from credit defaults. An ‘Af’ rating indicates that the fund’s portfolio holdings provide strong protection against losses from credit defaults.

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