Matthew McKinnon

Market Vectors ETFs, the exchange traded fund business of Van Eck Global, announced that its Market Vectors Australian Property ETF has received a four-star superior rating from SQM Research, an independent property advisory and forecasting research house.

Matthew McKinnon, Director, Intermediary and Institutions, Market Vectors Australia said, “We are thrilled to receive a four-star rating from SQM Research, one of Australia’s leading property advisory and research houses. The rating confirms the robust nature of our Market Vectors Australian Property ETF, which provides investors with easy access to the largest and most liquid Australian listed real estate companies.”

The research house confirmed in its report that a positive feature of the Fund is its diversification across A-REITs, “The Fund offers investors a unique and diversified exposure compared to other A-REIT focused ETFs, with the Fund aiming to replicate the Market Vectors Australia A-REITs Index (the Benchmark).

“The Benchmark is a pure-play Australian sector Index that tracks the performance of the largest and most liquid ASX listed A-REITs. Through a cap-weighted methodology, the Benchmark seeks to achieve diversification through capping individual security holdings at 10%. The Benchmark is also required to hold a minimum of ten stocks at any time,” the report said.

The report confirmed the Fund’s Index has outperformed the S&P/ASX 200 A-REIT Accumulation Index over the long term.

“The Fund’s underlying Index has produced robust returns relative to the S&P/ASX 200 A-REIT Accumulation Index. The Benchmark has been able to steadily build upon its cumulative excess return to the S&P/ASX 200 A-REIT Accumulation index, recorded at 9.6% at 31 March 2014.

“As a result of the Benchmark’s 10% capping, the Benchmark is significantly underweight to Westfield (WDC). At 31 March 2014, WDC accounted for over 24.7% of the S&P/ ASX 200 A-REIT Index (which peaked at over 50% in 2009). The Benchmark’s relative performance to S&P/ASX 200 A-REIT Accumulation Index will be driven by the relative performance of WDC,” the research house confirmed.

Another positive feature of the Fund is its fee structure according to SQM Research, “The Fund’s on-going fee structure is slightly below peers, which has positively affected the Fund’s rating. The annual management fee of the Fund is 0.35% p.a. of the Fund’s net assets,” the report said.

According to the research house, the Fund’s rating has also been positively influenced by the resources and capabilities of the Parent entity – Van Eck Global.

“Van Eck Global displays a solid track record in issuing and managing ETFs, having launched its first Market Vectors ETF in 2006. Moreover, over the years Van Eck Global has been able to successfully expand its ETF business, offering over 60 Market Vectors ETFs and developing into the eighth largest Exchange Traded Product (ETP) provider in the United States.

Mr McKinnon commented, “We have seen strong demand for our purpose-built Market Vectors Australian Property ETF since it listed on the ASX in October last year. Investors are actively seeking a liquid and more diversified exposure to a portfolio of A-REITs at a lower cost. We expect demand will continue for our purpose-built ETFs as investors’ continue to seek out exposure to particular investment opportunities.”

The post Market Vectors Australian Property ETF (MVA) awarded 4-star ‘superior rating’ appeared first on AdviserVoice.

Ross Kent

Global asset manager AllianceBernstein’s diversification into the Australian retail market continued when the firm announced that its Global High Income Fund (GHI) had been rated ‘Recommended’ by independent investment research provider Zenith Investment Partners.

The Fund—which is being offered in Australia for the first time—has a track record of more than 16 years in offshore markets. It aims to achieve income returns in excess of the Australian cash rate after fees over the cycle.

“This rating is a significant milestone in executing our diversification into the Australian retail investment market,” said Ross Kent, Executive Director at AllianceBernstein Australian Ltd.

The Fund invests into predominantly sub-investment grade (high-yield) corporate debt as well as emerging market sovereign and corporate debt. Zenith noted in its rating report that the Fund also has a relatively wide mandate and invests in high-yielding securities in other fixed-interest sectors.

“From a portfolio perspective, the Fund may be suitable as a component in the income portion of a well-diversified portfolio. The Fund is considered appropriate as a satellite exposure to global fixed interest and for blending with domestic fixed-interest strategies to produce a more balanced set of investment outcomes,” the research firm said.

“We believe the Fund is suited to investors who, in an environment of low cash rates, want to improve the income generating capacity of their portfolio,” said Kent, who noted that the strategy had raised more than US$22 billion from investors globally since 1997.

“We also expect that it will be of interest to investors who are willing to substitute some of their overweight in domestic or global equities towards return-seeking fixed-income assets.”

The post Zenith rates AllianceBernstein Global High Income Fund ‘Recommended’ appeared first on AdviserVoice.

Steve Davis, Chief Executive Officer of AU PFS, said Federation offers advisers and their clients clear value for money and this, coupled with operational structure and the option for clients to become shareholders in Federation Alliance, made it a unique offer in the platform market.

“We made the decision to put Federation on our preferred platform list primarily to take advantage of the structure of the platform, which operates as an IDPS-like managed investment scheme,” Mr Davis says.

“This structure allows us to build our model portfolios into the platform and our advisers can use them to better automate the investment management process for their clients.”

Mr Davis says the Federation structure means it operates like a managed discretionary account (MDA), but without requiring any variation to the advice licence or the additional compliance requirements for advisers that are usually required to operate an MDA.

It also offers efficiency benefits. “As a result of some of the additional administrative burden under the FoFA regime, we believe helping our advisers operate a more efficient practice is even more important. Federation helps our advisers to significantly improve the efficiency of the advice process,” Mr Davis says.

“Adding Federation was also a way to provide advisers with an alternative to the platforms owned by the major banks/institutions.

“We see there being a place for both institutional and independent platform models – they key for us is to give advisers the choice,” Mr Davis says.

“This is becoming even more important in a post FoFA world where advisers need to be even clearer in relation to meeting their obligations under their best interests duty.”

Mr Davis says PFS’ primary focus is to help its advisers continue the strong growth they have been experiencing in revenue, FUM and risk insurance business, but that further growth for PFS is also on the agenda.

“We do expect to continue to grow adviser numbers and more importantly plan to continue to strongly grow our network of accountants as referral partners and advisers,” Mr Davis says.

“In May 2011 we hit the $1 billion in funds under advice milestone and had 72 advisers. As at 31 December 2013 we were up to $3.2 billion in FUA with 117 advisers.

“There is going to be continuing convergence between the accounting and advice professions and we are well placed to help support accountants provide high quality financial services to their clients.

“Federation, and its ability to facilitate automated direct equity portfolios, can be a very complementary investment structure for accountants and their SMSF clients, who appreciate the transparency and ownership of direct equities, but are less interested in day to day management of the portfolio” Mr Davis says.

Richard Dixon, Chief Operating Officer of Federation Alliance, said Federation Managed Accounts is a comprehensive investment administration platform that provides easy access to a broad range of investment options

“As technology delivers further efficiencies and cost savings in this competitive part of the market, Federation’s equity participation option provides an effective way to pass future benefits to clients.”

Mr Dixon says work has begun on a superannuation vehicle which is expected to launch in the second quarter of this year.

The post Federation Managed Accounts added to AU PFS approved platform list appeared first on AdviserVoice.

John Billington, Executive, Wealth said: “This is another great accolade for Bendigo SmartStart Super and the Bendigo Wealth team who developed and built this product.

“A top rating CANSTAR award of 5-stars, by this internationally recognised research provider, puts us in the Top 10% of funds rated in the pre-retiree category and underscores the low cost and popular features that make Bendigo SmartStart Super a smart choice for our customers.

“In a very well contested market, Bendigo SmartStart Super is one of only 15 superannuation funds rated to receive 5 stars in any category, so this result is one of which we can be justifiably proud.

“Bendigo SmartStart Super offers great value and the investment options can be tailored to suit everyone from a school-leaver working part-time to a senior manager or small business owner and their employees.

“We’ve freshened up our website too so that it’s never been easier to open a Bendigo SmartStart Super account.  There is now an easy to follow online application process for direct investors”, Mr Billington concluded.

The post Bendigo SmartStart Super awarded 5 star rating by CANSTAR appeared first on AdviserVoice.

Through initiating coverage of the separately managed account (SMA) portfolios with these positive ratings, Lonsec is indicating its “strong conviction the products can generate risk-adjusted returns in-line with relevant objectives”.

Head of MPPM, Trevor Fisher, said the ratings reflect the experience, capabilities and robust investment process MPPM has built since it began offering managed accounts in 1999.

“During the past few years, we have seen a marked increase in interest from dealer groups and financial advisers as they recognise how managed accounts can deliver direct equities in a risk-managed and scaleable fashion,” Mr Fisher said.

“Managed account products can provide investors with a sense of control over their financial outcomes and offer transparency over their investments, performance and fee models.

“In step with the increased interest in managed accounts is the rising desire from investors for actively managed portfolios that generate consistent risk-adjusted performance.”

For example, the MPPM Growth portfolio outperformed the benchmark S&P/ASX200 accumulation index by 5.7% per annum, over the five years to June 2013, ahead of its expected 3% per annum outperformance target. In addition to the strong returns, Lonsec noted “its standard deviation was in-line with, or lower than, the benchmark’s over these periods. Further information and performance data on all three MPPM models, is contained within the Lonsec product reviews.

In its report, Lonsec said it has initiated coverage of these model portfolios with ‘Recommended^SMA’ ratings as it believes the highly experienced manager offers a very disciplined and tax-aware approach to Australian equities investment.

It noted that, “Pleasingly, the manager displays many of the attributes Lonsec looks for in boutique managers, including a performance-driven culture and a good alignment of interests between staff, investors and the firm.

“Lonsec believes this approach [manager’s stock research process] provides a disciplined and highly repeatable process which allows the manager to efficiently score companies based on various metrics.

“The manager has a good appreciation of the specific risks of running an SMA model portfolio. By offering an in-house solution, the manager reduces some of the risks faced by competitors who must communicate portfolio changes to third party SMA platforms.”

The post MPPM recognised with Lonsec ‘RecommendedSMA’ ratings for three model portfolios appeared first on AdviserVoice.

Sector review reveals value opportunities

The Listed Infrastructure sector performed very strongly over the past 12 months, with S&P Global Infrastructure Index returning over 20%. Zenith noted that “all nine funds that achieved a rating of Approved or higher outperformed Zenith’s assigned benchmark.”

Zenith’s sector report also focused on the defensive attributes of Listed Infrastructure, undertaking in-depth quantitative analysis on fund performance over the past five years. Baird believes that “Listed Infrastructure provides downside protection; however, the level of protection diminishes as the magnitude of the market downturn increases.”

From an initial investment universe of 14 Listed Infrastructure products, nine received a positive rating, with four funds achieving a HIGHLY RECOMMENDED rating, four received a RECOMMENDED rating and one was assigned an APPROVED rating.

While the sector has performed strongly in recent times, managers reviewed by Zenith believe “that there are still value opportunities in the sector; however, they are less common than they have been in recent years.”

The post Zenith 2013 Infrastructure Sector Review appeared first on AdviserVoice.

“Beta 1 style funds will typically maintain a net equity exposure of close to 100%, with the proceeds from short selling reinvested in their long positions. Short selling is primarily used to enhance overall fund returns and comes with increased market risk.”

“Variable beta style funds may utilise a broad range of strategies including short selling, gearing, derivatives and cash in order to adjust their net equity position in line with the investment manager’s market outlook.”

Of the 12 funds reviewed, none attained Lonsec’s top rating, Highly Recommended.

Sector themes and observations

High quality PMs entering the sector

While the universe has not increased all that dramatically, Lonsec is of the opinion that it has evolved with the introduction of a number of competing teams with strong skill sets and experience. “Historically the retail long short sector has been dominated by successful long only managers launching active extension or long short strategies,” commented Ngin.

“Lonsec believes that the shorting element is a specialist skill set and has tried to differentiate between solid long only investors versus investors with extensive track records in shorting.”

Post the GFC, the quality of personnel within the long short space has increased, especially at the portfolio manager level.

“We have seen a number of hedge fund investment professionals gravitate to the retail space, leading to greater sophistication and greater dispersion in portfolio manager skill sets and short selling experience,” said Ngin.

Key person risk is high

Key person risk for many managers is relatively high, given the additional specialist skill set required for the effective implementation of the shorting component of a portfolio.

“While we see this as a potential risk, at Lonsec we believe that key person risk is often worth taking,” said Ngin. “That said, in the event that a key person ceased to work within an organisation, the rating of the Fund would be reviewed.”

Stop losses – stopped out

While the market only returned 3.8% for the year to May 2011, it should be noted that this was a relatively volatile period. As a result, it wasn’t unusual to see managers being ‘stopped out’ of their short positions. Managers that employed less rigid approaches to their stop losses were more likely to benefit from this volatility as they were less likely to be stopped out of positions that would later turn profitable.

“While this strategy may have worked in the favour of managers with the less rigid approaches to their stop losses over the last 12 months, Lonsec acknowledges that good risk management in long/short investing is important and that improperly managed short positions can result in significant losses,” observed Ngin.

The post Lonsec releases its Australian Equity Long/Short Sector Review appeared first on AdviserVoice.

 We are pleased to see stability return to the team at Hunter Hall after internally led changes resulted in the departures of four portfolio managers in late 2008 and early 2009. We see clear positive aspects in the current portfolio manager structure which pairs senior portfolio managers with more junior colleagues. “This more collegial approach to stock-picking encourages debate without compromising accountability and the manager’s performance-driven culture,” said S&P Fund Services analyst Justine Gorman.

The investment process continues to be refined with the introduction of additional portfolio risk constraints and improved portfolio-construction discipline. The manager’s value, bottom-up, benchmark-unaware style, gives the fund a relatively wide mandate, allowing large biases to specific securities, countries, sectors, or market capitalisations, which may deliver a different risk/return profile to the benchmark and peer funds.

This fund is currently meeting its objective and has a long, successful track record, even when measured against international small-cap benchmarks. “The fund’s ability to hold cash up to 30%, as well as to employ active currency management, gives it a level of flexibility that peers do not have,” said Ms. Gorman. Due to the active hedging policy, fund return volatility may be higher than a similar unhedged investment.

The post S&P Fund Services Assigns Three Stars To Hunter Hall Value Growth Trust appeared first on AdviserVoice.

Five new funds were added to Lonsec’s Large Cap Australian Equity universe in this review, including the CFS Australian Share Core Fund, Ironbark Karara Australian Share Fund and the Perpetual Concentrated Equity Fund.

Sector observations

Market environment

The Australian sharemarket, as measured by the S&P/ASX300 Accumulation Index, delivered a modest gain of 1.9% over the 2010 calendar year. Andrew Scifo, Investment Analyst responsible for this review, commented, “The market could best be described as lacking direction in 2010, with large deviations in month to month performance.”

“In the absence of a broad sharemarket rally, individual stock picking proved to be critically important, with global macro-economic factors contributing to sharemarket volatility during the year.”

The second half of 2010 saw the re-emergence of a strongly performing resources sector. “Resources outperformed relative to industrials, and small and mid-cap stocks outperformed relative to large cap stocks,” said Scifo.

Australia is not immune to global events and uncertainty surrounding the macroeconomic environment is expected to cloud the outlook in 2011.

“The key macro factors likely to impact the Australian market this year include the recent events in Japan, impediments to US recovery, China‟s inflationary pressures, ongoing European debt issues and the high AUD (for exporters),” observed Scifo.

Fund performance

There was a large divergence between top and bottom performing funds across the peer group, with no trend of fund outperformance based on investment style alone.

“A key factor influencing fund performance during 2010 was the disparity in returns delivered by small, medium and large cap stocks,” commented Scifo.

“Some of the better performing funds for the year exhibited a bias toward smaller stocks.”

Inflows and funds under management

The trend towards low cost, passive alternatives in Australian equities continued in 2010, with retail fund flows towards active strategies being relatively flat.

“The increasing popularity of ETFs and availability of SMAs has created increased competition for the traditional managed fund,” said Scifo.

The post Lonsec releases its Large Cap Australian Equity Sector Review appeared first on AdviserVoice.

With offices in London and New York, ISAM was founded by Stanley Fink, former CEO of the Man Group, in July 2008 to provide alternative investment strategies to institutions, family offices and private individuals.

When Stanley Fink joined Man, the organisation was a medium sized private company, largely focusing on agricultural commodity trading, with small operations in futures broking and hedge fund management. By 2008, when Stanley left to join ISAM, Man had a stock market capitalisation of $20B and managed alternative assets approaching $80B.

ISAM CEO Stanley Fink and his senior management team have established long term track records in the fund management industry and collectively bring decades of hedge fund experience to the Firm.

In February 2010 ISAM formally announced a strategic alliance with Hite Capital Management (HCM), the hedge fund firm founded by renowned systematic trading authority Larry Hite. The new venture resulted in Larry Hite and his key senior managers Alex Greyserman and Gilbert Lee becoming shareholders in ISAM.

The immediate benefit for ISAM was access to the Hite investment program that is now the Fund that was the subject of Zenith’s review.

Larry Hite and his team developed and refined the Fund’s strategy over the last 30 years, initially at Mint Investment Management Company and then at Hite Capital Management. For 15 of those years Mint had a successful joint venture with Man Group.

This period occurred during Stanley Fink’s tenure at Man.

“The ISAM Systematic Fund uses a combination of trend following and other quantitative investment techniques for currency and futures markets,” said Daniel Liptak. “The system operates 24hrs a day with trades generated automatically with pre-defined stop / loss orders in place.”

The investment objective of the Fund is to achieve capital appreciation through active management using purely systematic trend following models. The strategy seeks to capture profits from market price trends using a rules based platform.

The program has evolved over the last 30 years and is continually monitored and refined.

Today, the systems are applied to over 50 global financial and commodity futures markets and forward currencies.

The Fund targets a return of 15 – 20% per annum with volatility in the same range.

Daniel Liptak added, “For the purpose of Zenith’s review, the Alternatives Team have incorporated the track record of the Hite Futures Strategy and the performance of the Fund since inception.”

“As a result we have data back to June 2001, with an observed volatility of 19.34% with an annualised return of 18.27%, providing evidence that the program can be profitable, but not without risk.”

Zenith believes the strength of the Fund comes from the stability of the team that has built the investment program, the purity of its approach and, given the Fund’s AUM – the ability to follow trends in markets, such as commodities efficiently.

In addition to this, the partnership of Fink and Hite was successful in the past at Man Group and enhances Zenith’s confidence in the management of the business.

“Zenith is confident that the Manager clearly has identified trends and noticeably is able to efficiently and profitably trade them in a risk aware manner. The Manager does not dilute or smooth out the investment process with a broader range of investment strategies designed to reduce risk,” concluded Daniel Liptak.

The post Experience & Long-term Results Underpins Zenith’s ISAM Systematic Fund ‘Recommended’ Rating appeared first on AdviserVoice.