Rob Thompson

Insight Investment, a leading global investment manager, has announced the Insight Diversified Inflation Plus Fund has been added to the non-aligned, zero ongoing fee platform, uXchange.

uXchange is a transactional asset hub delivering advisers and their clients low cost, low risk, efficient access to global and domestic managed funds.

The Insight Diversified Inflation Plus Fund offers a modern approach to portfolio construction combining dynamic asset allocation and diversification across both traditional and alternative sources of risk premia, with a focus on downside risk management.

The A$200 million Australian-domiciled Fund aims to deliver attractive, positive long term returns of 5% in excess of inflation over a rolling five year period. It uses a multi-asset approach investing in equities, fixed income, real assets, total return strategies and cash, with the ability to move between asset classes depending on market conditions. The Australian-domiciled fund is based on Insight’s flagship A$12.2 billon Broad Opportunities strategy which has been running for 15 years.

Rob Thompson, Head of Intermediary Distribution at Insight Investment, said: “In this post Royal Commission environment, we are seeing a paradigm shift as advisers move to non-aligned models, making platforms like WealthO2’s uXchange even more relevant.  Our industry is going through considerable change and we are witnessing the emergence of new service providers such as WealthO2 challenging incumbent models.”

Launched by WealthO2 in July 2017, it has more than 330 global and domestic funds on its platform. uXchange provides advisers using WealthO2’s portfolio management and financial planning software services with access to wholesale managed funds, alongside Holder Identification Number (HIN) based access to ASX listed assets, and cash deposit products. The Insight Diversified Inflation Plus Fund can be accessed in WealthO2’s APRA regulated Super Simplifier as well as for self-managed super fund and investment clients.

Shannon Bernasconi, co-founder and Managing Director of WealthO2, “Since launching two years ago the service has provided access to over 330 wholesale fund managers – from boutiques to global names – for advisers and their clients. We are different from many other service providers in that funds are added based on adviser demand, not the other way around. This is a huge shift in approach for the industry, the adviser and the client.”

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“The reality is that the strong focus on yield is distorting asset prices,” said Mr Thompson.

“On many occasions the elements of yield are overvalued or receive too much focus at the expense of other important fundamentals that deserve greater consideration,” he said.

“Heuristic simplification – the assumption that current circumstances will continue into the future – has become a powerful guiding force amongst local investors due to the strength of the Australian economy and resilience of the local Australian financial markets over the last 10-15 years.”

“While the current fundamentals – slowing in demand for natural resources and subdued consumer sentiment – point to a changing backdrop for Australian corporate earnings, dividend policy has broadly remained unchanged,” he said.

“Many companies continue to inflate payout ratios beyond perhaps what they would be under other circumstances, driven by the desire to pacify yield hungry investors.”

“The undoubtable benefits of regular cash-flow from investment securities should be considered in the context of the overall risk/reward proposition and appropriate asset allocation.”

Mr Thompson said that despite the extensive discussion of Australian investor reticence to deploy capital globally in recent years there has been little change in their outlook.

Statistics from the ATO show that SMSF’s only have around 1% of capital allocated to offshore assets.

“The key drivers are clearly natural “home-market bias” along with the generous dividend policy of many local companies and relatively higher term deposit rates (until recently) at play,” said Mr Thompson.

“Many Australian investors are aware that local shares have provided better returns than US shares over the last 10 – 15 years, yet few would be aware that the S&P500 (US sharemarket index) has outperformed the All Ordinaries (Australian sharemarket index) by 7% p.a. over the last 5 years (January 2014).

“The fundamentals have broadly been ignored as conservatism biases extrapolate that US shares are a “bad investment” based on the last 10-15 years.

Mr Thompson said the returns from the S&P500 in recent times have been impressive, and it has also been delivered against the backdrop of improving balance sheets and fundamentals relative to Australia.

“We expect this improving trend to continue over the medium term,” said Mr Thompson.

“There are very clear diversification benefits and compelling valuation opportunities available off-shore for Australian investors,” he said. “There may also be an opportunity to minimise the risk of another yield trap.”

“While yield has its place, a myopic focus on yield can lead to poor investment outcomes, if other factors are not considered.”

“It is important to look beyond any cognitive bias and remain focused on the fundamentals of the risk/reward proposition.”

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The Fund takes a differentiated approach to investing in Asia, which is largely dominated by quasi-index funds rather than fundamental bottom-up stock pickers. This formula has seen the Fund deliver a total return¹, since inception in 2008, of more than 190%, outstripping its benchmark² by more than 170% and achieving a 12 month return after fees, as at 28 February 2014, of 42.4% (a 31.0% excess return compared to the associated Index, the MSCI Asia (ex-Japan)).

PM CAPITAL’s Head of Distribution, Rob Thompson said, “Advisers want a managed funds menu that suits their diverse client base. We feel this product provides an addition to the Macquarie Wrap offering, which will help meet demand for Australian-domiciled investments that capture growth opportunities in global markets.”

The Fund is ranked the number one Asian equity fund over its five year history by Morningstar for its peer category and was nominated in 2014 by Morningstar in the best undiscovered manager category.

PM CAPITAL’s approach to investing in the Asia Region (ex-Japan) is focused on the rapidly evolving economies in Asia, with a reduced reliance on fixed asset investment in favour of domestic consumption, driven by individuals and private enterprise.

Kevin Bertoli, the Portfolio Manager of the PM CAPITAL Emerging Asia Fund said, “Within the Asian Region (ex-Japan) we are finding genuine value in industries that are supported by rising domestic consumption levels or that are benefiting from changes to consumer consumption patterns. The evolution of over four billion consumers in the Region creates an enormous investment opportunity.”

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1. Past performance is not a reliable indication of future performance. On an annualised basis, the Fund has delivered a return since inception of 202.3% pa versus the benchmark return of 19.0% pa.

2. See www.msci.com for further information on the MSCI and their indices.

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Mr Thompson has 22 years of experience in financial services, most recently with Perpetual, where he led distribution to large boutique financial planning firms, private banks and family offices.   He has also held senior roles with Macquarie, Skandia and Portfolio Partners Ltd.

Chief Executive Officer, Chris Donohoe, said PM Capital had further plans for growth and the appointment was a significant step for theGroup.

“We have been in operation for almost 15 years and have developed a strong product suite. Several years ago we increased the depth of our investment team and the benefits have manifest through strong performance in challenging times. In the past six months, we have restructured so that staff now own 100% of the business; in addition to being substantial unit holders in the same funds in which our clients invest. This means that our interests are always aligned with our investors”.

“The distribution agreement with Zurich is further testament to the relevance of our funds to the advisor community.  We are now working to expand our investor base and the appointment of Rob Thompson is an important step for us on this path.”

 In addition to its existing equity and income funds, PM Capital will be introducing its Emerging Asia Fund, which was seeded internally over 4 years ago. Despite market volatility, the fund performance has been consistently strong, returning 14.9% pa net of fees, since inception. The fund is looking to generate absolute returns with a strong focus on companies with over $1 billion market cap, that are under-researched and mis-priced.  

“An attractive aspect of working at PM Capital is that the investment team have a significant amount of skin in the game, which demonstrates a genuine commitment to seeking the best investment opportunities on behalf of their fellow unit holders”, Mr Thompson said.

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