Jonathan is a highly regarded investments executive with nearly 30 years of global experience, having worked in Australia, the United Kingdom and United States. He has a strong reputation as a leader in asset management, and his appointment means CFS is well positioned to further improve product performance and deliver the best outcomes for members. Jonathan will commence in August.

Ms Power said, “We are pleased to have Jonathan on board. Jonathan has a breadth of experience in Australia and globally including directly running investment portfolios. His strong skill set, global asset management experience, and track record of success, will help us to deliver market leading investment performance for members in the future.

“Jonathan’s appointment further strengthens our investments team capabilities and, with other changes we have made, is helping to make CFS one of the most competitive retail superannuation and investments businesses in Australia.”

Most recently Jonathan was the Chief Investment Officer and General Manager of Asset Management at MLC. His responsibilities included managing multi-asset diversified funds, fixed income, private equity and alternative capabilities. He joined MLC in August 2011 as Head of Global Equities, before becoming Head of Equities in December 2011 and being appointed Chief Investment Officer in March 2013.

Prior to MLC, Jonathan spent 20 years at Schroders, where he held roles including Head of US Equities and Deputy Head of Global Equities.

After more than 30 years with CFS, Scott Tully felt that the time was right to pursue the next phase of his career outside of CFS.

“We greatly appreciate Scott’s contribution to CFS over many years, the way he has led his teams, and his commitment to our members. We wish him all the very best for the future,” Ms Power said.

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Scott Tully

EOS at Federated Hermes, a leading global stewardship provider, has been appointed by Colonial First State (CFS) to provide engagement, voting and public policy support for its global equity investments.

The appointment means that EOS now provides ESG support to nine institutions in Australia, representing A$320.5 billion^[1] in assets under advice in the region, further strengthening its presence.

Gary Horton, Head of Distribution – Australia & New Zealand at Federated Hermes Limited said: “We look forward to carrying out engagement activities globally on CFS’ behalf that enable it to be a more active owner of its assets, through our dialogue with companies it invests in on environmental, social and governance issues.

“We look to engage with companies where there is a meaningful issue to resolve and where there is the ability to enact change. Issues could range from diversity on boards or in executive teams, supply chain sustainability issues, or whether plans to address climate change and offset carbon emissions are sufficiently in place.”

Scott Tully, General Manager Investments, CFS said: “We believe that active ownership, including engagement with and voting on how a company operates its business, leads to better long-term returns for shareholders and hence our customers.

We look forward to leveraging the knowledge and experience that EOS will bring to our engagement program across global markets and to expanding our advocacy efforts.”

Bruce Duguid, Head of Stewardship, EOS at Federated Hermes Limited commented: “Our global reach and leadership in stewardship gives us significant leverage to generate positive change at companies on behalf of our long-term institutional investor clients. Now more than ever, companies require a social license to operate, which is underpinned by a corporate purpose centered on being sustainable and creating long-term value for their stakeholders.

“We look forward to working with CFS and providing demonstrably effective stewardship services including engagement that address the full range of sustainability issues they are facing.”

Federated Hermes now has over 60 professionals working across its stewardship and responsibility teams, making it one of the largest resources of its kind in the world. Globally EOS has USD1.6 trillion of institutional assets under advisement^[2].

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[1] As at 31 January 2022
[2] As at 31 December 2021

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Scott Tully

Colonial First State (CFS) is set to celebrate the 10-year anniversary of its strategic partnership with investment manager Aspect Capital.

The partnership began with the launch of the Aspect Diversified Futures Fund in 2010, which uses systematic modelling and tactical allocation to capture profit in both rising and falling market environments.

In June this year Aspect Capital introduced significant fee reductions (up to 40 basis points for the Class A vehicle), reducing the cost of investing for thousands of Australian investors in the Aspect Diversified Futures Fund.

The CFS Aspect Capital partnership expanded in 2017 with the launch of a second fund for Australian investors: the Aspect Absolute Return fund.  The fund’s investment objective is to generate a stable return profile by capturing and maximising diversification across a balanced combination of momentum, value and carry alternative risk premia themes.

CFS General Manager of Investments Scott Tully said, “CFS’s strategic partnerships are with highly specialised global investment managers. Since they were appointed, the partnership with Aspect Capital has brought investors increased diversification due to low correlation with traditional asset classes, the ability to benefit in both rising and falling markets as well as access to opportunities across a broad range of liquid global markets.

“Over the past 10 years, the Aspect Diversified Futures Fund has consistently delivered on its investment objective of generating significant medium-term capital growth independent of overall movements in traditional stock and bond markets. It has a strong track record of providing positive returns including during prolonged periods of equity market stress.”

Reflecting on the past 10 years, Anthony Todd, CEO of Aspect Capital said, “We are thrilled to celebrate this partnership and are as committed today as we were 10 years ago to providing the Australian market with access to innovative, systematic investment solutions.

“Our team provides research-led enhancements to our programs, and in today’s uncertain environment, I believe that our experience and consistent approach to research are crucial to deliver the best possible outcomes for clients.”

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**On the dollar value of positive performance after management fees (less carried forward negative performance) above the Reserve Bank of Australia cash rate. For more information, refer to the PDS.

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Scott Tully

New data from Colonial First State (CFS) reveals switches by super members were three times the usual rate in March as a number of Australians moved their superannuation to cash in the midst of the coronavirus impact on markets.

Thirty nine per cent of members who switched their super, switched to cash. Against this trend, the second most popular investment category was Australian shares (26 per cent).  Interestingly, the number of members who switched to growth assets (including Australian shares) was almost exactly the same as the number that switched to cash.

Switch call volumes peaked on Monday 23 March after the S&P/ASX shed 5.6 per cent to 4,546, down 36.5 per cent from its peak just over two months ago. The market reaction was in response to news that businesses across the country should prepare to scale down their operations. CFS experienced the highest number of switches to cash (65 per cent) and the lowest percentage of switches by dollars to growth assets (9 per cent) on this day.

While looking to avoid losses caused by the sharp declines in the share market in March, members who switched to cash at the bottom of the market may have also missed out on the gains in the markets in the period after.

Commenting on member behaviour Scott Tully, General Manager Investments, said: “We recognise the importance of being focused on investing for the long term and we’ve been talking to our members directly about this to help them navigate what are understandably a concerning set of circumstances.

“We saw some people switching to cash, which means those members missed out on upside as markets rebounded. But we’re encouraged that many of our members also stayed the course and remained focused on the long term.

“Fear of volatile markets can drive decisions that might not be in a member’s long term interests. The switching activity we have seen is directly linked to how the Australian market is performing on the day. However, selling after markets have fallen means that you lock in those losses and longer term investment outcomes may be more difficult to achieve.

“During this challenging time it’s important to remember that super is the longest-term investment many of us may ever have.

Commenting on how CFS was helping people through these challenging times Mr Tully said, “We are committed to equipping our members and advisers with all the tools they need to get through this difficult period.

“We’re making it easier for members and advisers to interact digitally with their super, pension or investments and we’re sending out more regular and timely communications. We’ve also created a dedicated webpage for all Government support elements and are hosting a number of interactive webinars.

“Reacting to short-term market movements, regardless of whether you’re switching to defensive or growth assets, can have an impact on the long-term performance of your super. It’s crucial for members not to lose sight of their long term goals and personal investment objectives and seek quality financial advice about managing market volatility before making a change.”

Mr Tully said it was also really interesting to see that that were as many switches to growth assets as to cash during the month of March.

“Our data showed that while we had many super members who were spooked by the volatility, there were just as many people looking to invest after the market had fallen.  This suggests there are members who understand that super is a long term investment but are prepared to take advantage of lower prices in the middle of a crisis.”

Other key findings from the March data included:

• Pre-Retirees (members aged 50-64) were the most likely to switch to cash (47 per cent of all switches to cash) followed by wealth accumulators (members aged 40-49) with 19 per cent of all switches to cash
• Retirees (members aged 65+) were least likely to switch to growth assets (9 per cent of all switches to growth assets)
• Younger members (aged 49 or under) were more likely to switch to growth assets than cash (45% of all switches to growth assets were by members aged 49 or under with this group comprising only 34% of those switching to cash).
• Switches to growth had a lower average amount switched than switches to cash. The average switch to growth was $19,000 compared to the average switch to cash of $99,000 suggesting that switching to growth was more of a partial reallocation of members’ portfolios.

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Scott Tully

Colonial First State (CFS) has expanded its strategic Alliance Partnership with global investment management firm Baillie Gifford, with the launch of the Baillie Gifford Global Stewardship Fund (“the Fund”). The Fund gives investors access to a stock-driven global portfolio that combines the best elements of stewardship, governance, and specialist regional expertise to invest in responsible growth businesses.

Scott Tully, General Manager of Investments at Colonial First State, said the Fund will provide investors with a strong portfolio of global stocks that are focused on long-term performance and corporate best practice.

“We believe good governance and stewardship are vital to the long-term success and growth of a company,” said Mr Tully.

“Interest in responsible and sustainable investing has continued to grow amongst investors and the industry. We believe Baillie Gifford’s investment approach and active engagement with companies on environmental, social and governance (ESG) factors, as well as on a company’s strategic direction, corporate culture, and shareholder alignment, will ensure sound long-term performance for investors.”

Since its inception in December 2015, Baillie Gifford’s Global Stewardship UK composite^[1] has achieved a net return of 5.7% p.a. over the MSCI All Country World Index benchmark (as at 30 June 2019).

Growth of a global partnership

Baillie Gifford was first appointed by CFS as an investment manager within CFS’ FirstChoice Multi-Manager portfolios over a decade ago; a mandate that has experienced strong outperformance over that period.

Last year, CFS launched Baillie Gifford’s Long Term Global Growth Fund (LTGG) to Australian retail investors, offering a differentiated and proven investment approach underpinned by long-term, committed portfolios that aim to anticipate change in the market over the next decade.

“The launch of the LTGG Fund brought Baillie Gifford’s unique investment capability to the Australian retail market for the very first time. The Fund’s impressive performance track record is achieved by a purely stock-driven global equity approach, where the team focuses on high conviction investing for the long term” said Mr Tully.

“The new Baillie Gifford Global Stewardship offering employs this same high conviction, bottom-up approach, while also seeking out responsible growth stocks that have well-aligned management,” added Mr Tully.

Anthony Tait, Partner at Baillie Gifford, said the partnership with CFS enables the firm to reach retail and wholesale investors with its actively managed investment solutions.

“This partnership gives Baillie Gifford the opportunity to utilise CFS’ significant distribution footprint and in-depth knowledge of the Australian intermediary market, while building on a decade long relationship,” said Mr Tait.

“Since launching our flagship equity strategy in Australia last year, we have experienced strong investor demand for this stock-driven, high performance fund. We believe the Global Stewardship Fund will offer Australian investors another high-performance, quality portfolio of global stocks, with an added focus on stewardship and governance,” added Mr Tait.

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Colonial First State taking steps to support global action on responsible investment issues.

Colonial First State has confirmed its support for an open letter from institutional investors calling on index providers to remove controversial weapons from global indices.

Colonial First State is one of the first Australian companies to join 142 other institutional investors, representing US$6.9 trillion in assets, who are calling for the exclusion of controversial weapons from global investment indices. These weapons include anti-personnel mines, cluster munitions, biological and chemical weapons, and nuclear weapons.

Colonial First State’s Head of Investments, Scott Tully said: “Becoming a signatory to the open letter is yet another step we are taking to support global action on responsible investment issues.

“Together with other asset owners, we are in a position to make a huge difference to responsible investing, which we know is something many of our members value. We believe that active and passive investments should, by default, exclude controversial weapons.”

Signatories to the open letter believe that the exclusion of controversial weapons will better align their clients’ investments with what has become standard practice and expectation among investors. While companies involved in the manufacturing of controversial weapons account for a marginal weight of global equity and fixed income indices, the growing interest in passive investing means many investors are inadvertently investing in that industry by following the composition of the standard indices.

“Responsible investment is a matter of stewardship and we continue to collaborate with external parties to deliver meaningful change throughout the investment value chain,” added Mr Tully.

The letter, released on 12 February Sydney time (11 February Zurich time), will be sent to the CEOs and Chairpersons of all major index providers as well as the Index Industry Association.

Colonial First State remains on track to complete its own divestment from controversial weapons manufacturers by the end of this year. Colonial First State is a signatory to the Principles for Responsible and recently became a signatory to the United Nations endorsed Tobacco-Free Finance Pledge.

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Scott Tully

Colonial First State’s FirstChoice Multi-Index funds have been awarded a ‘Recommended’ rating from Zenith Investment Partners.

Zenith described CFS’ FirstChoice Multi-Index funds as ‘a compelling offering for investors seeking a low cost exposure to the diversified sector’.

Zenith also cited their high regard for the FirstChoice Investments team responsible for managing the FirstChoice Multi-Index funds; in particular Scott Tully and Peter Dymond who Zenith believes are ‘key to the continued success of the Multi-Index funds’.

Head of FirstChoice Investments for Colonial First State, Scott Tully, said “We are very pleased to receive a ‘Recommended’ rating from Zenith for the FirstChoice Multi-Index funds.  We introduced FirstChoice Multi-Index to the market to provide investors with access to good value, diversified portfolios using innovative investment strategies.”

“The combination of Colonial First State and Realindex Investments has generated great returns for our investors since FirstChoice Multi-Index was launched in 2009,” said Mr Tully.

The interactive relationship with investment consultant Mercer enables the FirstChoice Investments team to identify value-add opportunities and ensures the portfolios are comprised of the most compelling strategies to meet their investment objectives was noted by Zenith in their review.

The CFS FirstChoice Multi-Index funds currently have over $3 billion in funds under management.  The annualised, since inception performance (as at 30 September 2013)* of the headline FirstChoice Multi-Index funds recommended by Zenith are as follows:

• FirstChoice Wholesale Multi-Index Balanced:  11.58%pa
• FirstChoice Wholesale Multi-Index Conservative:  7.85%pa
• FirstChoice Wholesale Multi-Index Diversified:  14.44%pa

The Colonial First State FirstChoice Investments team manages portfolios that in total exceed $25 billion of funds under management on behalf of 600,000 investors.  The team has developed a range of innovative investment strategies over the last decade including the CFS FirstChoice Multi-Index funds.

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