Chris Gosselin, CEO of FundMonitors.com, speaks with Dean Fergie, Director & Portfolio Manager at Cyan Investment Management.

The Cyan C3G Fund  has a track record of 7 years and 6 months and has outperformed the ASX Small Ordinaries Total Return Index since inception in August 2014, providing investors with an annualised return of 13.69% compared with the index's return of 8.08% over the same period. The fund has achieved a down-capture ratio since inception of 57.19%, indicating that, on average, the fund has outperformed in the market's negative months.

Funds operated by this manager: Cyan C3G Fund

Aligning Interests: (no freeloading on my tab!)

Colins St Asset Management

February 2022

Fat salaries. Big bonuses. Plummeting share price. Sound familiar?

That an article discussing the benefits of aligned interests should even need to be written deeply concerns and somewhat surprises me.

Nevertheless, it's clear from our experiences that there are plenty of companies where the interests of the executives and the interests of the shareholders are in direct and lopsided conflict.

It boggles my mind that investors would put up with such situations, but it seems that many people out there are either unconcerned that the managers and directors looking after their money don't care about their goals or are simply too busy speculating to notice.

So, though it pains me to my value investing roots to prepare this article, here are our thoughts on where investor interests and attention should be (in our humble opinion).

"Show me the incentive, and I will show you the outcome." - Charlie Munger, Berkshire Hathaway

There are many factors we consider when looking to invest in a company. No doubt, the basic matters such as balance sheet strength, return on equity, and competent management rank highly, but even when all of those factors are in place, a conflict of interest between the incentives for the management team and the interests of shareholders can see an otherwise attractive investment opportunity devolve into an expensive 'learning experience'.

It should go without saying that a management team and investors should make all possible effort to ensure that their interests are aligned, but shockingly it is far less common than one would expect.

Where investors are concerned with positive long-term outcomes, strong balance sheets, return on assets, return on invested capital, and primarily an increasing share price, many managements incentive schemes (both short term and long term) stunningly disregard some (or all of those factors) in lieu of more 'inventive' measures of success.

We've seen management teams align their incentive schemes to revenue, or market cap growth, we've even seen some propose that the management team be rewarded for product growth.

In each of those circumstances, we've seen time and again, management teams sacrifice balance sheet strength (via leverage), long term share prices (with dilutionary capital raisings), and margins (in search of wider and less profitable products). None of that behaviour suits shareholders, but all too often, the powers that be, who create long and short-term incentives get lost in the excitement of a good story or an exciting 'opportunity' and forget that the only role a management team should be playing is that of enriching the company's shareholders.

Now it's important to note that even a perfect alignment of interests is not a guarantee of success. There have been plenty of companies with the best of intentions that have failed. However, we would suggest that over the long term, misaligned interests are a guarantee of failure.

HOW TO ALIGN INTERESTS:

There is no one-size-fits-all approach, but broadly speaking there are a few basic things a board should look to do.

1. A good place to start is to incentivise success.

• Stock options provide a good start but are imperfect in their implementation of alignment. That is, options will certainly encourage the team to strive for a higher share price (assuming the options are priced at a premium to the prevailing share price) but by themselves, options do not provide alignment to the downside (protect capital).

2. An improvement on our first point is to align management interests with shareholders by insisting that they become shareholders.

• Managers who own significant amounts of stock in a company are going to be motivated to both protect their capital and generate attractive returns over the long term. Colloquially referred to as "skin in the game", we most often see directors with significant stakes in a company when they used to be the founder. Having been a founder also (often) further aligns management interests with shareholders as the founder is not only financially committed to the business but also emotionally (though that can come with risks as well).

3. Once we've seen management align their interests to both the upside and the downside of the company, we also like to see the directors consistently increase their stake in the business.

• Consistent and considerable increases in management's stake in the business indicate both an ongoing commitment and confidence in the operations of the business.
• Manager selling is also an indicator - but not in the same way that buying is. There is no reason other than confidence in the business to buy, but there can be many reasons why a manager might need to sell, many of which are unrelated to business operations. Still, selling is something we pay attention to, and when it appears out of character, we seek to understand the reasoning.

If we can find a competent team that is prepared to support the company and align their interests with shareholders, it is one of the best indicators we can find for positive outcomes. A great example of this in practice is National Tyre and Wheel (NTD.ASX).

National Tyre and Wheel is a Queensland based business that, through its 28 different distribution centres spread over 3 countries, distributes tyres across a range of industries and sectors as diverse as emergency services, agriculture, off-road adventure driving and industrial vehicles (such as forklifts). The Board and Senior Management have been working together for over 30 years, well before the company was listed on the ASX.

Key things that I like about the structure and alignment of interests within National Tyre and Wheel include:

• Good governance is promoted when the Independent, Non-Executive Chair of the company is also a member of the Board's Audit and Risk Committee as well as the Remuneration Committee.
• The Independent, Non-Executive Chair is also the owner of over 200,000 shares in the company (~$1.40 p/s at the time of this article).
• Both Executive Directors (that is, Directors with management responsibilities as well) have material ownership in the company - the CEO and MD has 2.7M shares and 350,000 options and the second Executive Director has over 27M shares.
• The Chair of the Audit and Risk Committee and also the Remunerations Committee are both Independent, Non-Executive Directors (both of who have between 280,000 and 403,000 shares in the company). It is noteworthy that both Independent, Non-Executive Directors own shares in the company because they choose to do so - they were not allotted any shares under either a short term or long term incentive plan.
• Senior Management remuneration is tiered in a sensible way over time. For example, in 2021 approximately 66% of Senior Management's remuneration was by way of cash and salary, 30% was via cash payment under a short term incentive plan and 3% was via a share-based program under a long term incentive plan.
• The metrics used to determine both short and long term incentive payments are based on an increase in earnings per share, derived from audited financial statements and anchored against net profit calculations (after tax and excluding amortisation).

Some other questions investors should be asking:

There are no perfect solutions, but there are some simple steps we can take, and some indications we can look out for.

• Do the short term and long term incentives align with the corporate goals?

If the company is consolidating, incentives should reflect that. If the company is growing, then the incentives would be reflective of that.

• Do the incentives attract and retain good employees and prevent bad leavers from taking advantage?

It's worth offering highly attractive incentives to entice and retain quality staff. At the same time, it's important that those benefits are earned.

• Are the employees and Board being remunerated with shares?

If the company's employees and Board are confident in the outlook of the business, receiving part of their salary in equity is enticing.

• Is corporate culture a consideration when remunerating the team?

A toxic culture may achieve seemingly good outcomes in the short term but could have catastrophic consequences in the long term.

Again, there is no guaranteed method for ensuring success, but knowing that the management team are working towards the same goals that we investors seek, and that a loss to investors will be equally felt by the management team is as good an indicator of the quality and prospects of a business as any we've been able to identify.

How we align our interests.

At Collins St Value Fund we take these lessons to heart. We expect the directors of the companies we invest in to align their interests with ours, and we expect nothing less from the investors who have entrusted us to look after their capital.

As such the team have meaningfully invested in the fund and have done so on the same terms as all our investors. Additionally, the fund only receives a fee when our investors profit (focussing our attention on both genuinely protecting the downside and maximising the upside) - there are no fixed management fees skimmed off the top of investors capital as we believe, that in the Australian equities context, they incentivise little more than asset gathering, rent-seeking, index hugging and, ultimately, mediocrity.

Author: Michael Goldberg, Managing Director and Portfolio Manager

Webinar | Premium China Funds Management - Asian Fixed Income

The travails of certain Chinese property developers continue to impact Asian corporate bonds. Jonathan Wu has an update on how we are traversing this landscape.

Speaker: Jonathan Wu, Premium's Head of Distribution and Operations & Chief Investment Specialist

Damen Purcell, COO of Australian Fund Monitors, speaks with John Swallow, Director at Laureola Advisors.

The Laureola Australian Feeder Fund has a track record of 8 years and 10 months and has consistently outperformed the Bloomberg AusBond Composite 0+ Yr Index since inception in May 2013, providing investors with a return of 14.96%, compared with the index's return of 3.55% over the same time period.The fund has provided positive monthly returns 97% of the time in rising markets, and 97% of the time when the market was negative, contributing to an up capture ratio since inception of 160% and a down capture ratio of -249%.

Funds operated by this manager: Laureola Australian Feeder Fund

Norsk Hydro: In discussion with Pål Kildemo

Antipodes Partners Limited

 February 2022

Funds operated by this manager:

Antipodes Asia Fund, Antipodes Global Fund, Antipodes Global Fund - Long Only (Class I)

Is the (Liquidity) Party Over?

Longwave Capital Partners

February 2022

Funds operated by this manager:

Longwave Australian Small Companies Fund

Why it's time to capitalise on the carnage in tech stocks

Montgomery Investment Management

 February 2022

Funds operated by this manager:

Montgomery (Private) Fund, Montgomery Small Companies Fund, The Montgomery Fund

When it's good to be bad

Ophir Asset Management

February 2022

Inflation 'Persistently transitory'?

You'd have to be buried under a rock of late, or thoroughly disinterested in the news of the day, to not know that inflation is back. And back in a big way! Many young people today in developed economies haven't known what an inflation problem is. They've only known low interest rates that have been great for leveraging into investment properties. But COVID-19 has changed all that. Below we show various different inflation measures in the US, the world's still-largest economy. CPI, or Consumer Price Inflation, is the one heard most by investors and it is currently at 7%, well above the US Federal Reserve's 2% target.

US inflation (yoy)

Source: Ophir, Factset

Why is this?

Well, looking at the components that make up CPI, it is clear it's high mainly because (government boosted) demand for goods by locked up households during COVID-19 has greatly outstripped supply, pushing up their prices. CPI is likely to wane in the second half of 2022 as households spend their government cheques and supply catches up. But with low unemployment levels and wage pressure starting to build, it's no longer appropriate for the Fed to be engaging in quantitative easing (QE) and keeping interest rates at 0%.

For much of 2021, the Fed had been telling the market that inflation was likely to be quite transitory, but late last year fessed up that it was behind the eight ball and that inflation was likely to be more persistent. This has seen it stage a 180-degree turn that Fred Astaire would be proud of, changing its tune to a rapid exit from QE and bringing forward rate hikes from expected rises starting in 2024 to March 2022.

A bomb is detonated under small-cap growth

This about-face has seen a rapid lift in both short-term and long-term interest rates. You can see an example of this below with 2-year US government bond yields (red line) rising rapidly from November last year onwards as markets priced in Fed rate hikes.

A veritable bomb was then set off under parts of the share market most vulnerable to higher interest rates, particularly long-term interest rates. Those parts most impacted are those where more of their cash flows are earned farther out into the future, such as more growth-orientated businesses. This occurs because when you value a business, higher long-term interest rates disproportionately reduce the present value of profits earned further out into the future.

Small cap growth underperforms recently as markets price in higher interest rates

Source: Ophir, Factset

Two of the most growth-orientated parts of the share market in the US, non-profitable technology business and recent IPOs have been savaged over the last three months - falling over 50%+ at the time of writing. At the other end of the spectrum, large caps via the S&P500 held up better, down only around -5% in January and only circa -7% since its 2021 highs.

Looking at US small caps, as proxied by the Russell 2000 Index, they are down around -19% at writing from their 2021 highs. Whilst the Russell 2000 Growth Index, which looks at the faster-growing part of the small-cap market that we invest into, is down around -26%, well and truly into bear market territory.

Interestingly the Russell 2000 Growth Index in January underperformed its Russell 2000 Value Index counterpart (of more mature, slower growing but cheaper businesses) by the second most in a month since the early 2000's tech wreck over 20 years ago. Perhaps even more eye-popping is the fact that over the last year that same growth index easily underperformed value by almost -30% - the most again in over 20 years!

This is shown quite clearly in the gold line in the chart below. Normally this growth versus value under- or out-performance is mirrored in the large-cap part of the market (S&P500). But this period has been an extreme outlier. Quite simply this is because the growth-orientated stocks in the large-cap part of the market, such as the FAANG's, have seen their share prices hold up better to the end of January.

Growth v value (yoy)

Source: Ophir, Factset

This has also been reflected in the sector returns in US and also Australian small caps. The value-orientated sectors such as utilities, real estate, energy and materials (and also financials in the case of the US) have held up much better over the last three months. The sectors where you tend to find more growth-orientated businesses, such as IT, healthcare and consumer discretionary, have severely underperformed.

Long-time investors will know that we tend to have larger allocations to businesses in our funds in those more growth-orientated sectors; and are underweight, or often have no allocation to the more value orientated sectors, particularly utilities and real estate.

Why is this you may ask?

Utilities and real estate companies tend to have inflation-linked cash flows that are relatively steady and contracted in nature, which makes the job harder for us to get an edge on the market pricing those cash flows. Moreover, they tend to have higher levels of debt, as do many 'value' type businesses which are more mature and whose more stable earnings make it easier to lend against. We generally avoid the most indebted companies because they can often get into trouble during an economic downturn. We prefer those with little debt or net cash on their balance sheet which provides optionality for future growth.

When it's good to be bad (and why we will not compromise our strategy)

One unique characteristic of the market sell-off in January has been that companies with higher levels of debt and weaker balance sheets have actually tended to outperform. And not by a little!

As the below chart shows, companies with strong balance sheets have underperformed those with weak balance sheets in the US to a degree not seen since March/April 2009. Back then it was because the US was emerging from the GFC and if you were a highly geared business with lots of debt (if you were still around) you were now more comfortable you were going to survive - so their prices rallied. Today it's because the value sectors tend to have the most debt and investors are also more comfortable highly indebted businesses who were at risk are going to survive COVID-19.

GS Strong V Weak Balance Sheet (mom)

Source: Ophir, Factset

The important point here is that to outperform over the last few months at Ophir we would have likely had to throw out our time-tested process for finding growth-orientated businesses and pile into slower-growing and value-orientated companies with weaker balance sheets.

That is something we are not willing to do, and never will. Changing your spots as an investor to chase the flavour of the day has been the death knell for many funds management businesses and is a cardinal mistake.

There is no doubt in hindsight that making such a radical change would have provided some short-term downside protection to our performance. However, in order to do so, aside from the impenetrable rule above of not changing our spots, we would have had to be able to correctly anticipate the change in the macroeconomic environment and the pivot from the Fed. That is one game we do not have an edge in.

We are just as likely to be right there as we are to be wrong, with hundreds of thousands of professional investors parsing the daily macroeconomic tea leaves. We'd rather keep our performance reliant on the very detailed bottom-up work we do to understand the growth of small caps and how the market is pricing it - and where there is a comparative dearth of people looking.

So, where to from here ...

The $64 billion dollar question. One thing is certain: ultimately the market will be willing to pay up for companies that can display earnings growth.

What we have seen that gives us some comfort that perhaps most of the de-rating of small growth-orientated companies may have occurred already, particularly in the US, is current valuations.

In the chart below we show both the US 10-year government bond yield (the so-called global risk-free rate that is key to valuing businesses) and also the price-to-earnings ratios for the US Small Cap (Russell 2000) and US Small Cap Growth (Russell 2000 Growth) parts of the market.

Valuation compression: rising interest rates

Source: Ophir, Factset

What we can see is that the US bond yield is now back at the same levels (1.8-2%) as early 2020 just prior to COVID-19. But valuations (P/Es) for the Russell 2000 and Russell 2000 Growth parts of the share market are back down to levels seen in 2018 when the key US 10-year interest rate was much higher (3-3.5%). What this says to us is that falls in these parts of the share market are already factoring in much higher interest rates - and at the high end of what most strategists are forecasting over the next few years.

Another measure that highlights the value that is emerging in US small caps is looking beyond the headline indices to how much the average stock has actually fallen. The below chart shows how much various headlines indices have fallen from their highs over the last year and compares it to how much the average constituent of that index has fallen.

The average Russell 2000 and Russell 2000 Growth Index constituent is down a truly mammoth -38% and -45% respectively - far in excess of the headline index.

How?

Well, its partly because indices are market-cap weighted, so the biggest companies have a disproportionate influence on the index outcome and have fallen less. But for benchmark unaware active managers such as us, it is actually the average stock fall that is more indicative of the market we invest into.

The bear is on the loose

Source: Ophir, Factset

Finally in terms of value, by way of example, below we show our preferred valuation metric for our Global Opportunities Fund: Enterprise Value of a company (Equity + Debt value) divided by its cash-flow-generative ability, as proxied by Earning Before Interest, Tax, Depreciation and Amortisation (EBITDA).

As you can see, the price paid for EBITDA across the companies in the Global Opportunities Fund (demonstrated by their median) has decreased significantly over the last few months. All the while the fund's sustainable earnings growth capacity has remained consistent in the 20-30% range.

GOF EV/EBITDA (12m forward)

Source: Ophir, Factset

The bottom line here is that, in all its history, we have not seen the earnings growth in this fund as cheap to buy as today. Could it get cheaper? Yes absolutely. But on a medium-term to long term basis we see great value on offer so remain being close to fully invested (only 1-2% cash) in this fund.

And finally, we've heard this record before

No one likes to go through periods of negative performance or underperformance compared to the market - least of all us! We have and will continue to have all our investable wealth in the Ophir Funds.

But we also know that this time is not unique. We have had pullbacks in performance before. Below we show the almost 10-year performance history of our Ophir Opportunities Fund - our original Australian small-cap fund that has generated an asset-class-leading 23.9%pa (net).

There have been five periods of material pullbacks now, one about every two years, so they've hardly been infrequent.

Late 2016 probably is the closest analogy to now. You may remember this was the time when Trump was elected with a reflationary agenda and we saw synchronised global growth and higher interest rates.

The commonality of these five periods shown below is they saw circa 10-25% falls in performance and 6-12 months to recover to their previous peaks.

For those that have seen enough cycles as we have, these periods have generally been opportune times to add to investments at reduced prices.

A cautionary tale is in the anecdote above from famed investor Peter Lynch's Magellan Fund. Magellan was the best returning share fund from 1977 to 1990. But the average investor in the fund actually lost money! How? They tended to put money into the fund after short-term outperformance and took money out when it had performed poorly - the total opposite of the proven strategy of buying low and selling high.

In fact, you could say that transitory negative performance and underperformance to peers in the short term is a feature, not a bug, of generating superior long-term performance. 
In this instance investors may be better served with Warren Buffett's advice, "buy stocks like you buy socks, when they are on sale".
Is this as cheap as this sale will get? We don't know......and neither does anyone else.
 

Written By Andrew Mitchell & Steven Ng, Co-Founders & Senior Portfolio Managers

Funds operated by this manager:

Ophir High Conviction Fund (ASX: OPH)

This document is issued by Ophir Asset Management Pty Ltd (ABN 88 156 146 717, AFSL 420 082) (Ophir) in relation to the Ophir Opportunities Fund, the Ophir High Conviction Fund and the Ophir Global Opportunities Fund (the Funds). Ophir is the trustee and investment manager for the Ophir Opportunities Fund. The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL 235150 (Perpetual) is the responsible entity of, and Ophir is the investment manager for, the Ophir Global Opportunities Fund and the Ophir High Conviction Fund. Ophir is authorised to provide financial services to wholesale clients only (as defined under s761G or s761GA of the Corporations Act 2001 (Cth)). This information is intended only for wholesale clients and must not be forwarded or otherwise made available to anyone who is not a wholesale client. Only investors who are wholesale clients may invest in the Ophir Opportunities Fund. The information provided in this document is general information only and does not constitute investment or other advice. The information is not intended to provide financial product advice to any person. No aspect of this information takes into account the objectives, financial situation or needs of any person. Before making an investment decision, you should read the offer document and (if appropriate) seek professional advice to determine whether the investment is suitable for you. The content of this document does not constitute an offer or solicitation to subscribe for units in the Funds. Ophir makes no representations or warranties, express or implied, as to the accuracy or completeness of the information it provides, or that it should be relied upon and to the maximum extent permitted by law, neither Ophir nor its directors, employees or agents accept any liability for any inaccurate, incomplete or omitted information of any kind or any losses caused by using this information. This information is current as at the date specified and is subject to change. An investment may achieve a lower than expected return and investors risk losing some or all of their principal investment.  Ophir does not guarantee repayment of capital or any particular rate of return from the Funds. Past performance is no indication of future performance. Any investment decision in connection with the Funds should only be made based on the information contained in the relevant Information Memorandum or Product Disclosure Statement.

Why R&D masks earnings & value in today's mega-techs

Montaka Global Investments

February 2022

In the eyes of many investors, today's mega-techs - Amazon, Microsoft and Alphabet, for example - are way overvalued. A cursory glance at the valuations of the North American majors suggests they are more expensive, say, than most of the big non-financial ASX-listed companies. You need to pay a higher multiple of next year's operating profit for these tech giants.

Valuation multiples of US mega-techs

Source: Bloomberg

But investors are missing something vital: the massive sums the mega techs are spending each year on research and development (R&D) is masking their true earnings power and valuation.

Rather than expensive growth stocks, mega-techs are cheap value stocks.

Today's mega-techs might appear expensive because they expense R&D. But R&D is really an investment that yields high-probability future returns. That means the mega tech's reported earnings today - and therefore their apparent valuations - are understated.

Not all expenses are created equal

When a business reports its operating profits, it wants to give investors a picture of the revenues generated, less the costs incurred to generate those specific revenues. For most expenses, such as 'cost of goods sold' (that is, the direct costs incurred to create a product or service which has been sold) there is a clear link between the cost and revenue.

But for R&D, the link between cost and revenue is less clear.

Under US accounting rules, if a company spends money on R&D the costs are immediately and fully 'expensed' today (that is, today's profits are reduced by that full amount) because it is uncertain whether the company will derive any future economic benefits from said R&D.

This convention is very conservative and the implicit meaning of R&D expense in the US is that a company will not realise any future economic benefits. But for many businesses - particularly those with powerful market positions, scale, and data advantages - R&D does often lead to huge future economic benefits in the form of massive cash flows, profits and more entrenched market positions.

So, for businesses like the mega techs, R&D is an 'investment', not an expense. And by implication, their earnings power is understated.

Successful R&D drives and hides value

Not all R&D will drive long-term value. Lots of R&D is speculative - it has a low probability of success, but, if successful, will generate high returns. That's the case in fields such as drug discovery or prospecting for natural resources. Most dollars spent on these endeavours will not yield future economic benefits and, therefore, it is right that companies should expense those dollars when they are incurred.

But when Microsoft spends dollars to create its communications platform Teams, or when Alphabet spends to create its specialised machine learning tensor processing unit (TPU) chip, or when Amazon creates Alexa - the probability of future economic benefits is extremely high. That's because these businesses already own large, privileged, connected ecosystems of customers and developers.

What is unusual about today's mega-tech leaders is that they are choosing to spend to innovate, rather than drastically boost their short-term earnings by holding down R&D spend.

This year, Amazon and Meta Platforms will spend around US$40 billion on R&D. Alphabet will spend around US$30 billion and Microsoft more than US$20 billion. As a percentage of gross profits, this spending ranges from 17% up to an extraordinary 32% for Meta.

US Mega-techs - R&D intensity

Source: Bloomberg; Montaka estimates

We believe there is a high probability this enormous spending will lead to future economic benefits for these businesses. The expensing of the billions in R&D spending this year is therefore way too conservative and the mega tech's earnings power is materially higher than it looks. And if this is so, then today's valuation multiples are too high.

These businesses are much cheaper than many investors think!

A bigger investment opportunity than many appreciate

Here is a thought experiment. Imagine if the R&D spent by these American mega-techs earned an average effective return of, say, 8-10% per annum - which hardly sounds unreasonable and is certainly the absolute minimum hurdle needed by management teams to approve internal budgets.

If this were true, then we estimate Amazon's 'true' valuation multiple would more than halve to just over 20x operating profit. Alphabet's would be 15x and Meta's would be just 10x. If the return on R&D was higher still, then these valuation multiples would reduce even further.

Valuation multiples of US mega-techs

Source: Bloomberg; Montaka estimates

Investors today have an unusual opportunity. Many investors are wrongly thinking that some of the world's most well-positioned and advantaged technology businesses are 'expensive'.

But, to a large extent, that is being driven by the big R&D spending, which is depressing their perceived earnings power today in favour of higher earnings power in the future.

The message for investors is clear: cursory valuation analysis can often lead to false conclusions.

Yes, at first glance, most of America's large mega-techs 'screen' as expensive.

But when you consider the true value of the very significant R&D expenses that are depressing reported earnings, it's not hard to imagine this R&D leading to substantial future benefits in artificial intelligence, the internet of things and the 'metaverse', for example.

The true earnings power of these businesses is hidden today. And, therefore, these businesses are much cheaper - and much greater investment opportunities - than many appreciate today.

Written By Andrew Macken

Funds operated by this manager:

Montaka Global Fund, Montaka Global Long Only Fund

Welcome to the Metaverse

Insync Fund Managers

February 2022

Funds operated by this manager:

Insync Global Capital Aware Fund, Insync Global Quality Equity Fund

Disclaimer

Equity Trustees Limited ("EQT") (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Insync Global Quality Fund and the Insync Global Capital Aware Fund. EQT is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This information has been prepared by Insync Funds Management Pty Ltd (ABN 29 125 092 677, AFSL 322891) ("Insync"), to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Insync, EQT nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.