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30 Sep 2021 - New Funds on Fundmonitors.com
New Funds on Fundmonitors.com |
Below are some of the funds we've recently added to our database. Follow the links to view each fund's profile, where you'll have access to their offer documents, monthly reports, historical returns, performance analytics, rankings, research, platform availability, and news & insights. |
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30 Sep 2021 - Crackdowns in China: Part 1
Crackdowns in China: Part 1 Arminius Capital September 2021 No Arminius Capital fund has any direct exposure to Chinese equities. This is a deliberate policy: we can read the Chinese-language financial accounts of Chinese companies, so we know that these contain some of the most imaginative fiction outside the bestseller lists. But we want our investors to understand what is currently happening in the world's second-largest economy, so this is the first in a series of articles on the recent events in China. China's crackdown on its homegrown tech giants has triggered waves of confusion in the West. Some political commentators have criticized the Chinese government for undermining individual liberty, rewriting the social contract, and asserting the supremacy of Communist ideology in business and private life. Some financial commentators have claimed that Xi Jinping is destroying private enterprise and making China "uninvestable". Have these people forgotten that China is run by the Communist Party? Ever since it kicked out Chiang Kai-shek's Nationalists in 1949, the Party has always asserted total control over everything in China. (Not to mention a lot of things outside China.) In October 2017 the 19th Party Congress repeated the words which Mao Zedong spoke in 1962: "In politics and in the military, in society and in education, in the north or the south or the east or the west, the Party is the leader of everything." The Party has 92 million members and they occupy all the positions of power in government. Businessmen often join the Party when young, and prudent businessmen always make sure that they have friends and patrons in the Party's hierarchy, not just by means of bribery, but also by longer-term methods such as shared ownership or employing the relatives of the elite. The Party does not care about Western values or the approval of Westerners. It has always had its own well-developed system of patriotic Marxist values. Its theories of dialectical materialism and scientific socialism tell it that history is on its side. This is why history is important to the Party, because history proves why the Party's actions are always right, and history shows that the Party is leading the Chinese nation on the true path to the future. The Party does learn from history: the collapse of the USSR in 1990 prompted the Party to carefully analyse what had gone wrong there and to make sure the same thing didn't happen in China. If you understand the Party's history, you can understand what the Party is doing. What is happening in 2021 is a "rectification campaign" (zhengfeng yundong), which is what the Party does whenever the leadership decides that "bad elements" of the Party or of Chinese society are misbehaving and need to be corrected. Xi Jinping led off his rule in 2012 by announcing "the great renewal of the Chinese nation", and his first rectification campaign was a nationwide anti-corruption crackdown, which proved very popular with ordinary people because it hunted down corrupt officials and punished them severely. The current campaign will not lead to a re-run of the Cultural Revolution. China is now too large and too complex for the leadership to organize another Cultural Revolution. The original 1966-1976 version was Mao's last throw of the dice to regain power, after the rest of the leadership had sidelined him in the wake of his catastrophic policy failures such as the Great Leap Forward. Indeed, China's economic czar Liu He has been at pains to emphasize that the Chinese government has not changed its support for the private economy and will not do so in future. Liu He pointed out that the private economy contributes more than 50% of tax revenue more than 60% of GDP, more than 70% of technological innovation, and more than 80% of urban employment. He stressed that China would continue to develop along the lines of a mixed economy - what Chinese planners call a "socialist market economy". Why is all this happening now? Because 2021 is the first year of the new Five Year Plan, which sets the top priorities for the Chinese economy. (We will explain these priorities later in the series.) Xi Jinping has revived the old Communist mantra of "common prosperity" (gongtong fuyu) and turned it into a set of principles to guide economic and social policy. A central theme of "common prosperity" is consumer protection. This is the motivation behind the assault on the homegrown tech giants such as Alibaba and Tencent, who have abused and exploited consumers by misusing the personal data which consumers have given to their platforms. (Much more about this later!) Another key theme is the reduction of inequality. The leadership is well aware that, over the last two decades, China has seen the emergence of huge disparities in income and wealth. In June 2020 Premier Li Keqiang noted that, out of China's 1400 million people, 600 million people - 42% of the population - earned less than $200 (1,000 renminbi) per month. Three quarters of these 600 million live in rural areas, and about one third of them live in China's less developed central and western provinces. (Source: Caixin 06 June 2020.) The announcement that the government will "regulate excessively high incomes" is not about robbing the rich to give to the poor. It is about reducing tax evasion. China's new rich have learned how to conceal income, how to re-arrange income across family members, and how to move assets to other jurisdictions. In the past, the central government did not have the skills or resources to pursue most of the miscreants, but - thanks to the experience and information gathered in the anti-corruption campaign - the tax collectors are much better equipped. The recent public shaming of some celebrities for tax evasion signals that this is now a top priority for the central government.
To be continued ... Funds operated by this manager: |

29 Sep 2021 - Reduce your risk and pick outstanding companies
Reduce your risk and pick outstanding companies Emma Fisher, Airlie Funds Management September 2021 Despite the record reporting season past and the major wall of cash returned to investors this year, we at Airlie can't help but feel things in markets are a little gloomy. We believe that this is due to two sources of dismay.
In cutting through this doom and gloom we think it is important to talk about uncertainty and risk. It may seem obvious, but it is worth pointing out that uncertainty and risk are different concepts. We think the market is pretty bad at distinguishing between the two and punishes both evenly. Uncertainty is not knowing what is going to happen in the future. Put this way, you realise uncertainty is a fact of investing and ultimately a fact of life. In our view, uncertainty in markets creates opportunity. We're always looking for the uncertainty that may create a mispriced asset. What we don't like is risk. Risk is the chance of a permanent loss of capital and in our view, often comes down to two reasons:
At Airlie, we use a four-stage investment process tailored specifically to take advantage of uncertainty while minimising risk. #1 Focus on financial strengthStrong balance sheets The first place we always start is with a focus on the balance sheet. Making sure that the financial position of our companies is rock-solid is the first way that we limit the permanent loss of capital. These businesses can weather the storm of whatever markets throw at them and help portfolios perform through all cycles. When we consider the share market as a whole, it's important to note that balance sheet risk is much lower than it has been historically. Over the last few decades, net debt to EBITDA has had a median of 2.5 times. Right now it's much lower at about 1.9 times. This is a good sign. While we believe valuation risk is highly elevated right now, the lowered level of balance sheet risk is in essence telling us to proceed with caution at the moment. Heading into the GFC, both measures of risk were highly elevated. If you were to consider it as two signals - we had both lights showing red. Right now we see one showing orange and one showing green.
Self-funding businesses The other element of financial strength we like to consider is whether the business is self-funding its operations. This is simply because it has been proven that over the long term that these businesses outperform. They are able to fund their own growth profile through earnings and do not dilute shareholder capital. Alternatively, the businesses that are constantly tapping the market for equity to sell investors the dream and fund the business growth underperform, as seen below. #2 Don't overpayWhen investors reflect on the 2001 tech bubble, it is important to remember that it wasn't only tech stocks caught up in the hype. If you bought Disney, Coca-Cola or Walmart at their peak during that period, you would have had to wait 11 to 16 years to get your money back. Investing during peak periods is a real risk to a permanent loss of capital. Now we don't believe that we are at similar levels in the Australian market but we do see pockets of extremely optimistic valuations. As the risk-free rate falls, the multiples you have to pay for future cash flows increases. Right now markets have never been more expensive since yields have never been this low. In our view, if you're investing in the most expensive parts of the market, you're taking a bet against bond yields. And that's not a risk we are comfortable taking. #3 Buy quality businessesAt Airlie, we see quality businesses as those with a high return on capital. This is because, for every dollar that is earned by a business, a greater portion will be returned to shareholders and not lost in capital expenditures. The issue that unfortunately presents itself here, is that high-quality businesses can often be the most expensive. Therein lies the greatest challenge of this current market and what we look for in our investments - which are the quality businesses available at good prices. We believe there are three main reasons why a high-quality business may not trading at high valuations.
The best example of a past "jewel in the crown" business is Wesfarmers (ASX: WES). It was not until the demerger of Coles that Bunnings was able to shine as one of the best businesses in Australia. Bunnings generates a return on capital of more than 70%, so when Bunnings went from a third of WES' earnings to 70%, Wesfarmers re-rated. We believe a similar unlocking of value is happening with Tabcorp (ASX: TAH). We believe Tabcorp's lottery business deserves a very high valuation. This business has proven to be a resilient growth story over time. Their growth is underpinned by state monopoly licenses that run for decades in most states and an ever-increasing spend on lottery tickets online, meaning they no longer have to pay a commission to the newsagent. The issue is that the wagering division of the business proves to be somewhat of a problem child. The wagering arm doesn't offer the same attractive low cost of capital, and many investors who would be interested in the lotteries business do not want exposure to the gaming division. So the answer the company is pursuing here is a de-merger. We think in about a year's time Tabcorp will be worthy of a significant re-rate. #4 Find good managementThe final factor of focus in reducing risk is finding businesses with good management teams and founder-led businesses. We like these companies because it often means that management tends to focus on the long term, their interests are aligned with shareholders, and they are passionate about the business. An example of one of these businesses we are really excited about is PWR Holdings (ASX: PWH). PWR is also an example of a company we think is currently flying under investor's radar. Most of the company's revenue comes from selling cooling systems to motorsports companies. The founder and CEO, Kees Weel, started his business as a mechanic in the 70s. After a while, he decided he would give making radiators a try. Now, 40 years later, he's making the best radiators in the world and is the radiator supplier of every Formula One team. But it's not only the motorsports arm that excites us. In our view, the most exciting reason to own PWR is the growth happening in the emerging technologies division. They are currently working on the development of cooling systems for electric vehicles. This is likely to be a huge secular growth area for the company over the next few decades. Additionally, the team is working with a number of exciting companies to develop cooling systems in aerospace and defence applications. The passion their CEO Kees Weel has for the business and his staff is why we love founder-led businesses. Earlier this year we had a chance to visit the PWR headquarters in the Gold Coast and at the first stop of our site tour, Kees presented us all with a copy of the company's yearly cookbook. Kees showed us the on-site cafeteria that had been built so that the welders and engineers could have healthy, freshly cooked meals for free. That sort of passion for the culture and experience of the team is really infectious and something we love to see in the companies we invest in. Summing it all upIn conclusion, we want to highlight the importance of the difference between uncertainty and risk. While we love uncertainty, like the doom and gloom we see in markets, we hate risk. In our view, these four factors are the key to reducing risk and creating long term wealth. Invest where fair value exceeds market price We identify Australian companies based on their financial strength, attractive durable business characteristics and the quality of their management teams. The above article is a summary of the recent webinar hosted by Matt Williams and I. |
Funds operated by this manager: Airlie Australian Share Fund |

28 Sep 2021 - Global small caps: From unrecognised growth to future global titans
Global small caps: From unrecognised growth to future global titans Tobias Bucks and Simon Wood, Ausbil Investment Management September 2021 |
Small companies offer the potential for growth that can exceed their larger peers over the long term, an assertion supported by the data. Small Companies offer investors early stage entry into names destined to become future global titans. Tobias Bucks and Simon Wood from Ausbil's global small-cap team answer some key questions on how to access such unrecognised opportunities. Q: Can you give us the elevator pitch for what you do? TB: We find global companies that are early in their stages of development, are not actively covered yet by the market, and have latent, unrecognised growth prospects with the potential for major rerates and sustainable unrecognised earnings growth. Finding uncovered 'gems', the names that offer what we call 'unrecognised growth' is where an active global investment manager like Ausbil can help investors take advantage of smallcap idiosyncrasies, while helping to reduce the typical level of risk that come with early-stage small-cap investing. We like global small caps because over the long-term, smaller companies consistently show outperformance against their larger peers, as evidenced in Chart 1 Chart 1: Small is beautiful: The compelling performance of smaller companies From Chart 1, since the inception of the MSCI indices in 2000, small companies have compounded well in advance of mid and large-cap peers. Over this twenty-plus years, small caps have risen by a factor of almost 6-times, mid caps buy almost 4-times, and large caps by the best part of 2.5-times. The outperformance of small companies has been shown consistently in the empirical long-term evidence provided by esteemed researchers such as Siegel (2015). Banz (1981) and Fama and French (1992), and in the market data. Q: Can you explain the term, 'unrecognised growth'? SW: Unrecognised growth is where a company exhibits the signs and potential for future earnings growth that is conceptually ahead of peers or the market in general, but for which there is no consensus as the company is not yet covered by a bevvy of institutional analysts. The company is 'unrecognised' because, due to size, it is yet to become large enough to warrant broad institutional coverage. Chart 2 illustrates how analyst coverage changes as companies become bigger. Global small caps operate in a 'sweet spot' of opportunity that has yet to be noticed or acknowledged by the institutional equity research machine. Chart 2: What 'unrecognised' looks like Ausbil's global small-cap team seeks the opportunities in the 231 developed markets in which we invest before any reliable institutional consensus has been established. In the case of some companies, there might be a consensus based on the views of a handful of analysts, as illustrated in Chart 1, but there is typically a significant divergence in views on valuation, opportunity and risk. The essential idea is that we focus on companies where growth will surprise, in companies that are attractively valued, and which we believe demonstrate relatively less risk in proportion to the opportunity. Combined with a lack of analyst coverage, forward surprise potential at attractive valuations reveals companies with unrecognised growth, which ultimately drives share prices. Q: Why do these companies go 'unrecognised' for a period of time? TB: Fast growing smaller companies are proving their business models, their sales and earnings can be volatile, and their businesses can be undiversified in terms of steady-state earnings. Institutions, like insurance companies which are not specialist small-cap investors, typically look for larger-cap equities with steady historical earnings, and more mature business models. However, large super and pension funds often carry significant allocations to small cap equities for the superior long-term returns they can offer in equity portfolios. Small companies, when the fundamentals are sound, the management is strong, and the business model is relatively unassailable, can offer upside potential for investors who are comfortable with riding-out shorter term bursts of volatility. From the sell-side perspective, small companies are often supported by specialist financiers, angel investors, cornerstone investors, large insider holdings and small broking houses in their early years, before they graduate into the bigger leagues and into larger capital raisings with larger investment banks. This creates significantly more opportunity for astute smallcap investors to participate in funding rounds for businesses that are on a trajectory for major growth, ownership transition events and other ongoing capital raisings and block trades that offer the potential to steadily build positions in companies with the potential to become the next global titans. Q: In your experience, what are the features of a good unrecognised opportunity? SW: Our fundamental and quantitative research seeks to unearth the unrecognised winners that have a high probability of earnings upgrades. Chart 3 illustrates how, to date, we have been able to consistently track ahead of the market on capturing earnings upgrades. Chart 3: Beating the consensus on identifying quality and upgrades There is no exact template for finding companies with significant unrecognised growth that are also in the process of exceeding market expectations on earnings growth, however there are some key elements that appear in the excellent examples we have found in the past. A great, unrecognised growth company often starts as a niche leader, that has global ambitions and products that are capable of contesting position in the global market place. Unrecognised growth companies often invest capital into their own expansion, as opposed to paying higher dividends, as they are able to earn a greater return on capital for investors through reinvestment. Quality unrecognised growth companies seek expansion, but not at the expense of strong ESG characteristics, which ensure critical elements are in place for successful expansion: strong corporate governance; and low environmental and social risks. An attractive company that exhibits unrecognised growth offers the potential for earnings surprise in future years, which ultimately draws the attention of the institutional market and eventually catalyses significant re-ratings. It may be an oft-repeated cliché, but what holds all together, from the development of great strategy to the execution of a successful local and global business strategy, is the quality of leadership. Great unrecognised growth companies invariably boast great management. People matter in successful companies, and as active investors, we are well positioned to meet with, review, question and assess management as part of our due-diligence process. Q: What about risk? Aren't small caps riskier investments than larger companies? SW: In theory, small caps should be riskier than larger companies when compared on crude measures of diversified income and size, however, when adjusted for risk, small caps can be surprisingly rewarding. As illustrated in Charts 1 and 4, using the Sharpe Ratio measure of risk adjusted returns, global small caps typically demonstrate a superior risk-adjusted returns (higher Sharpe ratios), than both mid and large-cap stocks. Moreover, an active investment approach can increase this Sharpe ratio through concentration in high-quality unrecognised growth companies, and the active avoidance of low quality small caps that do not match the criteria we apply. Chart 4: The risk-return profile of small caps in perspective
In taking a wider range of risks into consideration with the application of additional ESG risk filters, it is possible to further improve the risk-return outcome for small caps. ESG considerations can help reduce many tangible and intangible, un-quantifiable risks that help select winners and deselect losers in the risk-return equation. 5 Contactus@ ausbil.com.au Finally, liquidity management is key to success in global small-cap investing. Unlike mid and large-cap stocks that typically have deep order books in the marketplace, global small caps can display shallower order books, to the point of illiquidity. A company needs market trade flow in order for the execution of a clean investment thesis through the clean entry and exit of positions. In an illiquid stock, news can hamper the ability of investors to trade or exit. Ausbil manages exposure to liquidity risk very closely, and we will not enter positions that we cannot exit at any time, and within a reasonable timeframe. Relative to all small caps, this further improves the riskreward positioning of our approach, and can also materially improve our Sharpe ratio. In today's volatile markets, large companies are not a guaranteed mitigation for risk. The market has rapidly sold down many large caps regardless of size, and institutional share registers can be brutal to large caps, as much as they can to smaller companies. Q: So can you give us some examples of what a great, unrecognised growth story looks like? TB: Australia is only 2% of the world market. There is a lot of potential on offer in the other 98% of markets, and a lot of companies and sectors that are just not available in Australia. Moreover, small caps in larger markets have a natural advantage in being 'small fish in very large ponds'. One such company is theTradeDesk (TTD). The Global SmallCap Fund invested in TTD in June 2018. At the time, TTD was marketing online banner ads and content that rivalled Google Ads, but protected the identity of advertisers. TTD was a small fish in a very large pond, but it offered a compelling challenger solution to the dominant player in one of the world's most profitable spaces. TTD displayed many of the crucial characteristics we look for as a sign of quality, unrecognised growth. It was a niche leader in digital advertising, with global expansion ambitions for developed and emerging markets. It offered new and unique products, especially in universal IDs that was not being offered by Google. The management team were already proven, and reinvesting a growing earnings stream back into expansion of the business. With strong ESG credentials and a focus on improved data privacy, a competitive edge in the market, TTD was able to build and expand, and generate earnings surprises that were not recognised by the market. The result is that from the $87 entry price in June 2018, earnings surprises drove the stock price to $900 by January 2021, at which time the Fund exited, with TTD graduating 'with honours' as an emerging global titan, moving from the Fund's benchmark into the mid-cap benchmarks. Another example from the Fund's portfolio is Generac, a world leader in generators, based in the United States. Generac (GNRC) is another company that demonstrates the features of an emerging global titan, similar to our experience with TTD. Generac started as a niche leader in generators and smart energy. Growth ambition has since seen it expand globally, into South America and Europe. GNRC has expanded its product offering into inverters and smart grid tech, further investing through accretive mergers and acquisitions that expand both its capabilities and its footprint. GNRC has strong ESG credentials, especially with its link to future sustainable energy demand, and like TTD, it has a highly regarded management team. The Fund has seen its investment to date rise to over $280, from an entry point of $50 in May 2018, with the stock a key holding for future earnings surprise. Q: Can you summarise the benefits of adding global small caps to a portfolio? SW: We think the proposition for investors is simple. Global small caps offers a superior riskadjusted return from a global opportunity set of companies, many of which are not represented in Australian equity sectors. The opportunity to invest early in the next theTradeDesk, Google or even Tesla are waiting to be discovered in these 23 developed markets. They are not common, but with the criteria we apply in selecting companies demonstrating superior unrecognised growth potential, we believe the odds are significantly shortened for investors capturing the growth of future global titans. |
Funds operated by this manager: Ausbil 130/30 Focus Fund, Ausbil Australian Active Equity Fund, Ausbil Global SmallCap Fund, Ausbil MicroCap Fund |
References Banz, R. W. (1981). The Relationship between Return and Market Value of Common Stocks. Journal of Financial Economics, 9(1), 3-18. Fama, E.F. & French. K.R. (1992). The Cross-Section of Expected Stock Returns. The Journal of Finance, 47(2), 427. Siegel, J. J. (2013). Stocks for the long run: The definitive guide to financial market returns and long-term investment strategies. New York: McGraw-Hill. DISCLAIMER Important Information: Australia, Canada, Denmark, Kuwait, Netherlands, Sweden, United Arab Emirates, USA, United Kingdom. General Research provided to a client may vary depending upon various factors such as a client's individual preferences as to the frequency and manner of receiving communications, a client's risk profile and investment focus and perspective (e.g., market wide, sector specific, long-term, short-term, etc.), the size and legal and regulatory constraints. This information is for distribution only as may be permitted by law. It is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of, or located, in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or would subject Ausbil to any registration or licensing requirement within such jurisdiction. This information is a general communication and is educational in nature; it is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. Nothing in this document constitutes a representation that any investment strategy or recommendation is suitable or appropriate to an investor's individual circumstances or otherwise constitutes a personal recommendation. By providing this document, none of Ausbil or its representatives has any responsibility or authority to provide or have provided investment advice in a fiduciary capacity or otherwise. Investments involve risks, and investors should exercise prudence and their own judgment in making their investment decisions. None of Ausbil or its representatives is suggesting that the recipient or any other person take a specific course of action or any action at all. By receiving this document, the recipient acknowledges and agrees with the intended purpose described above and further disclaims any expectation or belief that the information constitutes investment advice to the recipient or otherwise purports to meet the investment objectives of the recipient. The financial instruments described in the document may not be eligible for sale in all jurisdictions or to certain categories of investors. The value of any investment or income may go down as well as up, and investors may not get back the full (or any) amount invested. Past performance is not necessarily a guide to future performance. Neither Ausbil nor any of its directors, employees or agents accepts any liability for any loss (including investment loss) or damage arising out of the use of all or any of the Information. Prior to making any investment or financial decisions, any recipient of this document or the information should take steps to understand the risk and return of the investment and seek individualised advice from his or her personal financial, legal, tax and other professional advisors that takes into account all the particular facts and circumstances of his or her investment objectives. Any prices stated in this document are for information purposes only and do not represent valuations for individual securities or other financial instruments. There is no representation that any transaction can or could have been effected at those prices, and any prices do not necessarily reflect Ausbil's internal books and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions by Ausbil or any other source may yield substantially different results. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained in any materials to which this document relates (the "Information"), except with respect to Information concerning Ausbil. The Information is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. Ausbil does not undertake to update or keep current the Information. 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Except as otherwise specified herein, these materials are distributed by Ausbil, to persons who are eligible counterparties or professional clients and are only available to such persons. The Information does not apply to, and should not be relied upon by, retail clients. The information contained in this document is given by Ausbil Investment Management Limited (ABN 2676316473) (AFSL 229722) (Ausbil) and has been prepared for informational and discussion purposes only and does not constitute an offer to sell or solicitation of an offer to purchase any security or financial product or service. Any such offer or solicitation shall be made only pursuant to an Australian Product Disclosure Statement or other offer document (collectively Offer Document) relating to an Ausbil financial product or service. A copy of the relevant Offer Document may be obtained by calling Ausbil on +612 9259 0200 or by visiting www.ausbil.com.au. You should consider the Offer Documents in deciding whether to acquire, or continue to hold, any financial product. This document is for general use only and does not take into account your personal investment objectives, financial situation and particular needs. Ausbil strongly recommends that you consider the appropriateness of the information and obtain independent financial, legal and taxation advice before deciding whether to invest in an Ausbil financial product or service. The information provided by Ausbil has been done so in good faith and has been derived from sources believed to be accurate at the time of completion. While every care has been taken in preparing this information. Ausbil make no representation or warranty as to the accuracy or completeness of the information provided in this video, except as required by law, or takes any responsibility for any loss or damage suffered as a result or any omission, inadequacy or inaccuracy. Changes in circumstances after the date of publication may impact on the accuracy of the information. Ausbil accepts no responsibility for investment decisions or any other actions taken by any person on the basis of the information included. Past performance is not a reliable indicator of future performance. Ausbil does not guarantee the performance of any strategy or fund or the securities of any other entity, the repayment of capital or any particular rate of return. The performance of any strategy or fund depends on the performance of its underlying investments which can fall as well as rise and can result in both capital gains and losses. Canada This document does not pertain to the offering of any securities. This document is not, and under no circumstances is to be construed as, an advertisement or a public offering of the securities described in Canada. No securities commission or similar authority in Canada has reviewed or in any way passed upon this document or the merits of the securities, and any representation to the contrary is an offence. Sweden The information contained in the document is given by Ausbil and has been prepared for information and discussion purposes only and does not constitute an offer to sell or solicitation of an offer to purchase any security or financial product or service. It is provided to you as an institutional investor as that term is understood under Swedish law. By reading this document, you agree to be bound by these limitations, terms and conditions set out in the paragraphs above. United Arab Emirates & Kuwait This information relates to a Fund which is not subject to any form of regulation or approval by the Dubai Financial Services Authority ("DFSA"). The DFSA has no responsibility for reviewing or verifying any Prospectus or other documents in connection with this Fund. 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A public health crisis, pandemic, epidemic or outbreak of a contagious disease, such as the recent outbreak of Coronavirus (or Covid-19) in Australia, Italy, China, South Korea, the United States and other countries, could have an adverse impact on global, national and local economies, which in turn could negatively impact investment returns in any of Ausbil Investment Management Limited's registered managed investment schemes (the Funds). Disruptions to commercial activity relating to the imposition of quarantines or travel restrictions (or more generally, an inability on behalf of authorities to contain this pandemic) may adversely impact any investment, including by delaying or causing supply chain disruptions or by causing staffing shortages. The outbreak of Coronavirus has contributed to, and may continue to contribute to, volatility in financial markets. The impact of a public health crisis such as the Coronavirus (or any future pandemic, epidemic or outbreak of a contagious disease) is difficult to predict, which presents material uncertainty and risk with respect to any investment or fund performance. |

27 Sep 2021 - The Rate Debate - Episode 20
The Rate Debate - Episode 20 Yarra Capital Management September 2021 The RBA expects a material slowdown in economic growth in September, but is forecasting a bounce-back in December that will stretch into the first half of 2022. Given market uncertainties, is the RBA's confidence justified, and could it mean higher interest rates are coming? Darren and Chris answer this question and more in episode 20 of The Rate Debate. |
Funds operated by this manager: Yarra Australian Equities Fund, Yarra Emerging Leaders Fund, Yarra Enhanced Income Fund, Yarra Income Plus Fund |

24 Sep 2021 - What is a Life Settlements Investment?
What is a Life Settlements investment? Tony Bremness, Laureola Advisors September 2021 The sale in the USA of a life insurance policy to a 3rd party
Imagine having the ability to benefit from the diligent financial habits of middle America. Like most residents of advanced countries, Americans have a tradition of establishing a life insurance policy as they start a family, take on a mortgage or build their own business. Over a period of responsible financial discipline, the children become independent, and debt is paid off. The need for insurance cover diminished. Some policyholders realise that their life policy is a financial asset and would seek to cash in its value. Unfortunately, there is a low level of understanding of the options available to cash in life insurance policies. This resulted in over 90% of life policies being terminated in the US without paying a death benefit in 2018. To provide a better outcome, the life settlements market was formed to match policyholders wishing to sell their unwanted cover to investors looking for a non-correlated asset class with the potential for stable returns. A life settlement market will give policyholders additional options in obtaining a higher value of their policies. A life settlement transaction starts with a policyholder selling their life insurance policies to an investor (usually a fund). The life settlement investor buys the life insurance policy from the policyholder and commits to paying future insurance premiums until the insured person dies. The investor then collects the death benefit payout from the insurance company as the concluding repayment of the life settlement transaction. The path of an illustrative policy is shown below. Illustrative example - assume a life settlement transaction backed by a policy with a death benefit of $100k Hence, a life settlement transaction is clearly win-win transaction for the seller and for the investor. The returns to the investor are embedded in the benefit payout collected upon the maturity of the policy. Most market observers estimate a long-term range of 6-12% p.a. as potential returns going forward as long as the portfolio is managed properly. Funds operated by this manager: |

23 Sep 2021 - Is Evergrande Contagious?
Is Evergrande Contagious? Jonathan Wu, Premium China Funds Management September 2021
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23 Sep 2021 - What are the Benefits of Life Settlements for Society?
What are the Benefits of Life Settlements for Society? Tony Bremness, Laureola Advisors September 2021 Alignment with ESG principles is becoming imperative in investment management. A majority of Australians expect their super or other investments to be invested responsibly and ethically. In addition to the expectation of returns not being compromised, investors also expect these investments to have a real environmental, societal or governance impact, not just "ethics washing." Due to slow-changing legacies, popular investments such as equity and bonds, funds usually start their ESG journey through implementing negative screening to exclude investments whose activities are considered harmful. However, it is still difficult to directly link the remaining assets to having actual positive ESG impact. These assets might just be less harmful. Positive ESG impact assets are not immediately obvious because most investors are not used to the idea that assets that service a societal need can be profitable. The opportunity in life settlements shows how helping others can be profitable too. How can an investment in life settlements, where returns are made when the insured dies, be a social good? The positive impact that can arise from an investment in life settlements is improved physical and financial wellbeing of senior citizens in the US (where the most active life settlements transactions market operates). An investment in a life settlements fund can help vulnerable retirees and tackle three ESG-related issues in the US: There is a shortfall of retirement savings in the US The National Institute of Retirement Security estimates that approximately 44% of people born between 1944 and 1979 are at risk of having insufficient income to meet basic day-to-day expenses in retirement. Due to the savings shortfall, seniors cannot access long-term care The average middle-class senior citizen does not have sufficient savings to cover the cost of long-term care. When accounting for long-term care costs, 69% of households are at risk of being unable to maintain their standard of living in retirement. Instead of helping to ease this shortfall, life insurance policies add to the burden with regular ongoing demands for insurance premiums while the senior is alive. Every year since 2009, over 33 million life insurance policies terminate prematurely which means the policyholder does not realise a benefit from the policy despite paying premiums for decades. The American Council of Life Insurer reported over 90% of life policies terminate without paying a death benefit in 2018. Life settlements provide a solution to these issues by providing a cash payout to the seniors and by shifting the burden of the insurance premium to life settlements investors. By investing in this asset class there is potential for:
Researchers from London Business School estimated in 2013 that the value unlocked by the life settlement market is on average about four times greater than that of the surrender value offered by insurance companies. While life settlements might not look like a candidate as a force for ESG- aligned investing, its fundamental raison d'etre is to address a societal need for better retirement provision. In return for such social good, life settlement investors can obtain stable, uncorrelated returns which has historically been in the teens. Tomorrow, we continue this release with a follow-up article 'What is a Life Settlements Investment?". Funds operated by this manager: |

22 Sep 2021 - Crispin Murray: What's driving ASX stocks this week
Crispin Murray: What's driving ASX stocks this week Crispin Murray, Pendal 20 September 2021 |
Here are the main factors driving Australian equities this week according to our head of equities Crispin Murray. Reported by quantitative analyst Lee Ma GLOBAL EQUITY markets remained soft last week. The S&P500 fell 0.5%, bringing month-to-date performance to -1.9%. In Australia the S&P/ASX 300 was flat, though there was some meaningful sector divergence. Metals and Mining came off 4.4% while Energy was up 3.5%. There were two key drivers of this performance:
Covid and vaccines Domestic news has been generally positive. NSW Covid cases peaked at a lower level than feared and vaccine penetration has continued to grow solidly. Take-up rate for the first dose has risen to 82.2% — up 3.7% compared to last week. This rate has been holding up well. That's important since a higher rate will help relieve potential strain on hospital systems in future outbreaks and reduce the likelihood of future lockdowns. The seven-day moving average for second-dose vaccinations is close to 61,000 this week — up from about 50,000 last week. If this trend continues we might get to 80% full vaccinated — and further relief from lockdowns — before October 18. Globally case numbers continue to improve, albeit marginally in the UK and the US. Return-to-school impact can be seen in the higher ratio of kids in case numbers. Though this is tending to sustain case numbers rather than increase them. Hospitalisation numbers have been slowly improving in both counties. This is leading to some evidence of improved sentiment in the US. Economics and policy Tension has been building for weeks around Evergrande, China's (and the world's) most indebted property developer. Evergrande's bond interest payments are due on September 23. The question is whether the market will see a bankruptcy or some form of debt restructure. More importantly, people are contemplating whether this will have a cascading effect on China's other property developers and the economy more broadly. Weakened sentiment contributed to the precipitous drop in iron ore over the week. We see great uncertainties around how this will eventually play out. There is a good chance a default is possible with the Chinese government choosing to send a strong message on property speculation. But we think the outcome will be something the government can manage, since Evergrande is not a state-owned enterprise and is not as systemically important. That said, we will reach a crescendo of concern over the next couple of weeks. Outside China, the focus has been on renewed concerns that inflation is set to be persist for longer, leading to faster tapering and potentially an earlier move in rates. Inflation fears in the US have come mainly from a combination of labour shortages and unemployment insurance (UI) payments coming to an end. The next few weeks will be an important test of the durability of labour tightness. Recent pricing power surveys clearly indicate that US companies are pushing through pricing increases in a number of sectors. This reflects input price pressures, constrained availability of product and higher labour costs. Also, gas prices continue to remain far higher than we have seen for years in the US and Europe. Inventories are low heading into winter. There is a 70% probability of a La Nina weather event, which may lead to a colder winter. There are concerns elevated gas prices will persist, which has already led to higher electricity prices in the US and UK. All eyes are on the Fed's September meeting this week. The market will closely watch how they signal the pacing of tapering and their quarterly update on the dot plots. The dots are expected to have shifted forward again towards the median rate rise around the turn of 2023. The other focus will be on the number of rate rises through to the end of 2024. Similarly, there was media attention on unpublished forecasts by the ECB, which could see inflation rising 2% by 2025. This may lead to rates rising in 2023. All this has added to the market's wariness on the inflation impact on central bank policies. Markets The market saw a continued drop in iron ore price. The seaborne benchmark fell 22% last week and is now down 37% for the calendar year-to-date. In contrast the oil price was up by 3% and 45% in the same periods. The main reason for this disconnect was iron ore's reliance on Chinse demand, compared to oil's link to global demand. The fall in iron ore has been driven by a number of factors. It had an over-extended starting point, driven by surging steel production in China in 1H21. The production surge was then met by a dramatic slowdown starting from 2H21: steel production was down 18% in July and a further 10% in August. The Chinese government has an aggressive rhetoric around holding down steel production through 2H21 for environmental reasons and trying to keep production growth flat for the full year. These restrictions are expected to continue limiting steel production through to the end of the winter Olympics in late February next year. At the same time the Chinese government has introduced policies to maintain controls of the property sector, which is a key driver of steel demand. Fears for the overall sector have been exacerbated by the Evergrande situation. Also weighing on demand, the Chinese economy has been generally softer recently due to rolling COVID lockdowns. More stimulatory policies on local government bond issuance that funds infrastructure spend are unlikely to kick in until 2022. Lastly, the deteriorating relationship between China and Australia may have led to other measures impacting on the commodity price. Where to from here? The debate is not so much whether iron ore bounces much, but rather whether it can hold in the US$100s or if it continues to move towards a longer term price of US$70. The Evergrande final resolution may mark a sentiment low in China and its property sector. Consequently, some measures to support the economy may be introduced such as the RRR cut. We should still expect relatively subdued demand from China, but the real-time indicators on the economy look to be near their lows. Global demand for steel remains strong, as evident from the very high global steel spreads, suggesting there are still cyclical tail winds. Supply disruption also continues to emerge, with Vale announcing this week its iron ore production next year will be lower than expected. Overall, this week could be the crescendo in negative sentiment before investors start to rebuilding confidence slowly. Against this backdrop, equity markets overall are re-testing support levels. There could be support in early evidence that the US economy is experiencing a re-acceleration as Covid cases start to stabilise and fall. And liquidity from Central Banks remains abundant. Lastly, we note the rotation of value to growth has been mirrored by fund flows. Inflows to tech and outflows from cyclicals look to be at extremes. As such, we continue to see cyclicals holding better from here. |
Funds operated by this manager: Pendal Total Return Fund |
This article has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and the information contained within is current as at August 11, 2021. It is not to be published, or otherwise made available to any person other than the party to whom it is provided. This article is for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient's personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation. The information in this article may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this article is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information. Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance. Any projections contained in this article are predictive and should not be relied upon when making an investment decision or recommendation. While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. |

21 Sep 2021 - Jamieson Coote Bonds - August 2021 Market and Performance Review
Jamieson Coote Bonds - August 2021 Market and Performance Review Channel Capital August 2021 Charlie Jamieson, Chief Investment Officer at Jamieson Coote Bonds discusses the market and performance of high grade bonds in August 2021.
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Funds operated by this manager: CC Jamieson Coote Bonds Active Bond Fund (Class A), CC Jamieson Coote Bonds Dynamic Alpha Fund, CC Jamieson Coote Bonds Global Bond Fund (Class A - Hedged), CC Jamieson Coote Bonds Global Bond Fund (Class B - Unhedged) |