Earlier this month, Professional Planner and Zenith named the winners of their annual fund manager awards at a ceremony in Sydney.
The awards recognise excellence across 19 categories, based on Zenith’s methodology, which takes into account the managers’ investment philosophy, performance, process and the capability of the team.
David Wright, managing director of Zenith, said this year has been particularly challenging for active managers due to low volatility. He said it’s becoming more difficult to be “best of breed” and the winners this year showed true specialization in their individual fields.
Following each of the individual wins, Professional Planner spoke to the Fund Manager of the Year and Distributor of the Year about the factors they attribute to their success.
Interviews with all of the winners are in the November edition of Professional Planner.
Fund Manager of the Year – Antipodes Global Investment Partners
Interview: Jacob Mitchell, chief investment officer and portfolio manager
First of all, thanks to the team at Zenith responsible for the research process. We’ve been very careful not to get too carried away about awards, but this is a pleasant surprise. We’ve had our share of easy wins and I think we’ve also had our share of wins that we’ve deserved. It’s been a polarised market.
Antipodes Partners tends to deal in more eclectic or esoteric markets and I think we’re doing OK, given the market conditions. Performance matters, differentiation matters. If you have those, there’s a great chance for success.
We call our investment philosophy ‘pragmatic value’. The obvious question is, ‘How is that different to value investing?’ Well, we think most [fund managers] would describe themselves as value investors. Traditional value would be anchoring a lot to discounts, but it doesn’t go to the next step of understanding why. A lot of investors get hung up in a world of mean reversion. We know that can happen and we certainly want to take advantage of cyclical opportunities, but we also know in this day and age a lot of structural change is taking place.
Judges comments: ANALYST / BRONWEN MONCRIEFF
Antipodes was also a winner in two other categories: International Equities – global; and International Equities – long/short. The manager has done an outstanding job of accumulating funds under management since its launch in March 2015 and, more importantly, providing investors with strong returns across both its long-only and long/short international equities strategies. As such, we believe Antipodes is a deserving winner of this year’s Fund Manager of the Year Award.
Distributor of the Year – Pinnacle Investment Management
Interview: Ian Macoun Managing director, Pinnacle
This is a very big deal for us at Pinnacle. We won this award last year for the first time – it was a big deal for us – and as a result of the great boost in confidence it gave our distribution team, our sales the following year more than doubled. It’s been an extraordinary year for the Pinnacle distribution team. Net inflows for the year were $4.9 billion, of which $2.5 billion – roughly half – was retail. We’ve been running at well over $200 million a month net retail inflow, and that’s exceptional. People ask how that’s come about. Firstly, it’s a fantastic distribution team, led by Adrian Whittingham, who’s built that team over nine years into an absolute powerhouse, and we’re very grateful to Adrian and the whole team for what they’ve done there. But the second reason is we have awesome, really awesome, partners in our affiliates. We decided when we set up Pinnacle 11 years ago that we were only going to work with very, very high-quality investment professionals. Our model is all about allowing them to stay focused on investing.
Judges comments: ANALYST / BRONWEN MONCRIEFF
Pinnacle Investment Management has done an excellent job in retaining the mantle for the second year running in this category. Zenith recognises Pinnacle’s distribution capabilities, including its suite of high-quality investment boutiques across a range of asset classes and varying investor platforms and structures, including unlisted managed funds, listed investment companies and listed investment trusts. The manager has raised funds under management in both the listed and unlisted arenas while at the same time maintaining high standards in information provision, access to investment professionals, effective education, and communication of manager strategies. The well-resourced, experienced and growing sales team, with strong knowledge of the product suite and excellent relationships with their managers, make Pinnacle a deserving winner in this category.
Multi-asset – diversified – Blackrock Investment Management (Australia)
Interview: Karsten Kumpf, senior portfolio manager, BlackRock
We are proud to offer to investors in Australia a range of diversified multi-asset products that target specific investment outcomes. We focus on innovation, superior risk management and technology. Over the last 12 months, we’ve delivered a very strong yield with our multi-asset global income product, as well as an attractive capital return, and that’s by focusing on asset classes that can produce attractive yields and complement what Australian investors typically get from high dividend-paying stocks in the local market; for instance, in mortgage-backed securities markets, particularly the US residential market and the industrial warehouse sector, and in segments of the high-yield market, along with allocations in global equities. We build asset allocations for the portfolios we offer, in particular for our range of diversified funds, which are also recognised with this award. We offer different risk profiles, so we specialise in building superior strategic asset allocation, along with tactical asset allocation and stock selection, in order to outperform those benchmarks.
ANALYST / BEN DAVIS
BlackRock offers to market a broad suite of multi-asset solutions. With strategies spanning fundamental, quantitative, global macro and income-centric, BlackRock is considered a leader in the multi-asset arena. With a significant global presence, scale and specialist resources dedicated to its multi-asset platform, Zenith believes BlackRock is well positioned to navigate an ever challenging investment landscape.
Multi-asset – Real Return – MLC
Interview: Susan Gosling, head of investments, and Ben McCaw, portfolio manager
You can’t run a good investment strategy without a good process, and you can’t run a good process without good people. Getting the right people comes first. Culture, when we hire, is the first thing we ask about. If the culture isn’t there, no matter what the other skills are, that person can’t come into our team. Can we speak the same language? I think it’s under-appreciated that investors don’t all speak the same language. We want to be able to communicate effectively and make sure we understand one another, across the whole team. We don’t make short-term calls. We have multi-year time horizons and our objective is to have thought through ahead of time what could happen. One of the questions we’re always asking is: Did anything major happen that we hadn’t thought through? There were really no surprises; things really played out in unsurprising ways.
Judges comments: ANALYST / BEN DAVIS
NAB Asset Management offers to market three actively managed ‘Inflation Plus’ strategies. These funds are managed by a dedicated capital markets research (CMR) team and operate within a flexible set of investment parameters. Zenith retains a high level of conviction in the team under the leadership of Susan Gosling, and the support provided by way of specialist resources and a purpose-built risk-management framework. Representing the purist expression of the CMR team’s differentiated scenario-based process, we believe the fund is strongly positioned to deliver upon stated objectives.
Global REIT – Resolution Capital
Interview: Andrew Parsons, senior portfolio manager, Resolution Capital
Technology has had a significant bearing on market returns. Operationally it’s very important, and certainly for REITs that are operationally in the position to be able to incorporate aspects that are attractive to technology users and technology-driven businesses, that’s certainly been very important. But for us, frankly, it’s about consistency of bottom-up research and selection of stocks that we think are good real estate, with strong balance sheets and terrific management. Those are the critical things that continue to deliver for us.
Judges comments: ANALYST / DUG HIGGINS
Zenith’s conviction is predicated on our high regard for the collective abilities of the Resolution portfolio management team, led by global portfolio manager Andrew Parsons and using a multi-portfolio manager approach Zenith has a high regard for the level of stability observed amongst the team, which employs an investment process that combines top-down and bottom-up research in an effort to identify companies that are expected to generate recurring cash earnings on a consistent basis. Furthermore, Zenith believes Resolution has demonstrated success in generating outperformance on an absolute and peer-relative basis, over the long term.
AREIT – Zurich Investments / Renaissance Asset Management
Interview: Carlos Cocaro, managing director, Renaissance Asset Management
Our success is a long-term effort and a team effort; the team is led by myself and my business partner, Damien Barrack. We’ve both worked very, very hard for a number of years to achieve performance. It’s a very tough and competitive environment, but we have a great partner in Zurich, which has been distributing the product for more than 10 years. There has also been continuity in the team since we started Renaissance 14 years ago. That really helped us.
Judges comments: ANALYST / DUG HIGGINS
Zenith’s conviction is predicated on our high regard for the collective abilities of the Renaissance Asset Management property securities team, led by portfolio managers Carlos Cocaro and Damien Barrack. Zenith maintains strong conviction in their collective abilities, owing to their experience and longstanding working relationship. The fund offers investors value-oriented, active exposure to the AREIT sector, while also possessing the ability to invest outside of the benchmark. Furthermore, Zenith believes the team has demonstrated success in generating outperformance on an absolute and peer-relative basis, over the long term.
Exchange-traded funds – Betashares
Interview: Ilan Israelstam, co-founder and head of strategy
We attribute this win to innovation, largely. We’ve been very innovative in what we do. The main thing we specialise in is focusing on the needs of Aussie investors, which is unusual in our space because we’re competing with some very large global names. It is quite nice for a smaller Australian specialist to be doing well against them. We’ve launched some products that have been unique and do fit the criteria of helping Australian investors do things simply. In recent times, we’ve been building a ladder of income funds, from a high-interest cash ETF all the way up to our f loating bond fund.
Judges comments: ANALYST / DUG HIGGINS
With a large dedicated Australian ETF team and a diverse product menu, BetaShares has carved out an enviable record in the local ETF landscape in terms of product innovation and support. BetaShares has continued to build on its position and its product suite continues to evolve, particularly in the area of managed risk strategies in an ETF format. It has also cemented its position as first to market with a floating-rate fixed income ETF, which Zenith sees as a logical product development in the current environment.
Listed investment companies – Wilson Asset Management
Interview: Geoff Wilson, Chairman and portfolio manager
How we invest is bottom-up, and it’s really our ability to find undervalued growth companies. We tend not to try to limit our risks, so our weightings will be maybe up to 3 or 5 per cent. We tend to have a very diversified portfolio, so if we’ve had a good period, it’s really a combination of them all, and our ability to find those undervalued growth companies. We believe one of our competitive advantages is the number of companies we see. We’ve actually increased that by close to 30 per cent this year. We’ve had more than 2000 company visits this year. There are eight on the team, but that’s a lot of companies. The question is always, is it the people or the process? And to me, the process is important, but the people are more important. It’s your ability as an investor to see something that other people don’t see. We buy undervalued growth companies, and we buy them when we can see a catalyst that’s going to change the valuation. There’s a lot of timing in it for us. It’s the ability to clearly identify a) the company, but b) the catalyst that’s going to change the valuation, and it’s the skill of the individual that does that.
Judges comments: ANALYST / DUG HIGGINS For more than 15 years, Wilson Asset Management has been a stalwart of the listed investment companies industry. WAM offers a suite of quality LICs with a strong absolute return approach, spread across the full spectrum of sector and market capitalisation ranges. WAM continues to be highly regarded by Zenith in terms of portfolio performance and also shareholder engagement. This is an area we see as a critical facet of operating LICs, given shareholder dissatisfaction can drive share prices down to heavy discounts from portfolio values in difficult markets, despite investment strategies remaining sound.
Infrastructure – Maple-Brown Abbott
Interview: Andrew Maple-Brown, head of global listed infrastructure, Maple-Brown Abbott
Bottom-up stock selection has been the largest positive contributor for us. We have more recently faced some headwinds from some individual sectors, specifically pipeline networks, but really the positives have been driven by individual stock selection. We view ourselves primarily as infrastructure experts, with very much a bottom-up process. Having said that, we’re investing in very long-dated assets, across multiple countries. So we think it’s critical to have rigour around macroeconomic assumptions. We spend a lot of effort on that. To me, the most important things in any active management business are the quality of the team, and the alignment of the team. We’re extremely fortunate on both those aspects. It’s something we spend a lot of time concentrating on in setting up the strategy, and without a doubt that, to me, is the greatest strength of the business.
Judges comments: ANALYST / DUG HIGGINS
Zenith’s conviction is based on the collective abilities and experience of the Sydney-based Maple-Brown Abbott Global Infrastructure Investment team, which is led by the head of global listed infrastructure, Andrew Maple-Brown. Zenith believes the application of a comprehensive investment process and MBA’s stringent definition of infrastructure results in a high-conviction portfolio that highlights the core characteristics of listed infrastructure. Furthermore, the team has demonstrated consistent outperformance, with MBA’s listed infrastructure offerings commonly in the first quartile of managers over a range of time periods.
Direct property – Charter Hall Group
Interview: Steven Bennett, head of direct property
I think this award really shows the group’s ability to equate institutional-grade property for our retail super fund clients. The focus on security of income is something our investors really appreciate. That search for yield is very important in the low-interest rate and low-return environment we’re living in. We stayed disciplined in the last 12 months. We made sure our gearing stayed conservative and the quality of the assets remained high, and we picked the assets very carefully.
Judges comments: ANALYST / DUG HIGGINS
Charter Hall benefits from the significant expertise and resources of the wider group. The business operates an internalised model, keeping property management and asset management in-house. Zenith favours such models strongly when they are executed well, as this typically allows for a closer relationship with tenants and creates strong synergies in asset management. Charter Hall’s extensive real-estate expertise is combined with conservative and robust risk-management practices, which work in tandem with its deep real-estate skill set.
Global and diversified fixed interest – PIMCO Australia
Interview: Adam Bowe, portfolio manager, fixed income
I think, the last year, what’s really put us in good stead is having the global platform. It’s been a particularly challenging macro environment, so not having to be forced to take large macro calls and positions has been important. We not only have a strong global team to scour the world for attractive sources of return, but have been able to integrate that with local analytical platforms. It’s been a pretty stable year for the fixed income portfolio management team domestically and globally. We’ve added a couple of resources, but overall it’s been very stable. What we’re focused on at the moment is bringing aggregate risk down in portfolios. Volatility is low and valuations look pretty full across most of the fixed income universe we look at. At the moment, it’s about trying to construct the portfolio so aggregate risk has come down and when volatility steps back up, it should be in a position to perform reasonably well.
Judges comments: ANALYST / BRONWEN MONCRIEFF Across the global fixed interest asset class, PIMCO remains a preferred manager. With significant global presence and specialist resources located across multiple geographical areas, Zenith believes PIMCO is well positioned to take advantage of an everdynamic investment landscape. Zenith continues to view PIMCO’s scalable investment process favourably; it combines macroeconomic analysis with bottom-up security selection to identify the most attractive investment opportunities.
Australian fixed interest – Legg Mason/Western Asset Management Company
Interview: Anthony Kirkham, head of investment management, Western Asset Management
When you look at the year, there have been a number of different events. Being able to manage through those various events has been the key. Fortunately there have been a number of themes in the portfolio that we’ve been able to add value. But it’s certainly been an interesting year when you consider the whole Trump factor, which everyone got very excited about and sent bond yields higher. And then as we moved into the year, bond yields moved lower at first, as people realised, maybe he’s not going to get everything through. And of course there were some negative thoughts around North Korea, and other factors. It speaks to the way we manage money. Being a value manager, we’re looking for these opportunities and placing the portfolio in a position to benefit from different events. Team is critical and it’s a big thing at Western Asset. We are very much team-based in the way we think, using the global team to actually capture opportunities.
Judges comments: ANALYST / BRONWEN MONCRIEFF
Zenith views Western Asset Management (WAM) as a standout manager within the domestic fixed interest market. Our conviction in WAM’s investment capability continues to be underpinned by our strong view of the investment team under the leadership of Anthony Kirkham, head of investment management. Through the team’s adherence to an investment style best described as ‘value-driven sector rotation’, WAM has demonstrated an ability to deliver consistently on stated objectives, with excess returns generated across a range of investment terms.
International equities – emerging markets and regional – Schroder Investment Management Australia
Interview: Graeme Mather, head of distribution, product and marketing
This is the sixth time we’ve won this award in 10 years. We’ve got 50 people who’ve been running the fund for 20-plus years, so it’s a product of being one of the largest and most well established. It’s been challenging. Markets have been challenging. Certain things have worked, while others haven’t, but it is probably one of our best strategies. We’ve done really well in the last year. We’ve added a lot of value through country allocations. Korea, Taiwan, Malaysia and Russia have all done really well for us.
Judges comments: ANALYST / QUAN NGUYEN
Using a combined macroeconomic and fundamental share selection approach, Schroders offers investors a highly diversified, style-neutral exposure to emerging-market equities. Zenith has a high regard for the robust investment process employed and the overall investment capabilities of Schroders’ emerging-market equities team, which benefits from having well-resourced, locally based investment teams around the globe.
Australian equities – alternative strategies (including long/short, income overlay – options) – L1 Capital
Interview: Mark Landau, joint managing director
L1 Capital A lot of hard work and a fantastic, passionate team are behind this win. It’s quality research and independent thinking. We genuinely start with a clean sheet of paper, without being influenced by stockbrokers or the media. Every year is stressful and every year has different challenges. I think we’ve just done well through a particularly difficult time for the market. I think the risk management in the fund and the risk focus have stood us in good stead. We’ve had a very low drawdown profile. As much as we’re proud of the returns, we’re also proud we haven’t had the negative periods others have had.
Judges comments: ANALYST / QUAN NGUYEN
L1 is an independent equities-focused fund manager founded in 2007 by Raphael Lamm and Mark Landau. It is fully owned by the investment team. L1’s Australian equity long/short strategy has a strong, albeit relatively short, track record dating back to September 2014, over which L1 has demonstrated material value add from short-selling and market exposure adjustment. In addition, Zenith draws comfort from the impressive longterm track record L1 has built managing long-only strategies, which we expect to be the primary driver of the strategy’s performance. Overall, Zenith has confidence in the ability of L1 to deliver on the fund’s investment objectives, given the high calibre of its investment team and the attractiveness of the underlying investment philosophy and process.
International equities – alternative strategies (including long/short, income overlay – options)
Interview: Jacob Mitchell, chief investment officer and portfolio manager
Antipodes In this market, we think you have to be selective and absolutely understand what you own. There’s a lot of momentum investing happening, particularly around the FANGs (Facebook, Amazon, Netflix and Google parent Alphabet), [the idea is that] they’re going up so they should keep going up – and that’s certainly not the way Antipodes invests. In the more cyclical part of the market, there have definitely been opportunities we’ve been able to capitalise on. There has been a lot of negativity, especially in Europe, around financials, which has been a very good opportunity for us.
Judges comments: ANALYST / QUAN NGUYEN
Antipodes’ flagship strategy provides investors with a concentrated, absolute return-focused, long/short exposure to global equities. Antipodes’ investment team is led by chief investment officer and portfolio manager Jacob Mitchell, who was formerly deputy chief investment officer at Platinum Asset Management and possesses a strong performance track record over the variety of strategies for which he has held portfolio management responsibilities, including the Platinum International and Platinum Japan strategies. Zenith has a high regard for Mitchell, considering him an experienced and high-quality investor, underpinning our overall level of conviction in Antipodes’ investment capabilities.
International equities – global – Antipodes Global Investment Partners
Interview: Jacob Mitchell, chief investment officer and portfolio manager
Antipodes’ long-only strategy provides investors with a concentrated, absolute return-focused exposure to global equities. Antipodes’ investment team is led by chief investment officer and portfolio manager Jacob Mitchell, who was formerly deputy chief investment officer at Platinum Asset Management and possesses a strong performance track record over the variety of strategies for which he has held portfolio management responsibilities, including the Platinum International and Platinum Japan strategies. Zenith has a high regard for Mitchell, considering him an experienced and highquality investor, underpinning our overall level of conviction in Antipodes’ investment capabilities.
Judges comments: ANALYST / QUAN NGUYEN
Antipodes’ long-only strategy provides investors with a concentrated, absolute return-focused exposure to global equities. Antipodes’ investment team is led by chief investment officer and portfolio manager Jacob Mitchell, who was formerly deputy chief investment officer at Platinum Asset Management and possesses a strong performance track record over the variety of strategies for which he has held portfolio management responsibilities, including the Platinum International and Platinum Japan strategies. Zenith has a high regard for Mitchell, considering him an experienced and highquality investor, underpinning our overall level of conviction in Antipodes’ investment capabilities.
Alternative strategies (CTA, multi strategy, market neutral, FOHF, agribusiness, commodities, private equity, other) –
– Perpetual Investment Management
Interview: Anthony Aboud, portfolio manager
This year, our short book performed quite well. It’s been very tough in the short book, but there have been two or three that have really worked quite well for us, one of them being Quintis. It’s been in a trading halt for a while now. Shorting is very hard in this market. We’re quite fundamental and contrarian. We tend to look at areas that are loved on the short side because we find that investors are very complacent about the risks. When a stock has performed strongly, people tend to ignore risks. Where you make your most money is when there’s a big gulf between reality and perception.
Judges comments: ANALYST / BEN DAVIS Perpetual employs a long/short Australian equity strategy with low net market exposure. Its Sydney-based Australian equities investment team, led by head of equities Paul Skamvougeras, employs a fundamentally driven research approach to identify investment opportunities in domestically listed stocks. Zenith believes Perpetual’s rigorous process and experienced team are key strengths for the strategy.
Australian equities – large cap – Macquarie Investment Management
Interview: Patrick Hodgens, head of equities, Macquarie Investment Management
We made changes about five years ago, which involved moving to a team-based approach. I think the way we’ve refined our process to look at thematic risk, rather than sector risk, has also been important, along with just having an outstanding team of analysts who know how to pick stocks. The last year has been solid in terms of returns. We’re up about 10 per cent, calendar year to date. We’ve had a very significant move from growth to value and we’ve navigated that very well.
Judges comments: ANALYST / QUAN NGUYEN The flagship strategy managed by the fundamental equities team within Macquarie Investment Management offers a concentrated, style-neutral exposure to Australian equities. Zenith has a high regard for the investment team and its capabilities. In addition, we gain conviction from the consistent application of the investment process, which we believe to be intuitive and robust. INTERVIEW
Australian equities – small/mid/micro cap – Perpetual Investment Management
Interview: Jack Collopy, portfolio manager
Avoiding losers probably brought us the most success. There was a bit more of a valuation emphasis in the market over the last 18 months. Leading up to that, it seemed like the “growth at any price thematic” had got away from itself. The crowded momentum trades that were in the index got unwound a little bit. Some of the Asian consumer stocks – Blackmores, Bellamy – hit some hiccups. So nothing really specific.
One of our filters is only investing in profitable companies with good balance sheets. A company can’t really go bankrupt if it’s generating cash flow and it doesn’t have much debt. That in itself keeps you away from speculative investments that can go down as quickly as they can go up. We avoid those and it’s a bit more of a slow-and-steady process. Nathan Hughes and I are portfolio managers, but we have analysts who cover some big caps and some small caps, so it’s not quite a defined team [of analysts] within the group. It’s a large team in the whole of [Perpetual’s] Australian equities; 10 analysts, probably. There are probably six of us who focus more on small caps. In this industry, you need good people, but there’s very much a process that people buy into and believe in.
Judges comments: ANALYST / QUAN NGUYEN
The fund is managed by Jack Collopy, who seeks to buy high-quality micro-cap stocks trading at attractive prices. Collopy is supported by Perpetual’s Australian equities team. Zenith believes Perpetual’s rigorous process and experienced team to be key strengths for the strategy.
