Mountains in Clouds


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Hall Road Investments #40 (Family Office Sherpa, Index & ESG)

Sent to subscribers Friday the 30th of October.

The Sherpa Update

Magellan/Finclear – Magellan is taking a stake in third party custody and broking business, Finclear. The HIN/TFN as a central identifier for the ASX as part any new ledger technology will figure in this move from a fund manager with a lot of listed strategies. They’re always looking at new things, Magellan – always at the front.

Ares/AMP – Ares are in discussion to buy AMP; they must a like a distressed asset I guess.

Evans & Partners – 360 Capital has been quick to pull the trigger on a takeover. Tony Pitt continues his aggressive expansion.

ASIC – have fined three Contract for Difference (CFD) firms $75M. They are all in liquidation. I’d love to see these fines delivered to firms when they were actually able to refund money back to clients. Buyer beware, sure – but when a retail punter can get 100 to 1 leverage on a trade funded by their credit card, there must be some kind of red flag? It also shows that there is a need for advice here – would any adviser recommend trading CFDs through a Cyprus based OTC derivates provider?

There is $2.3bn in entities identified at OTC derivative providers in Australia. Of the 60 license holders, 16 have been subject to enforcement from ASIC since 2017. If you are going to use OTC derivates, and they are a legitimate tool – make sure your counterparty due diligence is done correctly.

Sayers – Ex PWC head Luke Sayers has launched a new firm and gone on a hiring spree. Ex Vanguard head of investment strategy, ex Head of Crestone/UBS operations, JB Were’s ex head of risk etc. This is in addition to the PWC partners he lured back in September. The wage bill alone must be huge.

Funds Management – News that Chad Slater has left Ellerston is big news for anyone in the Morphic fund. He was the main PM on that strategy so will have an impact.

Perpetual – flagship concentrated fund run by Paul Skamvougras has received a downgrade by Morningstar. One reason cited being that the fund manager “ has tilted the portfolio towards companies that have attractive underlying asset or book value but have often been beset with operational or management issues," A good example of this is Crown Resorts, the second-largest holding as at September 2020.”

Accordant/CapRaise – these two specialist firms have entered into an agreement. I know Peter Shanley from Accordant well, it’s a very unique business for family office clients and one that continues to become more important.

Investment Consulting – I met with quite a few advisers the last few weeks and all are using an outsourced investment consultant to provide SAA and TAA insights into client portfolios. Some are using insto firms such as JANA or specialist boutiques such as Context Capital or InvestSense. Not all the recommended implementation is taken on (ie. the funds) however the increased used of SMAs to streamline investment management means that they need an expert in that field as they move away from the banks and their research teams.

Platforms – HUB24 is acquiring competitor Xplore Wealth which I remember as IAS before it was changed to for $60M. They are also buying Ord’s portfolio reporting and admin platform for $10.5M and acquiring a 40% stake in Easton Group which they’ll sell dealer group Paragem into. Busy!

Family Office Investments - I see Kim Jackson and Scott Farquhar’s family office investment company Skip Capital is seeking a global equities PM. This would be a cracker of a job and would provide a look through into one of the more interesting portfolios in Australia.

Robo – SuperEd, started by ex-Vanguard staff has purchased industry fund aligned robo adviser Clover.

Indexing and ETFs

AMP – has decided that indexing is the way to go for its Kiwi Saver scheme and handing the management of around $6bn in FUM to Blackrock. It will be interesting to see if this flows through to the Aussie business with the risk of charging high fees to underperform the market a risk they may not want to take. Plus, outsource the indexing for low single digit fees and charge retail fees on the other side…

ASX ETP Report – if your broker or adviser claims to know about ETFs and doesn’t have this monthly report, start asking some questions. It shows flow and costs (spread, MER) and should be the go-to reference point for anyone that is interested in the space.

ESG & Philanthropy

Robeco – has drawn a line in the sand for insto asset managers claiming to be ESG. They decided last month that by the end of October the firm won’t invest in companies that derive more than 25% of their revenue from thermal coal or oil sands or 10% of the revenue from Arctic drilling. They also published their latest exclusion list of around 230 fossil fuel producers.

Brighte – the buy now pay later solar company has closed the first all-green asset-backed security deal in the Australian public debt market with a $190M offering. There were 14 (over)subscribers including Grok (Cannon Brookes FO) and Skip Capital (Farquhar FO).



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