Mountains in Clouds


Asset 1@114x.png

Hall Road Investments 62 (Family Office Sherpa, Index & ESG)

See below for the latest newsletter. As always, if you want daily updates on what I’m looking at, start following the Hall Road LinkedIn page here.

If someone has forwarded this to you, that’s awesome - please feel free to subscribe here or email me directly –

Happy reading.

The Sherpa Update

Family OfficeA great article from Dillon Hale on the current state of those providing advice to Family Offices in Australia. It’s always interesting to hear from someone with a rich history in advising global family offices have an actual opinion on some of the issues facing domestic clients.

I know Dillon is a proponent of the need for improved reporting and data analytics but it seems this wasn’t interesting enough for the AFR. For Hall Road clients, it’s a major piece of the Family Office investment structure and one that is either pushing offices forward into new opportunity sets or dragging them back to old school intermediaries and asset managers.

How to launch an ETF – I really enjoyed this blog post on launching a fund. One of the points made is that launching a trust structure is harder than an SMA. The reason this is so interesting to me is that Direct Indexing uses an SMA structure and that is why you can customise for each investor. If you can imagine an ETF where you are the only investor, that’s why it’s attractive – you have control of tax, thematic, rebalancing etc while staying in risk and tracking error bands. The embedded costs, counterparties, legal etc of co-mingled fund means that break-even is high, whereas an SMA can be started with very little.

I met with MSCI to discuss DI from the point of view of the index provider and it’s definitely getting more viable the more I think about it.

This article provide a great “current state” of DI in the US, who’s invested in what and why.

Brokerage - As we saw in the US, deep discounting on brokerage turned into zero brokerage. With Stake announcing the move to a flat $3 per trade on the ASX in a true to label individual account (as opposed to co-mingled), the bell tolls for transaction only brokerage.

Private Equity Real Estate – I attended a very interesting lunch where Alastair Nash from NashCap presented on an area which I have increasing client interest as they look for deal by deal structures.

Performance fees – a bumper year for performance fees for active managers in Australia has meant an enormous transfer of investor value to those that manage assets on their behalf. I am not begrudging anyone payment for a job well done, but surely there is a case for tightening of these performance fees when they are paid on the wrong benchmark or the reset is clearly in the manager, and not the investors, favour.

This article very clearly sums up the conundrum for investors who are balancing between an allocation to those that can outperform the market and how much of that performance is squirreled away by those they are entrusting their assets to.

NFTs – Family Offices continue to invest in digital assets.

VCC – I had an educational conversation on the Variable Capital Company (VCC) structure for those investing in Singapore from Chris O’Meara from Conduit Securities. For those unfamiliar, VCC is Singapore’s answer to the traditional offshore fund structure such as Cayman.

Advice – Accenture has released a 2021 report on The New State Of Advice which focusses on the consumer. It mostly hits the same notes as previous reports; however, it takes on the survey from the consumer perspective and brings in the idea of the “bogeyman” behemoths such as Amazon and Facebook as providers of financial advice.

Margin Robo?This is certainly new for me, InvestSMART has launched a robo advice model where you can gain access to a $10K ETF model portfolio with an initial $4K investment and the rest paid in $320 monthly instalments including a $20 per month instalment fee. It’s like BNPL but with higher stakes. They are aiming for $20M in the pilot scheme and $100M in the second phase. Very optimistic.

Coolabah Capital/Pinnacle – in 2019 the Bennett Family sold their 25% stake in Chris Joye’s funds management firm to Pinnacle for $29M. As FUM has grown a lazy 172% since then to around $8bn, staff of Coolabah have sold another 10% for what I’m assuming is a premium to the last deal which valued the firm at $116M.

Pinnacle has also purchased wholesale distribution firm Winston Capital as part of it’s push into the adviser space.

Family Office – As with Andrew Forrest in Australia, the heir to the $10bn JCB fortune is putting money into hydrogen technology. In this case, Jo Bamford has raised GBP200M after establishing a fund alongside Multi Family Office Vedra Partners, co-founded by Max Gottschalk.

We are seeing a global trend in single family offices either launch their own ESG/Impact strategies, or as in this case, get the heavy lifting done by a wealth manager/multi-family office.

Carnegie – Mark Carnegie continues to rail against the regulator as it drags its feet on Crypto compliance for retail investors. This follows his investment in Perth based Ian Love’s Blockchain VC.

I understand some of the frustration, but I think it should be noted that there is a real education gap in digital assets that needs to be addressed first as well as a lot of price volatility. For mum and dads to receive advice on this asset class, there needs to be an understanding from the people providing the allocation.

VC – an early-stage VC firm has launched to go alongside Jelix, Innovyz and Antler. This one, formed as “pre-accelerator” Pitchblak winds down is called Pitch and will start with a $2 million fund to back ideas. It will support 100 ideas, investing up to $20,000 into each. There will be three funds eventually, all refining the pool of companies until they get to 25 from the original 100. The firm will take between 10 and 25% of each in return for this support. I am left wondering where all these new ideas are coming from and what happens if none of those last 25 succeed? With Antler and Innovyz they seem to be first call for their chosen theme (tech, materials), I’d be interested to understand if Pitch has a point of difference.

Rockefeller VCVenrock, the family’s venture arm has invested in Vanilla, a new US firm that uses a parsing/reading tool to take masses amounts of estate planning data and find missing or out of date documents and collate it before meeting with stakeholders and lawyers. The article itself is a cool insight into how these tech solutions are making the full advice supply chain more efficient.

Success of a Family Office – Agreus has come up with some nice benchmarking data on how family office staff measure a good or bad year.

Perpetual an answer to my recent question on why Perpetual had purchased retail advice firm Jacaranda. Turns out they are going deep into the “Simple Needs” segment, just as the BCG Wealth Report 2021 said they should.

Meetings: MSCI (DI), Canopy (FO Reporting), ONDA (FO), Masttro (FO Reporting), Addepar (FO Reporting), Antler (VC), Mercer (FO), NashCap (RE Private Equity), Conduit Securities Singapore (Implementation), GQG (EM, Global Equities).

ETFs & Indexing

Active Managers – An interesting take on the index vs active debate. According to this article, the underperformance of active strategies in low dispersion market such as the S&P500 is not due to poor stock selection, but poor tax outcomes caused by the non-ETF structure.

As active ETFs are relatively new in the US (a different version has been operating in Oz for a fair while now), there is ongoing debate that will most likely mean a surge in active strategies using the ETF wrapper going forward.

SPIVA S&P has released its mid-year report on active vs passive, and it shows a higher proportion of active strategies outperformed their benchmark. Longer term (3, 5, 10, and 15 years), the majority of active funds underperformed their respective benchmark indices across categories, except for Australian Equity Mid- and Small-Cap funds.

ASX/Chi-X ETP Report – every month the ASX and Chi-X release their ETP reports and every month I play devil’s advocate and say that the ETF market is not the ETP market. I do feel that I am shouting into the void, however. Both are excellent sources of information for anyone looking at investing or advising on listed products. Know your product.

ESG & Philanthropy

Impact and Philanthropy – Often, the feedback from family offices is that these two remain outside the investment bucket. This article from fellow Simple expert Julien Lecs, looks to marry the concept of doing social good whilst maintaining a profitable mindset. This is an incredibly in-depth article with a lot of great case studies and data – a relevant companion piece to the recent PWC “How To” guide that was in the last newsletter and can be found here.

Sustainable Development Goals – Insto transition management firm TGM has signed a JV with Perth based SDG analytics firm Sustainable Platform. As clients, especially insto, look to manage assets with an eye to these UN goals, it makes sense that the data race continues.



Recent Posts

See All