Financial Standard vol23n08

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Consultants fall short with NFPs: Expert

Andrew McKean

Asset consultants are commonly employed by large not-for-profits for investment advice; however, their guidance often delivers underwhelming outcomes, according to Stockspot chief executive Chris Brycki.

This is because many asset consultants operate under a vertically integrated model, known in the industry as the ‘integrated consultant model,’ where they recommend their own products.

Stockspot recently reviewed dozens of pitch decks aimed at not-for-profits and found one of the biggest red flags to be consultants being paid by the very funds they recommend through hidden fees or rebates that aren’t clearly disclosed.

He says consultants’ recommendations are clouded by their business model structures, which effectively turns them into sales representatives for their own fund or fund-of-funds.

Transparency around those structures is “pretty poor”, he says, making it difficult to determine how much of the fees go to the consultant versus the underlying fund managers. It’s also hard to glean whether the managers being recommended have been compromised by their willingness to split fees, Brycki notes.

The outcome is that not-for-profits can be steered into “expensive, complex strategies,” often filled with active managers and alternative assets that “destroy value over the long run” and waste donor money, he says.

A combination of advice fees, performance fees, brokerage, and margins on cash means many not-for-profits are paying 2-3% per year, the review found. While that might not seem like much, over time it adds up in lost impact.

“These layers of fees eat into returns. They rarely buy you better performance. They just transfer more of your charity’s money into your investment consultant’s pocket,” Brycki says.

“I recently came across a consultant recommending their own ‘alternatives’ fund that charged 3.4% per year in fees. Over five years, the fund returned just 5.8% annually.

“Those fees weren’t clearly disclosed - you had to dig deep into the fine print to find them.”

Another bugbear for Brycki is benchmark manipulation.

He’s found some asset consultants often use inappropriate benchmarks that don’t match the underlying investment strategy to make performance appear stronger. For example, he said a bond fund

might be compared to cash, while an infrastructure fund could be stacked up against the Consumer Price Index instead of a proper index.

“I’ve never seen an asset consultant admit that their recommendations underperformed, even though the evidence shows most do. It’s like running a 100-metre race and claiming victory because you beat everyone else who was running 200-metre hurdles,” he says.

Brycki adds that if you compare the products recommended to an indexed equivalent, evidence often shows consistent underperformance.

SPIVA studies, which measure the performance of actively managed funds against their benchmarks across equity, real estate, and bond categories, show that most have underperformed over the short, medium, and long term.

Meantime, a US study based on Internal Revenue Service data from nearly 30,000 not-forprofit endowments of all sizes, estimates the average annual return between 2009 and 2016 was 6.65% – below benchmark returns of 13.7% for US equities.

For charities and other not-for-profits, given their long investment horizons, the best approach is often a simple one: setting the right asset mix based on risk capacity and sticking with it.

“Almost all of the performance we’ve seen [from portfolios managed by asset consultants] has been worse than if a charity had simply plonked money into low-cost index funds and rebalanced in a methodical way when allocations move away from their target,” Brycki says.

Removal of underperforming funds from historical models is also prevalent, he adds, describing it as a tactic that creates survivorship bias by showing only the performance of funds that survived while ignoring the poor managers they’ve dumped. Reporting only pre-fee returns to “disguise performance” also popped up in Stockspot’s review.

Brycki believes these red flags have remained unchecked because protections introduced for retail consumers after the banking Royal Commission haven’t translated to wholesale investors.

“Charities are treated essentially as sophisticated wholesale investors that aren’t owed a lot of disclosure or fund transparency,” Brycki explains.

“It would be a great start if there were certain standards required in order to report performance, so you can’t report it pre-fee…” fs

Local challenger enters ETF market

ETF Shares, Australia’s first new index ETF issuer in more than a decade and the country’s only locally owned provider, is preparing to launch.

The firm is led by Cliff Man as chief executive, David Tuckwell as chief investment officer, and Arjun Shanker as chief risk officer. They previously held senior roles at Global X ETFs, with Man serving as second-in-command and head of portfolio management, Tuckwell heading the product, strategy, and research team, and Shanker holding a senior role supporting the management of Victoria, South Australia, Tasmania, and Western Australia.

They first worked together at ETF Securities and remained with the business after its acquisition by Mirae Asset Global Investments, the family office of Korean billionaire Hyeonjoo Park. They stayed through the rebranding period to ensure a smooth transition following the sale. The trio launched ETF Shares after observing a greater proliferation of ETF issuers overseas and identifying a lack of choice for Australian

Continued on page 4

Industry to face shakeup: Deloitte

Karren Vergara

Private capital, active ETFs and tokenisation are set to take the financial services sector by storm over the next three to five years, Deloitte predicts. Deloitte’s 2025 Financial Services Industry Predictions report lays out six major forces that will disrupt investing, starting with the exponential growth in private capital from retail investor demand.

US and European retail investors are expected to pour money into private capital, reaching as much as US$2.4 trillion in 2030 from the current US$80 billion.

This growth is set to be driven by expanding product offerings and regulatory changes that make private capital more accessible to retail investors.

“While a large number of private assets available to retail investors are currently held within interval funds managed primarily by private capital firms, traditional investment managers are turning to structures that retail investors are already familiar with mutual funds and ETFs,” Deloitte said.

Continued on page 4

Chris Brycki Stockspot

By Jamie Williamson

Action is the only option

Twenty-four. That’s how many women have been killed at the hands of a man in Australia in the first four months of 2025, as at April 25.

Three of them were killed in a single day in three different locations, by three different people, according to Australian Femicide Watch.

The case that’s garnered the most attention is that of Audrey Griffin, who had her life cut short at just 19 years old. This occurred on the New South Wales Central Coast and, as someone who has lived on the Central Coast almost their entire life, I can tell you firsthand how this has rightfully shaken and enraged the community.

Naturally, the timing of all this made women’s safety and the proliferation of violence against women an election issue. Politicians have been falling over themselves to appear as though they will actually do something about it.

It provided fuel for those who have long been campaigning for legislative action to curb financial abuse, particularly in the superannuation system where a loophole means perpetrators of domestic violence can still be beneficiaries of their victim’s super.

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You may recall a case in 2022 where the mother of a young woman who took her own life after enduring unrelenting emotional, financial, mental and physical abuse at the hands of her husband fought to ensure he didn’t receive any of her daughter’s superannuation. Despite mountains of evidence, including death threats, both the fund and the Australian Financial Complaints Authority ruled in the husband’s favour. This, because legally a super fund can only refuse to pay out a benefit where the perpetrator is directly responsible for the death and charged as such.

Reforming this has been a commitment from both Labor and the Coalition, vowing to change the law – if elected – to ensure this can no longer occur. This is obviously a step in the right direction and, given that by the time you’re reading this we will know the outcome of the federal election, it’s something that will hopefully be prioritised.

However, attempts to close this loophole have been ongoing for years. So, why hasn’t it happened? It certainly doesn’t seem like a concept that would receive pushback. If anything, it’s

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low hanging fruit when compared to the other reforms needed in super.

The government realised the error of its ways after attempting to allow early access to super in instances of domestic violence in 2018. This was shut down, not only because forcing victims to fund their own escape is wrong, but also after it was pointed out how quickly early release could become a mechanism for financial abuse. And yet, this loophole remains.

In my mind, it’s an easy fix. Lawmakers must empower super funds to factor evidence of domestic and family violence into their decisions around payment of death benefits; there must be concrete, black and white rules for this, and they should be designed with no potential for loopholes.

Acting now won’t undo the wrongs of the past but, in many cases, ensuring perpetrators are blocked from claiming death benefits in future may well be the only justice their victim gets. If you or someone you know is experiencing domestic or family violence, support is available. Call 1800RESPECT or visit www.1800RESPECT. org.au for help and information. fs

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ASIC loses Block Earner case

The Federal Court has vindicated Block Earner by overturning a decision that it needed an AFSL to offer its Earner product and dismissing ASIC’s appeal to impose penalties on the platform.

Justices O’Callaghan, Abraham and Button dismissed ASIC’s appeal to Judge Jackman’s decision made last June to relieve Block Earner or Web3 Ventures of any liability and pay a fine.

ASIC believed that Block Earner should pay a penalty of as much as $350,000.

Judge Jackman at the time said Block Earner acted honestly and not carelessly in offering the product sought legal advice beforehand. This is despite a ruling in February of the same year stating that Earner was operating as a managed investment scheme without a licence.

On 9 July 2024, Block Earner cross-appealed the Federal Court’s decision that it needed an AFSL to offer its Earner product. Justices O’Callaghan, Abraham and Button have now overturned that ruling.

They determined that Earner was neither a financial product, managed investment scheme, or derivative under definitions of the Corporations Act.

The now-defunct Earner product was offered from 17 March 2022 until 16 November 2022. It enabled customers to loan specified cryptocurrency in return for interest paid at a fixed rate.

Block Earner maintains that its customers loaned cryptocurrency under fixed terms, receiving interest in return and that there was no pooling of contributions for the purpose of generating financial benefits for members, which is essential for a managed investment scheme.

On its website, Block Earner said: “Deposits into the Block Earner 7% fixed option, automatically convert your Australian dollars into the USD-backed stablecoin (USDC) via our exchange services and these stablecoins are then lent to us. Block Earner delivers risk-adjusted, high returns by working exclusively with partners whose investment strategies are proven, sustainable and measured.” fs

Iress offloads QuantHouse

ASX-listed Iress is divesting its market data business QuantHouse for €17.5 million ($31.4m) at a 45% discount to what it acquired it for in 2019. BAHA Tech Holding AG is set to take over Iress’ European market data and trading infrastructure business under a binding share sale and purchase agreement.

Iress paid €38.9 million ($69.3m) for QuantHouse, which provides 145 data feeds from exchanges and other data providers to clients in North America, Europe and Asia.

As part of the transaction, Iress agreed to a five-year agreement with BAHA to provide existing QuantHouse market data feeds into Iress’ software.

“The review determined that Iress was not the natural owner of QuantHouse, and it would perform better under renewed ownership with the capacity and intent to invest in delivering specialist market data offerings at scale to global clients. Iress will retain its traditional market data offering as part of its trading and market data business,” Iress said. fs

01: Kate Farrar chief executive Brighter Super

Centrepoint acquires super fund advice book

Andrew McKean

Centrepoint Alliance has entered into an agreement to acquire the comprehensive advice book from ESI Financial Services, a wholly owned entity of Brighter Super.

The transaction will see up to 400 clients, generating $1 million in annual revenue, transition to Centrepoint’s salaried advice arm, Financial Advice Matters, which manages around $1 billion in funds under advice.

We have a good understanding of where our internal team is best placed to provide advice and recognise that some members require more specialised support.

Brighter Super said the move is recognition to scale its advice offering to provide more comprehensive advice to members.

Brighter Super chief executive Kate Farrar01 said the fund’s goal is for every member to retire with advice, as closing the advice gap is essential to improving retirement outcomes for Australians.

“One of our key priorities is strengthening our ability to support external financial advisers, because we want members to have choice in how they seek advice and who they receive it from,” Farrar said.

“We have a good understanding of where our internal team is best placed to provide advice and recognise that some members require more specialised support.”

Brighter Super head of advice Steven O’Donoghue said he’s confident this will deliver the right level of support for members.

“We selected Financial Advice Matters because of its strong alignment with our values, high service standards, and presence in the communities where our members live and work,” O’Donoghue said.

“Our members will truly benefit from more personalised and specialist advice, while continuing to receive high-quality guidance that aligns with their individual goals.”

Brighter Super said around 39% of its members currently receive financial advice. However, the fund acknowledged that not all members’ advice needs can be met by its internal team, despite having nearly double the industry average of advisers, according to SuperRatings.

For this reason, it said it would continue to explore opportunities to expand its referral network to support scalable advice delivery. The fund now supports more than 1500 IFAs.

The fund’s initiative follows findings from the Brighter Super and Investment Trends 2024 Retirement Income Report, which revealed that 47% of pre-retirees feel unprepared for retirement indicating – “indicating a significant unmet demand for financial advice.”

The report found a direct correlation between receiving financial advice and confidence in retirement outcomes, with 55% of pre-retirees who changed investment options after receiving guidance feeling more prepared.

Other research from Russell Investments has also found that Australians who received financial advice were, on average, 5.9% better off at retirement.

“Our goal is for every member to retire with advice and bridging the advice gap is key to securing a better retirement for Australians,” Farrar said. fs

Shield Master Fund terminated, new receivers for Keystone Asset Management

Karren Vergara

The Shield Master Fund (SMF) has been terminated while its responsible entity Keystone Asset Management (KAM) has been appointed a new receiver and administrator.

The troubled SMF was terminated on April 10 after the new receiver, Alvarez & Marsal, the third liquidator to take over the case in eight months, determined this was in the best interests of unitholders.

“KAM is in liquidation, no suitable replacement responsible entity of the SMF has been identified to date throughout the administration and liquidation of KAM and it is unlikely that a suitable replacement responsible entity of the SMF will be found,” Alvarez & Marsal said.

KAM invested a significant amount of SMF funds into the Advantage Diversified Property Fund (ADPF).

“The ADPF has in turn made a number of loans to various special purpose vehicles in relation to potential land and/or property development projects. Many of these loans were made without the typical documentation and protections generally afforded in loan arrangements of a similar nature which has likely resulted in significant losses to the SMF,” Alvarez & Marsal said.

Last August, Scott Langdon, John Mouawad and Michael Korda of KordaMentha were appointed as voluntary administrators of Keystone.

On 5 September 2024, the Federal Court ordered to remove the prior administrators and have Jason Tracy and Lucica Palaghia from Deloitte appointed as the replacement joint and several administrators.

At the second creditors’ meeting held on 2 December 2024, creditors of Keystone resolved to wind up the company and appoint Tracy and Glen Kanevsky, also from Deloitte, as joint and several liquidators. On April 2, they both joined Alvarez & Marsal.

The now-defunct Keystone was the responsible entity for the Shield Master Fund.

The fund was available on Macquarie Wrap, and Equity Trustees’ NQ Super and Super Simplifier platforms.

ASIC began its investigation in February 2024 to halt new investment offers and then made interim stop orders on four product disclosure statements for the fund. It then sought to have the fund’s assets frozen.

About $100 million of investor money has allegedly disappeared. fs

The quote

Local challenger enters ETF market

Continued from page 1

consumers in the local market.

Man noted that Australia currently has six ETF issuers – BlackRock, Vanguard, State Street, BetaShares, Global X, and VanEck. By comparison, Canada has more than 20 and the UK has nearly 30.

He said Australia’s ETF landscape is “highly concentrated,” adding that having an industry dominated by a few players “something we see in other parts of the Australian economy.”

“This highly concentrated market benefits no one but the incumbents — and we think our entry will shift that dynamic. Without giving away too much during the exposure period, we expect our presence in the market will lower fees and increase competition from day one,” Man said.

The firm is targeting an early May listing, pending the completion of the exposure period.

He added that ETF Shares’ entry will “increase competition and product innovation” from day one.

“We’re going to be selective in our product launches. We only plan to launch funds when and where there is clear evidence of demand from Australian retail investors and advisers,” he said.

“We believe that being locally owned and fully locally managed means we’re better able to tailor our products and services to Australian advisers.” fs

Industry to face shakeup: Deloitte

Continued from page 1

For example, investment managers BondBloxx Investment Management and Virtus Investment Partners each launched actively managed ETFs with private credit exposure last December.

State Street Global Advisors (SSGA) launched an actively managed private credit ETF in February with the aim to provide all investors with access to private markets by investing in both public and private credit such as asset-based finance and corporate lending.

Deloitte predicts that private capital within mutual funds and ETFs will be up to 15% of illiquid investment allotment and will likely be a driving factor for US retail investors’ increased allocation to private assets over the next five years.

More broadly, Deloitte said that investment managers could unlock US$11 trillion in the active ETF space.

Active ETF assets in the US are expected to grow from US$856 billion in 2024 to US$11 trillion by 2035 – a 13-fold increase. This increase is expected to be driven by investors shifting from mutual funds to active ETFs across most institutional and retail investor channels.

Meanwhile, tokenisation is due to transform cross-border payments by 2030.

One in four large-value international money transfers will be settled on tokenised currency platforms, Deloitte said, which could reduce the cost of corporate cross-border transactions by 12.5%, potentially saving businesses more than US$50 billion. Stablecoins appear to be the nearterm frontrunner.

“Stablecoins may offer a clear path forward for wholesale cross-border payments in the near term...” fs

01: Sarah Court deputy chair ASIC

quote

In this case the Court found bonuses paid to advisers influenced the advice they provided, resulting in poor financial outcomes for the consumers involved.

THREE LINE HEAD

Advice firm hammered with $11m penalty

Andrew McKean

Defunct advice firm Equiti Financial Services, since renamed DOD Bookkeeping, which has been placed into liquidation, has been slammed with an $11.03 million penalty for providing “cookie cutter” advice and breaching conflicted remuneration laws.

Equiti Financial Services paid $130,250 in bonuses to three financial advisers who provided template advice to clients to roll over their superannuation into self-managed super funds (SMSFs) and use those funds to purchase property through a related entity, Equiti Property.

The Federal Court found that advice to 12 clients was “cookie cutter” and failed to consider their individual circumstances or objectives. It also determined that the bonuses paid to the advisers, when clients settled on property offered through Equiti Property, distorted the advice they provided and breached conflicted remuneration laws.

In settling the penalty, the Court said the misconduct was “plainly deliberate” and “extended over several years.” It noted that the recipients of the advice were making important and potentially life-changing decisions about their superannuation.

Separately, it found the advice was given in

an incentivised environment that rewarded uniform advice, benefiting the advisers to the detriment of their clients.

Justice Goodman also observed that the asset allocations in Statements of Advice were “strikingly different” from what was suggested, excessively weighted toward real property.

ASIC deputy chair Sarah Court 01 said misconduct exploiting superannuation savings is an enforcement priority.

ASIC updated its guidance on conflicted and banned remuneration (RG 246) in December 2020, and released an information sheet in December 2022 to help advice providers comply with their legal obligations when advising on SMSFs.

“In this case the Court found bonuses paid to advisers influenced the advice they provided, resulting in poor financial outcomes for the consumers involved,” Court said.

“Financial services licensees who employ advisers to provide personal financial advice need to ensure that they place their clients at the forefront.

“The size of today’s penalty demonstrates the seriousness of this misconduct.”

ASIC cancelled Equiti Financial Services’ Australian financial services licence in November last year. fs

ASX launches review into shareholder approval processes

Eliza Bavin

The Australian Securities Exchange (ASX) has launched a review into listing rules related to shareholder approval requirements, particularly when it comes to mergers and acquisitions.

The ASX said due to “heightened investor interest” around the James Hardie proposed acquisition of US-based Azek, it decided to launch the review into shareholder approval requirements for mergers and takeovers of listed companies undertaking a significant transaction.

The ASX allowed James Hardie to proceed with a $14 billion transaction without an investor vote, which led to backlash from major investors including AustralianSuper, UniSuper, Aware Super and HESTA.

“The Listing Rules need to balance the interests of both listed entities and investors, and ASX has a strong interest in ensuring the rights and interests of both groups are appropriately represented,” the ASX said.

“However, ASX acknowledges that Australian institutional investors are concerned that the current settings for shareholder approval requirements may not provide them with enough of a voice.”

The review will look to update analysis it undertook

in 2017 which looked at shareholder approval levels needed for listed company mergers, with a particular focus on reverse takeovers.

“This will be the first step in conducting a review of shareholder approval requirements as covered by the relevant Listing Rules. At the same time as updating this analysis, ASX will also explore the circumstances in which companies are required to disclose receipt of a waiver to the Listing Rules when they publicly announce the matter to which the waiver relates,” the ASX said.

ASX chief executive Helen Lofthouse said pushback from institutional investors spurred the review.

“We have heard from investors – many of them shareholders of James Hardie - that they want a greater voice for shareholders invested in ASXlisted companies, but we are also mindful that we need to examine this question in a way that ensures we serve the needs of the market as a whole,” Lofthouse said.

“We will seek feedback from stakeholders once we have updated the 2017 analysis and this will support a more informed review of shareholder approval requirements.” fs

The

01: Kris Webster portfolio manager Canopy Investors

Face punch

The power of conviction

Everyone has a plan until they get punched in the face.” Mike Tyson’s brutal observation feels particularly relevant in today’s investment landscape. As waves of policy uncertainty roll through markets, fuelling economic and share market volatility, many investors find themselves reeling from that proverbial punch.

Genuine conviction

Conviction is confidence in an investment built on first-principles research. High conviction enables investors to remain confident and focused in the face of market volatility, rather than letting market prices dictate their confidence. Many market participants operate on what we call ‘borrowed conviction’ – investment ideas adopted from others: analysts, financial media, popular sentiment, or the infamous BBQ stock tip. When markets tumble and uncertainty rises, borrowed conviction often crumbles like a house of cards, leaving investors vulnerable to fear-driven decisions that they later regret. As Warren Buffett famously said, “only when the tide goes out do you discover who’s been swimming naked.”

The Fair Isaac test

In 2020-2021, the stock price of Fair Isaac (NYSE: FICO) fell more than 30%. Despite its near monopoly in US consumer credit scores, the market grew increasingly concerned about potential competition, regulatory changes, and the trajectory of the housing market. Investors without conviction fled. But those who had done deep research understood something crucial: FICO was incredibly entrenched. Its credit scores were used in over 90% of US lending decisions, it was baked into banks’ complex decision processes, there were very high regulatory barriers to entry, and it therefore had significant pricing power. Through the volatility, FICO’s fundamentals remained intact. As temporary concerns subsided, the stock delivered exceptional returns, rewarding those who maintained conviction. The FICO episode offers a clear illustration of the power of conviction.

Hidden in plain sight

When Silicon Valley Bank collapsed in March 2023, shares of financial technology provider Jack Henry (NASDAQ: JKHY) declined sharply. The market seemed to assume that its business would be severely impacted, reflecting a misunderstanding of its business model. Jack Henry’s revenue isn’t primarily driven by the number of banking clients. In fact, most of its revenue comes from long-term contracts with fees tied to the number of accounts serviced and assets under management. When regional

banks fail or consolidate, Jack Henry’s clients are often the acquirers, bringing the acquired bank’s assets onto Jack Henry’s systems and expanding its revenue base. Understanding these underlying business drivers was critical to taking advantage of the market volatility.

Underestimating Amazon

Conviction is not only valuable as prices decline, but also critical when holding positions in companies that may appear optically expensive. Consider Amazon’s (NASDAQ: AMZN) journey from small-cap online bookseller to global juggernaut. When the company expanded beyond books into electronics and apparel, many thought the stock was too expensive, basing their expectations on growth within existing categories and expecting intensifying competition as traditional retailers built their online presence. The launch of Prime was seen as a cost centre, rather than the engine of Amazon’s incredible market share gains. AWS was dismissed as a capital-intensive side project, rather than the ultimate source of most of Amazon’s operating profit. Its advertising business was initially overlooked before becoming a multi-billiondollar revenue stream. Amazon’s unique culture and history of scaling new businesses were easy to dismiss without the kind of fundamental research that underpins long-term conviction.

Weaponising price

Wise (LSE: WISE) provides another compelling example. On the surface, it might appear to be just another fintech in the commoditized foreign exchange space. The goal of its ’Mission Zero’ is to drive cross-border fees toward zero, which seems sure to negatively impact profitability. But this view confuses price cuts for weakness rather than recognising them as a strength. Wise’s unique, low-cost global payment infrastructure bypasses traditional banking rails, allowing it to reduce prices while maintaining profitability. Lower prices and faster service drive demand – seven out of ten new customers come from word of mouth. This creates a virtuous cycle: growth funds infrastructure improvements, enabling lower prices, driving higher transaction volume, and accelerating its flywheel. Despite operating in a competitive industry, we believe Wise has a hidden and durable competitive advantage that should underpin its growth for decades. That belief is a source of conviction, even in volatile markets.

Is your manager’s conviction borrowed?

For clients, it can be hard to tell whether a fund manager has genuine conviction or is simply fol-

As Warren Buffett famously said, “only when the tide goes out do you discover who’s been swimming naked.

lowing the herd. In our view, some of the clearest indicators include:

• Behaviour during market volatility: The ultimate test of conviction comes during sharp market drawdowns. Managers with genuine conviction tend to maintain or increase positions in their highest-conviction holdings during these periods rather than retreating to defensive allocations.

• Concentrated portfolios: Managers with strong conviction typically allocate meaningful capital to a relatively small number of investments demonstrating confidence in their best ideas.

• Personal investment: Managers who invest substantial personal capital alongside clients demonstrate both alignment and confidence in their investment strategy.

• Structured research process: Genuine conviction stems from a disciplined, systematic approach to analysing businesses. Managers should demonstrate a clear, repeatable research methodology that builds deep understanding of their investments rather than relying on others’ perspectives.

• Willingness to be different: Conviction often means maintaining allocations that differ from peers or benchmarks, even as this leads to periods of underperformance.

At Canopy, we believe conviction should never be borrowed but must be built through detailed research. When markets turn volatile and uncertainty reigns, the strength of conviction can be the difference between seizing opportunity and capitulating at precisely the wrong moment. fs

The quote

Indigenous NFP mandates JANA

Karren Vergara

JANA has won a mandate from Aboriginal Investment NT to bolster its $655 million commercial investment portfolio (CIP).

Not-for-profit Aboriginal Investment NT’s purpose is to promote the self-management, economic self-sufficiency, and social and cultural wellbeing of Aboriginal people living in the Northern Territory via innovative approaches to capital deployment and investments.

JANA will provide a tailored investment strategy designed to meet the organisation’s goals, while building collective Aboriginal wealth and economic strength for generations to come.

Aboriginal Investment NT chief executive Nigel Browne said: “The appointment of JANA marks a major step in Aboriginal Investment NT’s strategic objectives to grow Aboriginal money for future generations, strengthen Aboriginal economic, social and cultural systems, and elevate Aboriginal interests across the Northern Territory.”

Aboriginal Investment NT was established under the Aboriginal Land Rights (Northern Territory) Act 1976. It was previously known as the Northern Territory Aboriginal Investment Corporation.

JANA’s appointment coincides with the first investments into the Aboriginal Investment NT CIP, which comprises of two funds: the Community Ready Fund and the Future Fund.

JANA chief executive Georgina Dudley said the Aboriginal Investment NT’s “vision of intergenerational prosperity, built on Aboriginal values and governance, is both powerful and deeply aligned with JANA’s commitment to supporting purpose-led investors.”

“Together, we aim to shape a strategy that delivers long-term, sustainable outcomes for communities across the Northern Territory,” she said. fs

Global X launches AI infra ETF

Global X launched the Artificial Intelligence Infrastructure ETF (ASX: AINF), which focuses on companies with exposure to data centres, energy and materials that help facilitate the adoption of AI technologies.

AINF tracks the Mirae Asset AI Infrastructure Index with 30 holdings in total. AINF charges a management fee of 0.57% p.a.

The index aims to track the performance of companies involved in supporting the data centre infrastructure requirements arising from AI operations.

This includes companies involved in the supply of electric utilities and infrastructure, energy management and optimisation, data centre equipment manufacturing, thermal management, and production and refinement of copper and uranium used to power and operate AI infrastructure.

Global X’s Billy Leung said AI infrastructure is the backbone of the entire AI value chain without which growth would be impossible.

“There has been significant underinvestment in key areas which power AI means there is a bottle neck which must be addressed. For example, global data centre spending is expected to exceed US$2 trillion by 2030,” Leung said. fs

01: Richard Webb superannuation lead CPA Australia

Smaller super funds unfairly burdened by regulatory levy

Andrew McKean

Members of small and medium-sized super funds have become “collateral damage” in an imperfect regulatory funding model, CPA Australia says, in response to Treasury’s proposed levy changes for 2025-26.

Despite the total levies for next year falling, members of smaller funds continue to make significantly greater contributions than those of large funds.

CPA Australia superannuation lead Richard Webb 01 said the Financial Institutions Supervisory Levies, which are collected by APRA to recover costs incurred for regulating the superannuation industry, are a “key component to the integrity of the system,” but the current model is “unfair and change is long overdue.”

“Despite the total levies for next year falling, members of smaller funds continue to make significantly greater contributions than those of large funds,” Webb said.

“What’s more, the reduction passed on to members of small and medium-sized funds is less than the reduction for members of larger funds. This is rubbing salt into the wounds.”

He pointed out that under the proposed levy changes, a large fund with $360 billion in assets and 3.42 million members would be charged $10.3 million in 2025-26.

Meanwhile, a medium-sized fund with $9.3 billion in assets and 26,063 members would be charged $909,000, while a small fund with $349 million and 2239 members would face a $34,000 levy.

For members of this large super fund, this would equate to an annual charge of $3.01, down from $3.71 in 2024-25. Members of medium-sized funds would pay $34.87, down from $39.24, while those in small funds would be charged $15.26, reduced from $17.17.

This represents a reduction of 18.9% for large super fund members, compared with 11.8% for medium-sized fund members and 11.1% for those in small funds.

More than 1.5 million Australians hold superannuation accounts with a super fund with less than $20 billion in assets, CPA Australia noted.

Webb said members of smaller super funds were already bearing a higher burden of administration costs and it is unfair to further increase this with a disproportionate share of the levies required to fund the regulation of the system.

“We acknowledge that current government policies aim to encourage mergers of super funds to reduce fees for members. However, we believe that there is more work to be done in the meantime to ensure that members of smaller funds do not continue to pay more than their fair share,” he said.

Separately, Webb was concerned that the funding allocation for the Gateway Network Governance Body (GNGB) – which governs the Superannuation Transmission Network (STN) –was not sufficient to prepare the organisation for the much-needed investment that will be required to manage with new Payday Super requirements.

“The levies attributable to the GNGB is forecast to increase by just $100,000,” he said.

“However, in addition to an increased focus on cyber threats and data security, the GNGB also oversees the work undertaken by the STN in preparation for Payday Super.

“This crucial work does not appear to have been factored into this. We would have expected to see around a five-fold increase in this funding.” fs

Corporate fund selects Mercer Super for SFT

One of the few remaining corporate super funds, the Goldman Sachs & JBWere Superannuation Fund, will be merged into Mercer Super this month.

In September 2024, the trustee for the Goldman Sachs & JBWere Superannuation Fund – BEST Superannuation –commenced a review of its options to merge the fund, saying it was appropriate to do so while the fund remained in a “strong and robust” position.

It has now been confirmed that the fund, which was established in 1948, will undertake a successor fund transfer (SFT) and become a specialised sub-fund within the Mercer Super Trust.

In forming the decision, BEST Superannuation cited the changing regulatory landscape and associated increase in costs. It also noted the need to rotate its long-standing directors, most of which serve on the board voluntarily and some of which have done so for more than two decades.

The two also have a long-standing relationship, with Mercer having served as the fund’s administrator for more than 20 years.

APRA data shows that, as at December end, the fund had total assets of $676 million. It has 1690 member accounts, about 720 of which are active. The median account balance is about $200,000.

The fund was also home to 32 defined benefit members with a lifetime pension entitlement. They have all already been transferred to the Challenger Retirement Fund.

Last year, a KPMG analysis found the Goldman Sachs & JBWere Superannuation Fund had some of the most expensive administration fees in the market, costing a total of $1326.

The merger process is expected to commence from May 20 and be completed in mid-June.

Mercer has taken over several other super funds in recent times, including ING’s Living Super, the Holden Employees Superannuation Fund and TAL Super.

It’s also currently offloading one of its offerings, transferring the Mercer Portfolio Service Superannuation Plan to CFS Edge Super and Pension in the Avanteos Superannuation Trust. This plan has some $1.6 billion in assets and about 4460 members. Mercer Super declined to comment. fs

The quote

Jamie Williamson

The Advisers Big Day Out provides financial advisers with leading presentations, networking and professional development opportunities over a one-day event.

Taking place across multiple cities, advisers can connect with specialist fund managers and hear the latest strategies and trends across a variety of asset classes.

After attending the Advisers Big Day Out, advisers will be equipped with additional market projections, insights and product knowledge, while earning legislated CPD hours for a full-day’s attendance.

REGIONAL 2025

Hobart

Tuesday, July 15

Geelong Thursday, July 17

Mornington Friday, July 18

Cairns Tuesday, July 22

Sunshine Coast Thursday, July 24

Gold Coast Friday, July 25

Canberra Tuesday, July 29

Wollongong Wednesday, July 30

Newcastle Thursday, July 31

Central Coast Friday, August 1

Insignia Financial trims $5bn FUM

Market volatility and institutional outflows shaved $5 billion off Insignia Financial’s funds under management (FUM) last quarter.

In the March quarter, Insignia Financial said about $1.8 billion of the $3 billion an institutional client poured into its domestic fixed income capabilities at the end of 2024 were redeemed. It said this was due to rebalancing and asset allocation requirements of the institution.

This, combined with market volatility, saw a total decrease of $5 billion in the wealth manager’s FUM, now coming in at $321.8 billion. This is spread across Wrap ($97.7bn), superannuation ($129.8bn), and asset management ($94.2bn).

The Wrap business’ assets were down 1.4% due to negative market movements and $608 million in pension payments, though partially offset by net inflows of $393 million. The MLC Expand Advised products saw close to $500 million in net inflows in the quarter.

The super, or Master Trust, division was also down 1.9% – again, on the back of market volatility and pension payments of more than $300 million. It also saw net outflows of $628 million. The advised channel had net outflows of $348 million.

Meantime, the asset management unit’s FUM decreased by 1.2%. While net inflows were positive, particularly driven by the managed accounts offering, it was fixed income that saw outflows here. fs

Family offices favour real estate

Karren Vergara

The world’s richest families love to invest in real estate more than any other asset classes, a new analysis shows, as more than half feature property in their portfolios.

The research conducted by familyofficehub, a provider of global family office research based in Munich, found that 52.7% of the total 2079 single family offices analysed invest in real estate. Family offices from Europe, North America, Asia Pacific and Middle East took part in the study. The US leads the way for real estate-focused single family offices, followed closely by Germany. Residential, office and retail buildings are the most popular property types. Logistics, hospitality, and light-industrial assets are also prominent.

The continued popularity of real estate reflects its enduring appeal as a vehicle for wealth preservation and growth, familyofficehub said, as the tangible, income-generating asset real estate provides an attractive alternative to more volatile capital market investments.

The study also highlights differing activities of global family investment vehicles in the real estate sector.

Many family offices hold existing assets, which are often based on the entrepreneurial activities of the family, and selectively purchases new properties. Meanwhile, an increasing number of family offices is also actively investing in new assets. fs

01: Brett Chatfield chief investment officer Cbus

Cbus investment chief resigns

Eliza Bavin

Cbus chief investment officer Brett Chatfield01 will leave the $100 billion fund to take on an opportunity outside of industry superannuation, as his replacement is named.

Chatfield will exit the fund he’s been with for more than a decade to commence as chief investment officer of a large family office, after completing a transition to incoming chief investment officer Leigh Gavin.

The quote

Leigh has a proven track record as an investment leader, delivering strong returns for members, shaping strategies, portfolios and teams.

Cbus chief executive Kristian Fok thanked Chatfield for his many years of service in delivering strong returns for members.

“Brett has spent the last few years bolstering the investment senior leadership team, hiring exceptional investment professionals with whole-of-fund experience – like his successor Leigh Gavin. Cbus has always had a strong focus on succession planning and having a strong depth of leaders,” Fok said.

“Brett’s commitment to members and his determination to deliver them the best investment returns, and retirement outcomes, is unquestionable. He has lived and breathed Cbus for over 12 years and members are undoubtably much better off because of it.”

Gavin has been deputy chief investment officer since February, having replaced Alexandra

Campbell. He joined the fund as head of portfolio strategies in October 2023.

Prior to that he was head of investment model design at AustralianSuper and chief investment officer for LUCRF Super.

Fok congratulated Gavin on his appointment to the role, saying the fund aims to grow from $100 billion to $150 billion in the coming years. Fok added the fund is looking to directly manage half of members’ assets through the inhouse investment team.

“Leigh has a proven track record as an investment leader, delivering strong returns for members, shaping strategies, portfolios and teams,” Fok said.

“An industry veteran with more than 25 years’ experience, Leigh has the deep expertise and skills necessary to deliver the outstanding investment results our more than 920,000 members deserve.”

Fok said Cbus is preparing to deploy more than $20 billion in members’ savings over the next five years, with at least $5 billion into private markets and $10 billion in domestic investment.

“Leigh’s previous CIO experience, and skills honed managing local and global portfolios will allow him to build on our already strong investment foundations,” Fok said. fs

Future Group confirms more mergers ahead

Jamie Williamson

The Smart Future Trust is growing again, taking on the Zurich Master Superannuation Plan and a small MLC product.

The Zurich Master Superannuation Plan will be merged into the Smart Future Trust alongside the MLC Insurance Only product that currently sits inside an Insignia Financial fund.

Equity Trustees serves as trustee of both the Smart Future and Zurich offerings and, following a review, decided Zurich members would be better off if transferred into a larger fund.

It said that after doing so, it was satisfied that transferring members to smartMonday PRIME, a product within the Smart Future Trust, was suitable. Upon completion, the Zurich branding will be abandoned.

The Zurich Master Superannuation Fund, which was established in 1994, has close to $800 million in funds under management, held on behalf of 7500 members.

Meantime, MLC Insurance Only is used by about 97,000 members to fund life insurance premiums in a tax-effective structure. It also has superannuation accounts with funds under management totalling about $200 million.

The insurance policies for these members that are transferred, which are held through Acenda (formerly MLC Life), will retain their existing terms and conditions. They will go into a new Acenda Division within the Smart Future Trust and Acenda will remain as policy administrator.

“We have built a strong relationship with Acenda and are looking forward to a long-term partnership with both Acenda and their parent company in Japan, Nippon Life,” Future Group said.

The Smart Future Trust has close to $6 billion in assets. This is currently spread across more than 20 different products,

primarily corporate offerings. In total, there’s more than 60,000 member accounts tied to the Smart Future Trust – and soon to be even more.

Financial Standard recently reported Future Super and Verve Super will soon be merged into the Smart Future Trust as well. This would add a further $2.7 billion to the total FUM.

The Zurich transfer is expected to take place on June 6, while the MLC transfer will be completed on July 1.

“With our focus on centralising operations and creating a highly efficient superannuation platform across multiple brands, these transfers demonstrate that we are a favoured destination for funds looking for a home for their super and insurance offerings and ensure members are well served,” Future Group chief executive Simon Sheikh told Financial Standard.

“Combined, these transfers will see funds under management grow by just under $1 billion while increasing the number of members we serve to just under 500,000.”

At the same time, the group is undertaking a review of its operations and extensive insurance arrangements, which largely differ from product to product within the Smart Future Trust. The trust currently has mandates with several insurers, including AIA, MetLife and Zurich.

Future Group is consolidating its insurance offerings from 10 to four and closing several of its legacy investment options. Future Group said this has resulted in the need to transfer some members with complex insurance needs to a more appropriate super fund.

As part of the insurance rationalisation project, Future Group is currently completing a tender process for its insurance offerings, with the aim of appointing a single provider. The outcome of this process will be announced in due course, it said. fs

01: Georgia Hall ESG and investment director Maple-Brown Abbott

Energy as a weapon

The critical case for energy transition

Market noise would have us believe we’re at the end of the road for the energy transition and the push to decarbonise – not just in the US, but even in more climate-oriented markets such as Europe. But the reality is far more nuanced than the headlines suggest. The energy transition offers numerous affordability and security benefits which only strengthen the case for decarbonisation in an era of deglobalisation. This point isn’t lost on companies and policymakers in Europe.

President Trump’s inauguration in January 2025 saw swift and sweeping attempts to roll back key policy measures designed to incentivise and attract investment in some clean energy sectors. Even Europe, often seen as the most progressive and climate-oriented market, is showing signs of a pullback on flagship “green” policy measures as the region attempts to reorient capital towards security and defence.

This negative sentiment has been further strengthened by a challenging environment for renewable energy projects that pre-dates the Trump 2.0 presidency. Project developers on both sides of the pond are facing inflationary pressures, supply chain bottlenecks and permitting delays.

But the numbers tell a different story. Data from the International Energy Agency (IEA) shows that renewables accounted for the largest share of growth in global energy supply over 2024 at 38%. In key markets like Europe, solar and wind generation surpassed coal and gas for the first time, while US coal consumption fell by approximately 4% to its lowest level in nearly 60 years, and European consumption dropped by 10%.

A recent research trip to Europe and the UK revealed how infrastructure companies, policymakers and regulators all seem to be more aligned than ever on the need to invest more –and at a faster pace – in the energy transition. Why? Because the region needs to secure energy sovereignty and support affordability. “The focus used to be more about climate change but now it’s more about energy sovereignty,” one chief executive explained in a research meeting, “but the solution is just the same because the answer is renewables and grid infrastructure.”

At a time of geopolitical instability and trade war uncertainty, we risk overlooking the significance of energy transition investment. It is too easy and simple to assume it is a trade-off between decarbonisation, security and affordability. “When we have debates about defence,” said one chief executive of a major European infrastructure company, “we forget to acknowledge that energy is a weapon.”

Despite Europe’s best efforts to wean itself off Russian gas, the region still purchased around 19% of pipeline gas and LNG from the country

in 2024. The decrease was made possible by a sharp increase in LNG imports from other countries and a 19% reduction in gas consumption between 2021 and 2024. The US supplied almost 45% of total LNG imports to Europe in 2024, more than double what they were three years ago. With the US now proving to be an unreliable and volatile trading partner, the case to secure energy sovereignty while managing affordability becomes even more pertinent for Europe.

At a global scale, analysis undertaken by Ember – an energy think tank – shows that 37^% of total primary energy demand is met by imported fossil fuels, with 52 countries importing more than 50% of their primary energy from fossil fuels. The weaponisation of energy is a very real risk and the solutions depend on having the right infrastructure to support longterm security.

Robust energy infrastructure will enable countries to enhance electrification and share energy resources more efficiently and help insulate countries from geopolitical uncertainties and minimise commodity price spikes that can drive up energy costs. Despite macroeconomic pressures such as higher interest rates, renewable energy technologies remain highly cost competitive compared to conventional fossil fuel-based generation, with large scale solar being the cheapest followed by onshore wind on a per megawatt-hour basis (location dependent). The fundamental economics remain intact.

Key to achieving this is having the right regulatory frameworks and mechanisms in place to create more certainty around long-term returns, while ensuring the sector remains investable and financeable. Indeed, energy regulators are stepping up efforts to attract capital towards major transmission and interconnector projects, one of the biggest bottlenecks to the energy transition. One UK-based electric utility described how the “regulators are now focusing more on timely project delivery than nitpicking the costs”, a perspective shared by other utilities in Europe.

In March, the UK electricity regulator (Ofgem) approved £4 billion of accelerated investments to fast-track the delivery of high-voltage transmission projects. The UK’s National Energy System Operator (NESO) has also proposed a series of grid connection reforms based on the principle of “first ready and needed, first connected”. These reforms aim to optimise grid use and facilitate a more efficient transition to renewable energy sources, removing stalled projects holding up the queue.

Even in the US, private sector investment in the energy transition continues apace, albeit with less fanfare. Increasing load demand owing to the rapid build out of data centres is putting particu-

The quote

At a time of geopolitical instability and trade war uncertainty, we risk overlooking the significance of energy transition investment. It is too easy and simple to assume it is a trade-off between decarbonisation, security and affordability.

lar strain on the grid, requiring significant investments in transmission infrastructure and new electricity generation across the country.

This is despite the Trump administration pausing all federal (not state) leasing and permitting for wind projects and threatening to rescind parts of the tax credits and subsidies inbuilt into the Inflation Reduction Act (IRA) to help catalyse investment in clean energy projects. While the outlook for wind remains uncertain, the outlook for solar remains positive.

Across the US, renewables provided nearly a quarter of electrical generation in 2024, reinforcing their position as the second largest source of electrical generation, behind only natural gas. Looking forward, the Energy Information Agency (EIA) expects growth in US power generation over the next two years to be mostly driven by new solar plants. The EIA also expects utilities and independent power producers to add 26 gigawatts (GW) of solar capacity in 2025 and another 22 GW through 2026. The agency also forecasts that US coal retirements will accelerate, retiring 6% (11 GW) of coal generating capacity from the US electricity sector in 2025 and another 2% (4 GW) in 2026.

While the Trump administration is making efforts to reinvigorate America’s “Beautiful Clean Coal Industry”, the reality is that coal is far more expensive than renewables and gasfired power generation. Based on our company research meetings and discussions with sell side brokers, coal plants are becoming increasingly inefficient and cumbersome to operate. Supply chains are shrinking, and regulated utilities are keen to close them as soon as practicable.

When we’ve asked US electric utilities, or even sell side brokers, whether there is any appetite to invest in greenfield (i.e. new) coal power projects, the answer has been a resounding “no”. We do not know of one single regulated utility that is currently considering or showing any desire to do so. The invisible hand of the market is clearly at odds with the Trump administration’s policy push. In this case, economics have already decided coal’s fate.

We therefore believe the energy transition thematic remains intact, albeit with a lot of short-term noise and over-generalised headlines that don’t reflect the reality of what’s happening on the ground. As an active investor in electric networks and renewables, we are ever watchful for adverse changes and improvements in the economics and scale of investment plans. However, the horse has already bolted. The energy transition carries significant opportunities for investors – especially those companies providing essential services to society and investing with a long-term mindset. fs

FNZ faces revolt from shareholders

FNZ employee shareholders are revolting against the global technology firm for allegedly diluting their ownership by US$4.5 billion with three capital raises in 12 months.

A group of past and present FNZ employees are threatening a class action against FNZ, alleging the dilution of ownership undermines their hard work and dedication to the company and effectively transfers their wealth to the major shareholders.

FNZ rattled the tin in April, raising US$500 million of new capital to “support long-term sustainable growth” under a refresh strategy.

Amid appointing a new chief executive in Blythe Masters in August 2024, FNZ also flagged existing institutional shareholders committed $1 billion in new money via the issuance of two rounds of preference shares and then awarded them warrants.

Such preference shares rank higher than employee shares, the FNZ Class Action group said, meaning that the latter’s equity have been diluted by US$3 billion.

The new capital announced this month under the same structure potentially dilutes the employees’ shares by another US$1.5 billion.

CDPQ, former US Vice President Al Gore’s Generation Investment Management and Temasek are some of the major investors in FNZ.

In addition to its institutional and private equity investors, FNZ has more than 3000 employee shareholders.

“The value of the employee shareholders’ shares has been drastically eroded by institutional investors and private equity firms who dominate the FNZ Group board and now also control senior management,” the FNZ Class Action group said.

“There has been a lack of substantive response from FNZ Group’s board and management to their concerns. With FNZ domiciled in New Zealand, there are potential violations of the New Zealand Companies Act 1993.” fs

Selfwealth to be taken over

Andrew McKean

Selfwealth shareholders approved the investment platform’s acquisition by Singaporean digital wealth manager Syfe Group’s holding company Svava at the end of April.

Of those who voted, 99.7% were in favour of the proposed offer, which will see shareholders receive $0.28 in cash for each share they own as of May 1.

The offer represents a 133% premium to Selfwealth’s 12 cent closing price the day before Bell Financial Group made its initial bid on November 13 last year. Bell raised its proposal to 25 cents per share later that month; the approved offer is a 27% premium to that bid.

Axi Corp Financial Services was also in the hunt, putting forward an indicative offer of 23 cents per share the day after Bell’s initial bid, before Syfe submitted the winning proposal.

Prior to the vote, Selfwealth’s board unanimously recommended that shareholders back the offer. fs

01: Mary Delahunty chief executive Association of Superannuation Funds of Australia

Div 296 must proceed: ASFA

Matthew Wai

Ahead of the federal election, the Association of Superannuation Fund of Australia (ASFA) urged all contesting parties to consider its recommendations to “protect and strengthen” the super sector.

The peak body is calling for specific reforms in the sector, including proceeding with the controversial Division 296 Bill, which aims to double the tax on super balances exceeding the $3 million threshold.

The bill has been put on halt until at least after the election; the Coalition had reiterated the bill will be rubbished if it were elected.

In fact, ASFA chief executive Mary Delahunty01 justified the sentiment.

“ASFA believes that the tax on earnings on assets above $3 million is a worthwhile pursuit, the bill and the shape that it’s currently in, obviously has some hairs on it,” Delahunty said.

“I’m not as concerned about the taxation of unrealised capital gains as some other commentators are, I think we’re all familiar with land tax, which is also a taxation system that is based on unrealised capital gains.

These reforms present an opportunity to enhance fairness in the system while preserving longterm

Those opposing the tax have been vocal around their concerns, including taxing unrealised gains and the lack of indexation on the threshold.

retirement savings.

This includes the independent member for Wentworth Allegra Spender, who labelled the tax on unrealised gains a “very bad policy”.

However, ASFA believes the tax can effectively ensure fairness in super tax concessions, arguing that the incoming government should commit to maintaining the sustainability of the super system by ensuring tax concessions are “distributed fairly”, which is supported by The Australia Institute.

“This includes supporting Division 296 measures while ring-fencing and enhancing the Low-Income Superannuation Tax Offset (LISTO) to protect low-income earners,” the report said.

“These reforms present an opportunity to enhance fairness in the system while preserving long-term retirement savings.”

“Whether or not that means you need to pay the tax at the time, or whether there should be some reform done to that bill that would see a debt held over. Those are the sorts of issues I think an incoming government might want to tackle if they want to bring more equity to the tax incentives in superannuation.”

Other recommendations include immediate attention to payday super, providing super for all workers under 18, strengthening enforcement of superannuation guarantee compliance. The peak body also advised the government to protect super entitlement in case of insolvencies, enabling contributions to pension accounts, and banning the use of adverse genetic testing results in life insurance through the paper.

“This federal election ASFA is calling for targeted and coordinated reforms that protect and build upon the strengths of Australia’s superannuation system, including maintaining the elements that make our system work: preservation settings, improving equity outcomes, and ensuring the system remains a pillar of national economic stability,” Delahunty added. fs

Advisers seek investment philosophy, performance in managed accounts provider

Karren Vergara

Investment philosophy and portfolio performance are the main reasons why financial advisers have chosen their managed accounts provider, new research from Zenith Investment Partners show.

The Unlocking Advice Efficiencies in 2025 report found that half the participants cite investment philosophy as a drawcard while the same number say that investment performance is a driving force when it comes to partnering with a managed accounts provider.

The survey of 460 financial advisers also found that fees are a top concern for 55% of off-the-shelf users, compared to 27% for custom managed accounts and 26% for private label solutions, highlighting cost considerations in selection of both provider and managed account type.

Zenith head of portfolio solutions Steven Tang said the report found strong overall satisfaction with 81% of respondents being satisfied or extremely satisfied with their managed account provider, indicating broad approval of service quality.

“In addition, managed accounts are demonstrating their value to advice businesses, with 92% of advisers reporting time savings in administrative tasks and 81% expressing overall satisfaction. However, challenges exist to their broader adoption. The migration of legacy portfolios, cost considerations, and client preferences for bespoke solutions key barriers to the broader adoption of managed accounts in Australia,” he said.

The managed accounts sector is growing exponentially as more practices adopt these solutions.

Adviser Ratings founder Angus Wood recently told Financial Standard that managed accounts assets have quadrupled over the past five years to $200 billion and more than 100 active separately managed accounts (SMAs) managers are creating portfolios.

“Every day that goes by there’s another $1 billion to $3 billion being modelled into managed accounts. We’re seeing it through ProductRex – for $2 that’s coming through the advisers, $1 is going into managed accounts,” he said. fs

The quote

Executive appointments

Bravura chief executive exits

Bravura chief executive Andrew Russell 01 has decided to step down from his role, effective immediately, after leading the software solutions company through a turnaround.

Russell joined Bravura in June 2023 in the role of managing director and chief executive.

“I joined Bravura at a very challenging and critical time requiring difficult decisions to be made and fast action to be taken to restore profitability and restructure the company, whilst at the same time improving engagement with our customers and employees. I am proud to have led Bravura through this period and to see the company achieve such a significant turnaround,” Russell said.

“Bravura is now well positioned to build on the strong foundation we have created, and I believe it is the right time for me to step aside to allow the board to find a successor who can capitalise on this position and continue the positive trajectory.”

The board said it will commence a comprehensive international search for its next chief executive and thanked Russell for his tenure.

QTC names chief executive

The Queensland government’s central financing authority welcomed a former TCorp treasury lead as its new boss.

Queensland Treasury Corporation has appointed Simon Ling, an executive with nearly three decades of experience in investment banking, government financing and treasury management.

Ling was most recently the head of financial markets at TCorp - part of an executive team that oversaw the state government’s $130 billion balance sheet and $110 billion investment portfolio.

The incoming chief executive quit the central borrowing authority for the state of New South Wales in 2022 and spent the last two years chairing social impact and climate investment organisations.

These include Ready Growth Grant and the Social Enterprise Development Initiative Capability Building Grant Panel.

Ling is currently a non-executive director of the Resilience Constellation, a data-based agency that looks at global climate adaptation costs and investments.

LGT Crestone poaches risk chief

After seven years at Challenger in several risk and compliance roles, Karen James Lawson 02 has stepped into the top risk role at LTG Crestone.

Confirming the appointment, LGT Crestone said since Lawson is filling a c-suite role, she will sit on its executive committee.

At Challenger, she was most recently general manager of risk and compliance following a fiveyear stint running risk and compliance for the funds management arm, which includes Fidante Partners. Lawson previously spent five years at National Australia Bank in similar roles.

There, she led a team of risk management professionals who partner with businesses to ensure they operate within the Big Four bank’s risk appetite.

Future Fund creates new role

Future Fund’s emerging markets lead has taken up a new role at Australia’s sovereign wealth fund.

Industry heavyweight Craig Thorburn – who has been with the fund for almost two decades – has been appointed director of thought leadership.

While leading the Future Fund’s efforts to understand the complexities of investing in emerging markets across all asset classes, Thorburn also looked after research and insights.

The investment professional was a senior member of the in-house strategy team from 2007 to 2012.

Reporting directly to the chief investment officer for the last five years, Thorburn has focussed on strategic portfolio and investment initiatives.

Before that, he was part of the in-house private equity team with investment responsibilities cutting across venture, growth and buy-out sectors focusing on China and other emerging economies.

Northern Trust appoints sales lead Chicago-based custody bank and asset manager Northern Trust has appointed a global head of sales for asset servicing.

Douglas Gee will replace Jon Dunham, who plans to retire.

Based in London, Gee currently leads sales teams across Asia-Pacific, Europe, the Middle East and Africa.

Essentially, the promotion will see him add business development responsibilities for the Americas to his remit.

The new sales head is tasked with driving the global sales strategy and accelerating new business revenue growth for Northern Trust.

Gee, who joined Northern Trust in 2008 to lead its asset owner business development for the UK and Ireland, will report to Northern Trust Asset Servicing president Teresa Parker.

Gee has over 25 years of business development experience, having previously specialised in IT and consulting before joining Northern Trust.

Funds SA investments deputy resigns

Funds SA will soon bid farewell to its deputy chief investment officer and director of equities.

After seven years with the fund, Matthew Kempton 03 is leaving to take up a new opportunity in Melbourne with an industry super fund.

Kempton first joined Funds SA in 2018 as director of equities before being promoted to deputy chief investment officer as well in 2021.

He also served as acting chief investment officer for about eight months between the resignation of Richard Friend in May 2024 and commencement of Con Michalakis as chief investment officer in February.

He came from ESSSuper where he spent five years as head of investments after having been at Frontier Advisors for three years. Early in his career, he worked in transactions at ISPT.

Funds SA chief executive John Piteo thanked Kempton for his contribution to the fund.

Coller Capital hires from L1

Alexander Ordon 04 joined Coller Capital in March as a director for Australia and New Zealand to support the private wealth secondaries solutions business.

Ordon spent six years at L1 Capital as an investment specialist and before that had a stint at Aoris Investment Management as head of distribution. He’s also held senior distribution roles at J.P. Morgan Asset Management, Netwealth and Credit Suisse.

Coller Capital head of Australia and New Zealand private wealth distribution David Hallifax said Ordon’s “deep understanding of the private wealth market in Australia and New Zealand, coupled with his strong relationships with private wealth investors, will be critical to our efforts to expand our offering.”

New ANZ lead for BNP Paribas

BNP Paribas has named Nicolas Parrot as its new chief executive for Australia and New Zealand, replacing Karine Delvallée.

In his new role, Parrot leads a team that delivers global markets and banking, and securities services solutions and asset management offerings to corporate and institutional clients.

Parrot has been with BNP Paribas for more than 27 years, most recently serving nearly five years as chief executive of the Indonesian business, which offers banking services in structured finance, fixed income, cash management and trade solutions. Other senior roles in the firm include senior investment banking roles in the areas of aviation and transportation.

Parrot reports to Delvallée, who was promoted to chief executive for the Singapore and SouthEast Asia units.

Delvallée led the Australia and New Zealand businesses from 2019 to early 2025. fs

01: Andrew Russell

02: Karen James Lawson

03: Matthew Kempton

04: Alexander Ordon

US President Donald Trump’s “Liberation Day” tariffs caused havoc for global markets, but there may be an upside for emerging markets

with a trifecta of tailwinds picking up steam. Eliza Bavin explores.

On April 2, US President Donald Trump unleashed the most aggressive tariffs the US had imposed in more than a century, sending global markets into turmoil.

The announcement included a 10% baseline tariff on imports from all countries, effective from 5 April 2025, alongside additional reciprocal tariffs on imports from 60 nations (Figure: 1).

The effects were shocking for markets. Wall Street suffered its worst day since March 2020 with the Dow Jones down 3.9%, the Nasdaq plunged nearly 6% and the S&P 500 was down 5%.

Trump later put a 90-day hold on the reciprocal tariffs, keeping the baseline 10% in place, to go to the negotiating table with almost every country.

China, unsurprisingly, was excluded from the pause on reciprocal tariffs and the two nations are engaged in a fullblown tit-for-tariff trade war.

As China is a major part of most emerging markets portfolios, this element has investors concerned, but it’s not all bad news – especially for those who planned ahead.

Robeco head of emerging markets and lead portfolio manager of the Global Emerging Markets Core strategy WimHein Pals 01 made plans to lessen exposure to countries reliant on trade with the US prior to “Liberation Day”.

Pals says his team had been working towards positioning their portfolio to be more defensive well and truly before the tariffs took effect, and not just within China, but the Asian region in general.

“We favour countries that are less exposed to the US in the first place, so no exports, or hardly any exports, to the US,” he says.

“So, countries like India, South Africa, and the periphery of Europe - Central Europe, Turkey and Greece come to mind. But also, Latin America. So, we are currently positioned towards Latin America, emerging Europe and Africa, those regions we’re overweight in the fundamental year portfolios, and we are underweight emerging Asia.

“It’s been a while that we were underweight in the Asian region, and that has all to do with our large underweight in Southeast Asia. We don’t have any Philippines, Malaysia, and are very underweight Thailand. We are underweight in Taiwan as well. It had a good run the last couple of years with big IT hardware companies, so we sold our position.”

The profits from Taiwan were then put towards South Africa and Latin America, with the portfolio now positioned more towards Mexico and Chile, as well as Europe, taking positions in Poland and Turkey.

“The countries where we built up our positions and are now comfortably overweight have less exposure, or hardly any exposure, to the US from an export perspective and have minimal tariffs,” Pals says.

Feature | Emerging markets

01: Wim-Hein Pals head of emerging markets Robeco

The China problem – or opportunity?

Despite having moved to a more defensive portfolio before the tariffs came into play, Pals admits the trade war with China is something EM investors need to be prepared for.

“China is being targeted, and tariffs are going up there. So, what to do with China is probably one of the most important questions,” Pals says.

“We have been more constructive over the last couple of quarters, but we are underweight. That’s what we did over the last couple of months; we were significantly underweight before September.”

T. Rowe Price portfolio manager of the China Evolution Equity Strategy Wenli Zheng02 says while the excessive tariffs – 145% and counting – seems significant, things aren’t as dire as one might think.

“To provide context, China’s real estate sector constitutes over 20% of its gross domestic product (GDP). In contrast, exports to the US account for only 3-3.5% of China’s GDP, highlighting the relatively limited direct impact of US trade on China’s overall economy,” Zheng says.

“Given the complexity and wide range of potential outcomes surrounding tariffs, it is prudent to focus on what is knowable rather than speculate on future moves.”

Zheng says amid all the uncertainty, one thing is certain: tariffs do more to harm the consumers in the country that imposed them than to the country they are inflicted upon.

“Over the past four years, China’s macroeconomic landscape has been characterised by weak domestic demand and resilient exports. This trend is likely to reverse over the next few years, with exports facing strong headwinds and the domestic economy showing signs of recovery, even before significant stimulus measures,” Zheng says.

“China’s recent de-leveraging, particularly the deflation of the property bubble, has provided policymakers with greater policy flexibility. This has created potential in domestic consumption and investment-related sectors. This shift is not

Wenli Zheng portfolio manager T. Rowe Price

03:

Andrew Swan head of Asia (exJapan) equities Man Group

Given the complexity and wide range of potential outcomes surrounding tariffs, it is prudent to focus on what is knowable rather than speculate on future moves.

Wenli Zheng

solely triggered by tariffs but reflects a trend that is expected to continue in the next one to two years.”

And it is those stimulus measures that has inves tors taking an optimistic outlook, says Man Group head of Asia (ex-Japan) equities Andrew Swan as the nation is on the cusp of a massive change.

“China’s economic model has been one that has been fueled by higher and higher levels of in vestment and funded by higher and higher levels of credit or debt. And the problem with that is now that China has a lot of debt relative to its stage of development, and it also has a lot of ca pacity because of all the investment, and so you have deflationary forces now,” Swan explains.

“China therefore can’t keep doing what it’s been doing in the past – being investment and credit led – and it needs to make a transition now to consumption, because this economic model now is at the end of its useful life.

“So, what we’ve been seeing as a policy shift in China is not just easing policy now that we’ve got easier policy globally, but in fact, they’re now starting to develop policy that would mean a shift in the economic model and one that favors consumption over investment.”

Swan says this shift in policy is “probably the most important thing” – apart from tariffs – happening in the world right now. He says this pivot could create a major change that investors need to get ahead of.

“The result, if they execute well, is much

China specifically, starting to develop this policy that is structural in nature, that is much higher quality and much more sustainable growth.”

However, he notes it is early days.

“We’ve still got a long way to go in this, particularly on the execution front, but that is the best way I can describe the last few years and why things might be changing,” he says.

Currency boost

Alongside this major policy change in China, emerging markets are set to benefit from lower US interest rates.

As Swan explains, emerging markets’ central banks tend to link their interest rate to the US, as opposed to local economic conditions. They do this to ensure currency stability.

“Normally in a synchronised world, that’s fine, but when it’s desynchronised, it’s actually problematic and you end up getting much higher interest rates in Asia than were justified by local economic conditions,” Swan says.

“That’s because central banks are trying to keep currency stable to avoid a spiral, which we’ve seen historically, and then by having high real interest rates, the economy slows down even further because you’re encouraging people to save and not spend. The result of all that is corporate profitability is far superior in developed markets than it is in emerging markets in Asia, and therefore equities perform much better.”

However, now that the market is factoring in quite aggressive interest rate cuts in the US –close to 150 basis points – that is creating a very good opportunity for smaller economies.

02:

Figure 1. Who is hit hardest by proposed US tariffs?

Emerging markets | Feature

“The more domestically driven economies, places like India, Indonesia, the Philippines, will now be able to cut interest rates. As a result, you’re going to start to see economies improve,” Swan says.

Pals agrees the strong US dollar had been weighing on EM for quite some time, but now things are aligning to give these less-developed nations their time in the sun.

“There is a large and a high correlation between the dollar and emerging markets performance. We’ve seen a weak dollar over the last couple of months. It’s weakening further as we speak with these Trump policies, so we expect a structural weakness in the dollar, not a collapse, but a weakness,” Pals says.

“And that’s positive for emerging markets. But that is only the tip of the iceberg.”

Tailwinds picking up speed

GQG Partners deputy portfolio manager Sid Jain 04 says while nothing is guaranteed, history suggests that an improving relative earnings outlook could also drive higher multiples and a

tech sector – which was experiencing rapid innovation and accelerating earnings growth.

“As a result, investors pivoted from emerging markets to the US as the belief in American exceptionalism became unshakeable,” he says.

“From 2010 to now, poor economic and business decisions resulted in a lost decade for most emerging markets, while the US technology sector boomed - similar to the late 1990s. The biggest index constituent – China – also experienced a structural slowdown that dragged down the benchmark.

“We are starting to see new momentum within emerging markets.”

Navigating the risks

While there is optimism, investors are still highly aware that a Trump presidency can lead to any number of outcomes, and EM portfolio managers are still viewing the situation as highly fluid, Morningstar associate director, manager research Lena Tsymbaluk 05 points out.

“Investors are closely monitoring for any potential bilateral negotiations between the Trump administration and the countries affect-

There is this challenge of investing in emerging markets, but we also should not pretend that developed markets are overly transparent, right? I think in Australia, we have enough examples where governance hasn’t been fantastic.

Jan Rohof

weaker dollar, which would be a triple tailwind for emerging markets.

“As interest rates begin to normalise across most of the world, this will likely become a headwind for earnings growth in the US. In contrast, emerging market business models are designed to accommodate a high interest rate environment,” Jain says.

“Meanwhile, earnings have started to recover for emerging markets in both local currency and US dollar terms. From January 2020 through mid-January 2025, India, Brazil, and Indonesia had delivered earnings growth comparable to the S&P 500, despite having minimal technology exposure.”

EM has gone through several boom-bust cycles but there are indications that a fresh momentum is appearing.

“Since the inception of the MSCI EM index nearly 40 years ago, emerging markets have faced four distinct cycles, including two bear markets,” Jain says.

“From 1994-2001, a series of poor economic decisions, excessive leverage, dependence on foreign capital, and political unrest resulted in a painful bear market. Emerging markets began collapsing like dominos in the late 1990s due to one crisis after another, such as the Asian financial crisis, Russian debt default, and Mexican tequila crisis.”

During this turmoil, it was no wonder investors turned to the US – and specifically the US

ed by the tariffs. Several options remain on the table, including direct retaliation—for example, China has already reciprocated—or the implementation of fiscal stimulus measures to support exporters,” Tsymbaluk says.

For this reason, China will be the key nation to keep an eye on.

“The risks associated with tariffs on China had been on investors’ radar for some time, leading several active managers to adjust their portfolios away from export dependent sectors toward sectors more reliant on domestic demand, such as internet services, household goods, and services. These sectors are considered less vulnerable to tariffs,” she explains.

For Northern Trust Asset Management’s director of quantitative solutions, APAC Jan Rohof 06 , the key to success is hidden in sectors, as opposed to looking at specific EM nations.

“When you look at emerging markets investments there are different approaches and different styles, right? You have your typical fundamental investor who oftentimes, obviously focuses on stock selection, but oftentimes also has a view on certain countries. And you have, I would say, more quantitative approaches that essentially try to steer away from some of those allocation calls, and really just focus on bottom-up selection and making a very widespread portfolio,” Rohof says.

“That’s what we essentially do. The MSCI Emerging Markets index has roughly 25 countries. If you have to pick the winner out of those 25 that can be really tough to do. And we don’t really see that, from a risk adjusted return perspective, as necessarily being rewarded. We rather focus on the thousands of stocks that sit underneath that and see what are the most likely winners and losers in that.”

Rohof says that during times of uncertainty, paying less attention to broader factors like country, region, geopolitical issues or sectors and just getting down to the data works well for him.

“There will be companies that can probably better weather such environments, companies that have a little bit more cash on their balance sheet, companies that are already profitable. So those companies tend to be a bit more stable,” he says.

As for why some of the major institutional investors – like Australian super funds – have somewhat steered clear of having significant holdings in EM, Rohof says a lot of that had to do with US over-performance.

But as mentioned, that is starting to change, and Rohof says he is now seeing increased interest from investors looking to discover new opportunities within EM.

“With the dominance that we’ve seen in the US, a lot of that was driven by a handful of stocks and led to quite lofty valuations at times. I don’t want to say that the US was overvalued, I’m not going to go there, but what you saw was that a lot of stocks in emerging markets look quite cheap,” he says.

“However, for a lot of investors – particularly in Australia – emerging markets were a bit of a challenging topic.”

Rohof says between complexities in opening accounts in some EM countries, to trade frictions, geopolitical and governance issues and finding the right managers who had eyes and ears on the ground, EM wasn’t exactly easy investing.

“Those are all challenges that people had to overcome. And let’s be very honest, the beta of emerging markets was not very good over the past years, factors and Alpha have been very healthy in EM, but the overall market just didn’t perform really well,” he says.

“When you select stocks, you face those challenges too. So, there are a lot of nuances to emerging markets where you have to have a manager that has done that for a long time and that understands all this.”

All that said, the benefits to investing in EM remain – and what is investing without some risk?

“There is this challenge of investing in emerging markets, but we also should not pretend that developed markets are overly transparent, right? I think in Australia we have enough examples where governance hasn’t been fantastic,” he says.

“So investing is about risk mitigation, and investment is about risk management, and not just diversifying your basket but also making sure that you stay on top of what’s happening.” fs

04: Sid Jain deputy portfolio manager GQG Partners

05: Lena Tsymbaluk associate director, manager research Morningstar

06: Jan Rohof director of quantitative solutions, APAC Northern Trust Asset Management

The Podcast

Bringing you the latest news and thinking in wealth management.

Nearly $9bn leaves Perpetual

Nearly $9 billion of investor money exited Perpetual in the March quarter, leaving its total assets under management (AUM) at $221.2 billion.

The fund manager was hit hard by net outflows of $8.9 billion and negative currency movements of $0.9 billion but marginally offset by market gains of $0.7 billion.

All its affiliates saw AUM shrink between 1-5% in the quarter. Barrow Hanley reported the biggest outflows of $3 billion, with AUM declining 3.7% quarter on quarter to $81.9 billion.

Pendal Asset Management’s outflows were $1.7 billion. It ended with $42.5 billion for the period, down 4.9% compared to the December quarter.

Perpetual Asset Management’s AUM of $21.3 billion was impacted by net outflows in Australian equities and multi-asset strategies, whilst fixed income strategies experienced net inflows in the quarter.

Trillium’s AUM was down 9.2% to $8.9 billion thanks to negative market movements and net outflows of $0.3 billion. Meanwhile, TSW’s AUM was 1% lower at $31.1 billion.

Overall, total AUM dropped by 4% from the $230.2 billion reported at the end of 2024.

On a brighter note, Perpetual’s corporate trust business’ total funds under administration (FUA) grew to $1.26 trillion, up 1.1% on the December quarter.

The wealth management unit’s total FUA was $21 billion, up 2% on the prior quarter, driven by net inflows of $0.9 billion but offset partially by a $0.4 billion impact from negative market movements. Net inflows of $0.9 billion were mainly driven by a new institutional client win.

Perpetual chief executive and managing director Bernard Reilly said: “Our asset management business was impacted by outflows in the quarter, mainly in global and US equities and cash, due to a range of reasons including client mergers, clients reallocating or rebalancing their portfolios and continued underperformance in some strategies.” fs

Insignia gives PE firms more time

Jamie Williamson

Bain Capital and CC Capital Partners have been granted more time to thumb through Insignia Financial’s books.

Insignia Financial has extended the exclusivity deeds it signed with Bain Capital and CC Capital Partners in early March by four weeks.

It said this was to enable both bidders to finalise debt funding and associate due diligence, as well as giving them time to complete all aspects of the scheme implementation deed.

On March 7, Insignia Financial confirmed it had received revised bids from both Bain and CC Capital, both of which offered $5 per share and valued the wealth manager at $3.35 billion.

Insignia then signed exclusivity deals with both parties so they could continue discussions for a period of six weeks.

At the time, Brookfield Capital Partners had also made an offer. It and other bidders have been locked out of the race by the exclusivity deeds, with the four-week extension meaning they’ll have to wait even longer to lob another offer if they choose to. fs

01: Grant Hackett chief executive Generation Development Group

Generation Development Group enters ASX 200

Andrew McKean

Generation Development Group has posted record inflows across its managed accounts and investment bonds businesses and capped off the milestone by entering the ASX 200.

... we are incredibly proud to have reached the milestone of becoming an ASX 200 company...

The group’s funds under management (FUM) increased to $26.8 billion in the March quarter from $25.4 billion in December last year, following the acquisition and integration of Evidentia Group, according to an ASX announcement. Lonsec Investment Solutions contributed $13.3 billion in FUM, up 28% on the prior corresponding period.

Lonsec had net inflows of $685 million, representing a year-on-year increase of over 325%.

“The integration of Lonsec Investment Solutions, Implemented Portfolios and Evidentia is progressing to plan, with key milestones being met. Evidentia Managed Accounts continues to win more client mandates, ensuring a healthy FY26 pipeline of committed inflows,” Generation Development Group chief executive Grant Hackett 01 said.

Generation Life, meanwhile, strengthened its position in the investment bonds market, increasing FUM to $3.95 billion, up 23% on the prior corresponding period.

Generation Life also recorded record quarterly inflows $239 million, a 55% increase.

Generation Life chief executive Felipe Araujo noted that this quarter Generation Life became number one in the investment bonds sector.

He said the result reflects “consistent conversion across all regions,” supported by “disciplined pipeline management” and a “focus on strategy solutions with advisers.”

Hackett said each of Generation Development Group’s businesses are strategically positioned to benefit from long-term industry tailwinds, and that the company remains focused on executing its growth agenda.

“In closing, we are incredibly proud to have reached the milestone of becoming an ASX 200 company — this is a strong reflection of the sustained growth, strategic focus, and disciplined execution that have defined Generation Development Group in recent years,” he said. fs

DII drives life insurance disputes: APRA statistics

Karren Vergara

Disability income insurance (DII) continues to be a bugbear for the life insurance industry and is the most highly disputed product among advised, non-advised and group insurance customers, APRA statistics show.

In 2024, total DII disputes reached 1987 for advised customers, 366 for non-advised customers and a whopping 2896 for group super.

TAL received the largest number of disputes with 310 for advised customers, 246 for nonadvised customers and 812 for group super, APRA’s recently published life insurance and disputes tables show.

A total of 1711 of DII disputes were resolved during the period for advised customers, 316 for non-advised customers and 2572 were finalised for group super customers.

AIA Australia had the lion’s share of resolved group super disputes at 996, finalising 91.1% of them in 0-45 days. AIA took 1.3 months on average to resolve these disputes, as did MetLife and ART Life.

TAL resolved a total of 691 group insurance disputes and took 1.3 months on average to do so, with 93.5% finalised in 0-45 days. TAL, however, took the longest on average to resolve 237 advised customer disputes at 2.5 months.

NobleOak also registered as one of the most

sluggish to resolve a dispute at 2.1 months on average for advised customers, albeit from a small base of a total of six disputes.

In recent years, APRA put the microscope on DII, questioning its sustainability, profitability, pricing and actual benefits delivered to policyholders.

Otherwise known as income protection insurance, DII replaces policyholders’ income in the event they are unable to work due to illness or injury.

APRA said DII made a turnaround in 2022 when it reported net profits after tax for five straight quarters. This followed an extended period of losses, with the sector losing $3.4 billion in the five years to 2019, resulting in APRA’s intervention.

The latest statistics show that advised customers paid a total of $3.2 billion in annual DII premiums for 676,000 lives insured last year. TAL and Zurich Australia each possess between 21-22% of the advised market.

Some 4.3 million group super customers paid $1.8 billion in DII premiums. TAL holds 40.4% of this market, followed by ART Life with 20.3% and AIA Australia with 23.2%.

About 89,000 non-advised customers paid $154 million in DII premiums, with TAL holding 49.1% of this market. fs

The quote

Events | Life Insurance Awards 2025

Life insurance industry excellence honoured

The inaugural Financial Standard Life Insurance Industry Service Awards recognised service and innovation across a range of categories.

On April 2, at an intimate event in Sydney, Financial Standard presented the inaugural Life Insurance Industry Service Awards.

Allianz took home two awards, with its ‘The importance of life insurance’ campaign winning in the marketing category, and collaboration with Greenlight HC seeing it win for claims.

“We’re absolutely delighted our claims team has been recognised for the incredible care they deliver to our customers, thanks to the remarkable Grief and Trauma Support Service, made possible through our exceptional collaboration with rehabilitation provider Greenlight,” Allianz said.

Meantime, Acenda took home the most awards on the night. Its Wysa Assure was recognised across two categories, being Health & Wellness | Group Life and Health & Wellness | Individual Life. And Acenda’s KickStart service was awarded in the Claims category.

“We’re proud to be recognised for making a real difference in our customers’ lives. Kickstart

is an early intervention program that reflects our deep commitment to supporting customers before a claim is even lodged. By focusing on proactive, personalised support, we’re helping customers remain engaged at work, return to work or transition smoothly to a claim, offering tailored support that meets individual needs,” Acenda chief claims and transformation officer Andrew Beevors said.

“Wysa Assure brings mental health support into the everyday lives of our customers, it puts mental health support into the pockets of our customers anywhere, anytime. We’re honoured to see this innovation recognised as it reinforces our purpose to deliver human centric support through leading technology.”

And finally, NobleOak was also recognised across two categories, taking out the gong for Underwriting for its AI-drive application process, and scoring an award for its ‘Choice and flexibility in life insurance’ marketing campaign.

“We’re incredibly proud to be recognised by

The facts

These awards were formerly known as the Plan for Life Excellence Awards –Life Insurance. They were previously run in conjunction with the Association of Financial Advisers, since merged to form Financial Advice Association Australia.

Financial Standard… At NobleOak, we place the customer at the heart of everything we do with a focus on providing quality service and products,” NobleOak Life chief executive Anthony Brown said.

“The underwriting award recognises the success of our dynamic approach to the life insurance application process, which tailors the application journey based on the customer’s risk profile. By leveraging AI technology, customers are now completing applications around 35% faster than the previous one size fits all approach.

“These awards are a fantastic recognition of our ongoing efforts to listen, learn and respond to our customers’ evolving needs. It reflects our belief that quality life insurance is about giving people clarity, confidence, and support when it matters most.”

Finally, MetLife was successful in the Health & Wellness | Group Life category for its 360Health service, and the award for best Adviser Service went to NEOS. fs

Investors dump Climate Active

IFM Investors and Insignia Financial have confirmed their exit from the government’s Climate Active scheme.

Launched in 2019, Climate Active certifies organisations, products, events and brands as being carbon neutral. It has faced significant challenges in recent times, including IFM Investors was certified under the Climate Active scheme in 2023, with some of its portfolio companies receiving the certification in the preceding year.

The asset owner withdrew from Climate Active on April 3. While confirming the exit, IFM Investors declined to comment as to why.

Insignia Financial, meanwhile, withdrew on March 28. It had been certified under the scheme since 2022.

FS Sustainability understands Insignia Financial made the decision after bringing this capability in-house.

Meantime, a spokesperson for Perpetual confirmed it also recently withdrew. The Climate Active website shows this took place on January 24. They’re just the latest in a steady stream of investment managers dropping the initiative. Among others, Minderoo Foundation exited the scheme in January, while ECP Asset Management and Yarra Capital withdrew at the end of 2024, and HESTA and Pacific Equity Partners withdrew in June 2024. fs

Warakirri adds kiwifruit to fund

Andrew McKean

Warakirri Asset Management has added a 200-hectare aggregation of three orchards, mainly kiwifruit, with some nashi and corella pears as well as jujubes, to its farmland fund.

The manager paid $33 million for the orchards in the Goulburn Valley region of Victoria, calling the purchase a well-scaled addition that diversifies the farmland fund’s portfolio and lifts its return profile.

The orchards will be leased to Seeka Limited, Warakirri’s new tenant partner.

The New Zealand listed company, which has been active in Australia since 2015, is the region’s largest integrated kiwifruit producer, accounting for around 70% of local output.

The purchase brings the $130 million farmland fund, which is targeting a scale of $500 million, to five assets. The fund launched in April 2021 and secured two foundation assets in the stone-fruit sector a year later, before acquiring two vineyards in December 2022.

Warakirri Farmland Fund portfolio manager Steve Jarrott noted that the Goulburn Valley acquisition added a “prime horticultural asset” in one of Australia’s most productive agricultural areas to the fund.

Seeka chief executive Michael Franks, meanwhile, said the company’s partnership with Warakirri opens several opportunities for future sustainable development in the region.

“Warakirri are a progressive and complementary partner…” Franks said.

The fund’s indicative portfolio spans a max of sectors, with up to 50% allocated to fruit, including summer fruits, tropical fruits, citrus, pears, olives, apples, avocados, and berries. fs

Trump presidency pushes Aussies to ethical super fund

Jamie Williamson

The inauguration of President Donald Trump in the US and the heightened volatility and uncertainty that has followed has been a boon for Future Super, the fund says.

Analysis of Future Super’s member acquisition data shared with FS Sustainability shows the fund had a surge in new members in the first quarter.

The quote

In times of large change, we see consumers take action and this is what Future Super is currently witnessing.

Interestingly, the largest spike in new members came in the third week of January – the same week Trump was inaugurated and commenced his second, non-consecutive term.

In the three months to March end, Future Super had a 24% increase in new members joining. This is compared to the same period for the past three years.

Of the new joiners, 55% identified as male and 45% identified as female, and they were predominantly aged between 23 and 27 years old.

Geographically, the most new joiners were in Melbourne (VIC) and Surfers Paradise (QLD), followed by Blacktown (NSW), Haymarket (NSW), Brunswick (VIC), Sydney (NSW), Caboolture (QLD), Craigieburn (VIC), Truganina (VIC), and Bankstown (NSW).

Since coming to power, the Trump administration has actively moved to scale back US involvement in climate change initiatives, and publicly derided diversity, equity and inclusion (DEI) initiatives, spurring many corporates to abandon their own DEI measures.

In February, Future Super conducted polling with Essential Research, finding that 25% of

members were more likely to favour ethical investments because of Trump’s election. Just 7% said it would make them much less likely to support ethical investments.

“What we know is that our members care about what is happening globally. They want a superannuation fund that actually invests in their future, and they are prepared to move to ensure their values are reflected,” Future Super executive director, customer and growth Amanda Chase 01 told FS Sustainability.

“In times of large change, we see consumers take action and this is what Future Super is currently witnessing.”

The polling also uncovered an unexpected political consensus, with members who identify as Coalition and Greens voters (66%) showing equally strong support for ethical investment practices from their super funds.

Further research revealed older Australians aged 55 and over are leading the charge for ethical superannuation investments, with 65% of this demographic saying they expect their super funds to invest responsibly and ethically.

“This cross-political alignment suggests ethical investing is transcending traditional ideological divisions in Australian finance,” Future Super noted.

The 2024 From Values to Riches report from the Responsible Investment Association Australasia shows 75% of Australians would consider switching their super fund to ensure their investments were invested in line with their values. fs

Sustainable real assets boutique launches

Peter Johnston, James Hooper, and Alexandra O’Dea have come together to form Socia Investors, ‘socia’ being the Latin word for ‘partner’.

The founders have all worked together at Lighthouse Infrastructure for the past five years; Johnston and Hooper were managing directors, while O’Dea was investment director.

Individually, the also bring experience working with the likes of Hastings Funds Management, Macquarie, IFM Investors, Willis Towers Watson, and Frontier Advisors.

Joining the trio in the investment team is Eris Fink, Penelope Laletas, Jeremy Grocott, and Dominic Clark – all also coming across from Lighthouse Infrastructure.

Serving as senior advisers to the new firm are former ISPT chief executive Daryl Browning, Charter Hall Direct Property chair Adrian Harrington, and former Lighthouse Infrastructure head of compliance Kim Rowe.

Currently, Socia Investors oversees $400 million in funds under management. So far, the firm has some $300 million invested via the Australian Disability Accommodation Projects Trust 2 (ADAPT 2), an institutional, evergreen fund focused solely on specialist disability accommodation.

There is also a further $100 million invested in Key Worker Affordable Rental Housing (KWARH) with provider SGCH, which use a unique private-community sector partnership model developed by Socia Investors. Socia Investors is currently working to raise capital to develop its own dedicated KWARH investment strategy and fund.

At the same time, Socia Investors is looking to work with the not-for-profit sector to incorporate sustainable investment finance for investment in real assets required by the health, aged care, and education sectors.

“In the current environment where governments are struggling to plug the gap for the enormous capital investment required to fulfill the population’s unmet demand for essential services, the community sector has the ability to step in and assist through the expansion of its existing network of real assets it operates very effectively in the housing, health and education sectors,” Socia Investors said.

“Socia Investors looks forward to partnering with both institutional capital and the community sector in order to facilitate this expansion to serve more community members with the essential services they require.” fs

01: Amanda Chase executive director Future Super

ANSC’s AFA takeover tanks

Karren Vergara

Agriculture & Natural Solutions Acquisition Corporation’s (ANSC) bid to acquire the Bell family and Alastair Provan-owned Australian Food & Agriculture Company (AFA) for $780 million fell through.

Nasdaq-listed ANSC, a special purpose acquisition company (SPAC), said in Securities Exchange Commission (SEC) filings that the parties “mutually determined to terminate the business combination agreement due to increasingly volatile equity market conditions”.

AFA’s portfolio comprises agricultural assets in New South Wales’ Deniliquin, Hay, and Coonamble.

They include 87,000 acres of dryland and irrigated cropping that produces irrigated cotton, wheat, barley, canola, and corn among others; water entitlements; and livestock-carrying capacity of about 247,000 for sheep wool, meat, and cattle operations.

Bell Group Holdings (BGH), which is the parent company of ASX-listed Bell Financial Group (BFG), Bell Securities, and Bell Asset Management, has about a 66% interest in AFA.

ANSC said each party has agreed on behalf of themselves and their respective related parties “to a release of claims relating to the business combination agreement and the related transactions, including the termination, subject to certain exceptions, as set forth in the termination agreement”. fs

Rainmaker Mandate top 20

Prime Financial Group buys Lincoln Indicators

Jamie Williamson

The ASX-listed wealth manager is acquiring Lincoln Indicators, expanding its presence in the high-net-worth and selfmanaged super spaces.

The quote

Prime has a successful track record of working with founders and has a significant number as part of its leadership team.

Based in Melbourne, Lincoln Indicators is a provider of investment research and portfolio, platform and funds management business. It has some $600 million in funds under management and employs about 30 people.

Prime Financial Group is acquiring 100% of the company and its associated intellectual property for $15.75 million for on-target EBITDA performance, or $17.9 million for outperformance.

Lincoln Indicators has about 3300 high-networth (HNW) investors using its research services and three managed funds, being the Lincoln Australian Income Fund, the Lincoln Australian Growth Fund, and the Lincoln US Growth Fund. It means a 10x increase in the number of HNWs Prime Financial Group deals with, it said.

Under the deal, Lincoln Indicators co-founder and managing director Tim Lincoln will join the Prime Financial Group leadership team.

The acquisition adds significantly to Prime Financial Group’s distribution capabilities, it said, and provides operational, client and capability synergies and cross-sell opportunities.

Prime Financial Group’s funds under management will be boosted to $1.9 billion once finalised.

“The acquisition will not only provide Prime ownership of a leading Australian wealth provider, but also provides us with additional profitability and a suite of well-established and loyal clients,” Prime Financial Group managing director Simon Madder 01 said.

“We look forward to bringing our two businesses together… Prime has a successful track record of working with founders and has a significant number as part of its leadership team. We warmly welcome the well-established and capable Lincoln Indicators team to Prime.” fs

Managed Funds OPINION

Unlocking millennials’ financial wellbeing mindset

Cara Williams, financial adviser, The Hazel Way

As a millennial, I have recognised a definitive gap in the market, cultivated by the persistent idea that financial advice exists exclusively for affluent and older generations, which set me on the path to empowering young people in both their financial and life journeys.

We are living in a time where understanding and unlocking a positive money mindset in millennials presents an exciting opportunity.

Research supports this growing need. Ensombl’s Future Life Focuse d research paper, sponsored by TAL, found that young Australians are under indexed in seeking advice and are underinsured – and amid today’s cost of living crisis, advisers are in the unique position of helping millennials set themselves up for success.

This does come with a distinctive set of challenges – from navigating the burden of student loan debt to embracing new investment strategies. But with these challenges comes an opportunity to redefine financial advice, making it accessible, relevant, and transformative for the millennial generation – empowering them to build stronger financial futures and take control of their life goals. As advisers, we can be at the forefront of a movement that demystifies finance and fosters a mindset shift, turning financial literacy into a foundational tool for independence and growth.

I have often heard millennial clients frustrated that they haven’t felt truly seen or understood by professionals.

They do not operate the way their parents did at their age when it comes to money – and therefore the financial advice they desire is different.

My approach focuses on creating a deeply personalised and people-centric experience. These three questions stand out to me when engaging with millennials and something I like to continually consider with my clients: How do they want to live, what do they want their life to look like, and how do they expect to get there?

This self-reflection is a key tool to help clients also explore their relationship with money and identify their financial behaviours and habits, so we can find what is working - and what can work better. By understanding their answers, we will be in a position to tailor strategies that align with what the client values, what they hope to achieve and when.

As technology progresses, it is increasingly essential to blend emerging digital tools with an empathetic client relationship, so clients feel engaged in and are excited by the process. Leveraging technology can streamline processes and enhance the client experience – but it should complement, not replace, the human touch fundamental to effective advice.

Developing personalised advice that takes into account the current climate, to foster a positive millennial mindset, will set you apart. If this doesn’t come naturally, a coach or mentor can assist.

In 2023, I was in the privileged position of being

awarded the Financial Advice Association Australia (FAAA) Inspire Women – Excellence in Advice Award, which has provided me with a platform to support and uplift my female peers.

The recognition has allowed me to mentor and inspire millennials to overcome challenges, encouraging them to back themselves, acknowledge their own hard work and understand the importance of investing in themselves.

I can understand and empathise with the financial challenges young people often face. The unique economic conditions, societal pressures, and rapid technological advancements that characterise our generation require a distinct and thoughtful approach to advice.

I have had the privilege of working with hundreds of clients and continue to value the success stories where they experience significant improvement to their emotional, mental, and financial wellbeing. Clients who genuinely feel understood and supported are more likely to achieve their financial goals and enjoy greater overall life satisfaction.

To aspiring advisers, particularly those looking to work with millennials, one thing that will always set you apart in this profession is a high level of emotional intelligence and the ability to provide advice that impacts lives beyond financial wealth. My advice is to also actively engage in networking and seek mentorship. Building and

fosters a

Workplace Super Products

MSCI, Moody’s launch risk tool

Karren Vergara

MSCI and Moody’s Corporation have partnered to launch an offering that assesses risks for private credit investments.

The solution integrates MSCI private capital data with Moody’s EDF-X credit risk modelling tool.

MSCI said the new solution leverages consistent, independent probability of default (PD) scores and implied ratings for deeper risk insight across funds, sectors and geographies.

It also delivers credible, transparent credit risk metrics to boards, regulators and investors and support decision-making with insights backed by the independent methodologies, MSCI said.

The two firms said the solution “will be distinct from the services provided by Moody’s Ratings, the credit rating agency, to the issuers in the private credit market.”

MSCI is supplying data on more than 2800 private credit funds and 14,000 underlying companies.

The solution will also produce early warning signals that flag potential credit deterioration, macro-adjusted PDs incorporating both climate and economic factors, and loss given defaults at the facility level.

“As the private credit market evolves, investors are looking for trusted independent assessments to help benchmark credit risk and inform investments and monitor portfolios,” Moody’s chief executive Rob Fauber said.

“Our partnership with MSCI will play a critical role in providing these insights, helping market participants make informed decisions.”

MSCI chief executive Henry A. Fernandez said the rapid growth of private credit continues to transform the global investment landscape while highlighting the need for increased transparency, consistent standards and independent risk assessment. fs

PGIM Real Estate makes APAC hire

Wai

Matthew

PGIM Real Estate has promoted its head of Japan to the newly created role of deputy head of Asia Pacific, effective immediately.

David Fassbender continues his 23-year tenure with the appointment.

As deputy head of Asia Pacific, Fassbender will report to head of Asia Pacific Benett Theseira. He will simultaneously retain his role as senior portfolio manager for the firm’s flagship Asia Pacific value-add (AVP) fund series strategies, which have completed close to $33 billion (US$21 billion) in total transactions since its inception, including the recent acquisition of 20 Bridge Street in the Sydney CBD.

Fassbender joined the firm in 2002, bringing experience across real estate funds, asset management and transactions, including property development across key markets in Asia Pacific. He was previously the head of southeast Asia based in Singapore.

PGIM Real Estate houses a combined $325 billion (US$206 billion) in assets under management and administration across 35 cities worldwide as at 31 December 2024 and is the real estate arm of PGIM. fs

01: Sarah Pritchard executive director, supervision, policy, competition, and

international Financial Conduct Authority

UK watchdog to open Australian office

Jamie Williamson

The UK’s Financial Conduct Authority (FCA) will open an office in Australia so that the regulator can assist UK firms in entering the local market and vice versa.

To be based in Australia from July, Camille Blackburn has been appointed director, Asia Pacific at the FCA.

The quote

We recognise that major international investors want easier access to us, and having a presence in these key regions will help achieve that.

She is tasked with building out an office that will support financial services firms in navigating regulation to enter the UK market or raise capital and support UK firms looking to expanding into Australia or the broader Asia Pacific region.

Blackburn is currently director of wholesale buyside at the FCA, a role she’s held since 2022. Prior, she was global chief compliance officer for Legal & General Investment Management for close to three years and held the same role at Aviva Investors for two years before that.

A native Australian, early in her career Blackburn worked in regulatory risk at Macquarie Bank and spent five years in the investment banking team at ASIC. She also served as head of compliance, Asia Pacific for Travelex

and global head of compliance for Westpac’s institutional bank.

In 2014, she was a principal advisor for Treasury’s Financial System Inquiry, after which she made the leap to the UK to join the Central Bank of Ireland’s policy and risk team.

Her appointment is part of the UK government’s broader strategy to present the UK as an investment destination and hub. The FCA also established a US presence this month, tasking Tash Miah with working alongside the Department for Business and Trade to advance UK-US policy and regulatory cooperation.

“The UK is a global hub for financial services. We are committed to continuing to build our global network and international reputation. These appointments will help us deliver on our mission to support growth through the export of UK financial services and attracting more inward investment to our shores,” FCA executive director, supervision, policy, competition and international, Sarah Pritchard 01 said.

“We recognise that major international investors want easier access to us, and having a presence in these key regions will help achieve that.” fs

Japan’s first digital investment platform for private assets goes live

Andrew McKean

Tokyo-based financial services firm Keyaki Capital has launched what its describes as a “first of its kind” online platform to exclusively offer private equity, private credit, and other private asset investment funds to Japanese high-net-worth investors.

The launch, which Keyaki Capital said marks an important step in expanding digital access to institutional-quality private asset investments in Japan, follows its registration to conduct electronic offering services for privately placed funds under Japan’s Instruments and Exchange Act.

Keyaki Capital said digital investment platforms affording individual investors access to institutional-quality private asset funds has rapidly expanded across North America, Europe, and Asia. It’s now seeking to replicate this model in Japan, where such access has previously been unavailable to domestic investors.

The new platform features an open-ended Private Credit Fund currently distributed by Keyaki Capital, alongside the Marina Investment

Fund, a closed-ended investment vehicle for wholesale investors launched by MA Financial Group in April 2023.

The latter fund includes locations such as Rushcutters Bay, The Spit, and Cabarita Point in Sydney Harbour, as well as two near Melbourne’s CBD, and two regional marinas.

It targets an annual distribution yield above 7% and an internal rate of return over 13%.

“… marinas located on the east coast of Australia is attracting attention as one of the attractive real estate investments. The point to note is that the Australian marina market is limited in new construction due to environmental regulation,” Keyaki Capital said.

“This creates constraints on the supply side, making marinas more scarce.”

Keyaki Capital said it plans to add additional private capital funds to the platform, including private equity, private credit, real estate, and venture capital.

Keyaki Capital was founded in 2020. fs

Inflation figures point to May cut

The Consumer Price Index (CPI) rose 0.9% in the March 2025 quarter and 2.4% annually, according to the Australian Bureau of Statistics (ABS).

“The March quarter increase of 0.9% follows two quarters in a row of 0.2% rises,” ABS acting head of prices statistics Leigh Merrington said.

“Annual inflation to the March 2025 quarter of 2.4% was unchanged from the December 2024 quarter.”

Trimmed mean, or underlying, annual inflation was 2.9% in the March quarter, down from 3.3% in the December quarter.

Saxo chief investment strategist Charu Chanana said while a May interest rate cut is still widely expected from the Reserve Bank of Australia (RBA), the inflation problem remains.

“Australia’s inflation surprise reinforces that we’re not past the inflation problem yet – especially with tariff risks still looming globally,” Chanana said.

“The RBA will have to remain cautious, and while a May rate cut is fully priced in, expectations for five cuts this year may need to be revised down. This stickier inflation backdrop supports the AUD in the near term, unless clearer global recession signals emerge and shift the focus back to growth risks.”

State Street Global Advisors’ Krishna Bhimavarapu agreed a May rate cut is expected, but said that’s not what economists will be focused on.

“Today’s CPI data makes a May rate cut a near certainty, but that is an old hat for Australia. What needs to be seen is whether the RBA changes its hawkish stance or not,” Bhimavarapu said. fs

01: James Brooks economist CEDA

WFH saves employees $5308

Eliza Bavin

Australians who have worked from home since the COVID-19 pandemic have cut their commutes by around three hours a week, equivalent to a time saving worth an estimated $5308 a year based on average wages, new research by the Committee for Economic Development of Australia (CEDA) found.

CEDA analysis of the latest data from the Household Income and Labour Dynamics in Australia (HILDA) survey found people who work from home commuted on average 15.7% less than if they worked in an office.

“This confirms what many Australians have experienced since the pandemic – workers are saving time and money on their commute, and in many cases are also able to work more hours or even get a job, where they couldn’t do so before,” CEDA economist James Brooks 01 said.

“Commuting less brings savings on public transport fares and fuel costs, but there’s also savings on time.

“We value that at $110 per week or $5308 for a

48-week working year, using the average hourly wage of Australians who work from home.”

Brooks said that despite previous CEDA analysis pointing to the fact that Australians who work from home earn approximately $4400 less, they still come out ahead when comparing that figure to the estimated cost of time saved.

“In other words, what they might be losing in wages, they are gaining in reduced commute time,” he said.

Additionally, the analysis found people who worked solely from home were able to work nearly 20% more hours than those who do not, and workforce participation, compared to the pre-COVID trend, has increased by 4.4%. Those who work from home half of the time work just over 9% more hours per week.

“This can be due to a range of factors such as being able to add an extra day of work, using the time gained to get more work done, cost-ofliving pressures and the strong labour market,” Brooks said. fs

Financial Standard economics and investment table

Alternatives

Gilt-y party

Sanjesh Pinnapola

Gold prices have been surging in 2025, up 23% since the start of the year. This has meant the price for a troy ounce has breached the AU$5000 for the first time (or US$3200) on the London Bullion Market. By comparison the S&P 500 is down 12% and the MSCI AC World 8% over the same period.

While the Trump administration’s tariff merry-go-round did provide an additional boost in demand and prices, gold was already up 15% in the three months before the tariff announcements. Even 2024 saw gold prices up 38%, matching the S&P 500’s total return for the year and beating the MSCI World and ASX 200’s 32% and 11% returns.

This hasn’t always been the case.

Over the decade to the start of 2020 the rise in gold prices would have equated to an annualised return of 5.9% pa, just over a third of the 16.9% pa return of the S&P 500 and just under half the 12.6% pa return of the MSCI World index.

Since 2020 the tables have certainly been turned. Gold prices have been on a tear, equating to a 18.3% pa return over the

five years, while the S&P 500 and MSCI World have returned 16.3% pa and 13% pa respectively.

According to the World Gold Council, the just under half of the world’s 4500 tonnes in demand for gold in 2024 was for jewellery fabrication. That is not to say gold as investment isn’t in demand. Coins and bars for investment purposes saw a 25% rise in demand globally in 2024. A trend likely to continue in 2025 amidst turmoil and volatility in equity markets.

One of the strengths of gold here is in diversification. Over the past 15 years the monthly change in the price of gold only had a -0.12 correlation (which is to say there is hardly any) with the monthly return of the MSCI World index.

The other is as a currency hedge. With gold being traded globally in USD, a depreciation in USD usually sees an appreciation in gold, thus preserving purchasing power.

Alternatively, if the local currency depreciates against the dollar gold can serve as a buffer, as it will appreciate in local currency terms. fs

Donald Trump spooked

John Dyall

W

hile the threat of an awkward phone conversation with Australia’s prime minister appeared to have no effect on Donald Trump’s rather erratic tariff announcements, the mood of the bond market was a different thing entirely.

On April 2 he announced “Liberation Day” with the imposition of a broad range of very high tariffs imposed on products entering the US. The bond market reacted in two ways. The first reaction was similar to the stockmarket.

Bond buyers and sellers thought the tariffs were a bad idea that would lead to higher inflation (prices to US consumers would rise) and lower economic growth. This is what is called stagflation, a malignant set of economic circumstances not really seen in developed nations since the 1970s.

For the bond market slower economic growth is an indicator that the Federal Reserve would lower short term interest rates, which would flow through to bonds with lower yields, and capital gains.

This was the prevailing mood in the first two days of trade following the tariff announcements. The yield on US Treasury 10-year bonds fell

from 4.2% pa to 4% pa, which was a boon to investors because when yields fall, the capital value increases. In this instance the gain to investors was 1.4% over two days.

Then something unexpected happened.

Other countries were so shocked by the actions – which flew directly in the face of the international rule of law that the US was a leader in creating and maintaining since the end of the second world war – that they wondered whether the US could be relied on to maintain that system in the future.

The two largest lenders to the US – Japan and China – began to sell Treasuries. Investors worldwide realised that this could well be the end of USD being the global reserve currency.

From there the yield on 10-year Treasuries began to rise, with investors wanting a higher yield. By the time Easter was over the yield on the 10-year bond had reached 4.4% pa and the total return from 4 April (two days after Liberation Day) to 21 April was negative 2.9% for 10-year Treasuries and negative 7.4% for 30-year Treasuries.

And that was when Donald Trump announced a 90-day tariff pause. fs

Source: Rainmaker/CoreLogic RP Data

Source: Rainmaker/CoreLogic RP Data

Figure 2. US Treasury bonds returns since “Liberation Day”

Figure 1. US yield curve since Trump’s “Liberation Day”

Figure 2. Global gold demand (in tonnes)

Figure 1. Gold vs market indices performance since Jan 2020

1.

2.

5. The two largest lenders to the US Federal Government are: a) Japan and China b) Vietnam and Cambodia c) Australia and New Zealand

6.

3. Central banks and institutions were responsible for the majority of global gold demand.

a)

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KNOWLEDGE IS KEY

Felicity Walsh, Franklin Templeton’s head of Australia and New Zealand and head of institutional, APAC (ex. Japan), is constantly traversing the globe, learning as much about the business, its clients and the broader funds management industry as she can. Matthew Wai writes.

Ever since a young age, Felicity Walsh has devoted herself to learning; knowing as much as she can about as much as possible has always been a priority for the Shropshire, England native.

It’s fair to say she was unlike most other kids, falling in love with mathematics and science at school.

“And I loved studying… I was completely opposite to my brother and sister. I would teach myself and was always asking my mother to buy me books, particularly in science,” Walsh recalls.

Her passion for science led Walsh to pursue becoming a chemist, studying at the University of Nottingham. That path was short-lived, however – before long Walsh decided she had “had enough time in the lab coat,” and shifted gears.

While investigating what she wanted to do, and ever eager to learn more, reconnected with an uncle living in Perth who encouraged Walsh to dip her toes in financial services. He had studied mathematics at Oxford University before moving to Australia and becoming an actuary.

Finding interest in it, Walsh landed an internship at Towers Watson in Birmingham, England.

“I absolutely loved being in the office. After that work experience, I decided in my last year of university that I wanted to go straight into work,” she says.

“I was a little disadvantaged because I hadn’t gone to Oxford or Cambridge like most of the graduates had, and I hadn’t studied mathematics, instead I had studied science, so I had to get my maths up to where it needed to be.”

While she had always been one for the books and was studying to become a fully qualified actuary, as a consultant Walsh found herself falling in love with the client-facing aspects of the role.

“I loved the fact that you could learn technical details and then work out how to convey that to a trustee board or the investment team,” she says.

In 2014, having become a Fellow of the Institute of Actuaries and a Certified Investment Management Analyst, Walsh hopped on a plane to Australia to become an investment consultant in Sydney.

Just a year later, she joined K2 Advisors as a portfolio manager and, over the six years she was there, worked her way up to managing director. As a subsidiary of Franklin Templeton, it wasn’t long before her efforts in running K2 Advisors caught the attention of higher ups and Walsh took on a dual role, overseeing K2 and working on institutional sales for Franklin Templeton. It was an arrangement that wouldn’t last long, however – she was soon made head of sales for Franklin Templeton and, in August 2022,

became managing director for the Australian and New Zealand business. Then, last year, leading institutional sales in Asia was added to her remit as well.

It’s an intense and demanding workload. How Walsh copes with the pressure is a “constant work in progress.”

“Being part of such a large organisation, there’s a huge amount of relationship work that needs to be done across the business…

Being able to manage so many different things coming at you from so many different regions and streams [is difficult]. I’ve always got many different things in my mind, and you never know which one’s going to have to be dealt with,” Walsh says.

The role also requires a lot of travel, working with a variety of super and pension funds, insurers, family offices, private wealth groups and retail clients around the world. While some might find it taxing, Walsh says understanding what clients want and need and how it differs the world over is crucial.

She recently took part in an event that saw Franklin Templeton bring together super and pension providers from around the world to share what has and hasn’t worked in the decumulation and accumulation phase in their respective markets.

“We think it’s important on two fronts; one is being part of the ecosystem and working with our clients, peers, and broader industry to ensure that we are creating and delivering the best outcomes for all Australians in their retirement… if you don’t understand their challenges it’s going to be pretty hard to work on solving them,” she explains.

“The other part is being the advocate for my team to help understand the importance of continued learning, formally and informally, across the industry. As a team we participate in numerous industry educational programs and mentoring/mentee schemes. We also take internships seriously, being able to provide opportunities to smart, energetic young students is incredible fulfilling for both our team and our interns.”

Walsh believes the key to her success in her current role is her ability to compartmentalise and not become too attached to specific tasks. She also finds it much easier to focus and work efficiently when in the office.

“If I’m in Sydney, I’m always in the office. I just cannot get my mind into it sitting at home; it just doesn’t work for me,” she says.

“That doesn’t mean that the whole team needs to be here, but I’m just way better when I’m in work mode if I am in the office.”

She’s found she’s needed it lately, with all the emerging areas Franklin Templeton is getting involved in.

… working with our clients, peers, and broader industry to ensure that we are creating and delivering the best outcomes for all Australians in their retirement… if you don’t understand their challenges it’s going to be pretty hard to work on solving them.

Felicity Walsh

For instance, digital assets take up a lot of her time, particularly when she’s visiting with Asian clients as the sector is much more developed there than at home.

Walsh has also learned an awful lot about alternatives in recent years as part of her desire to always be on the front foot with clients.

“Lately, we have focused on adding alternative capabilities. Alternatives are relatively new to big segments of the Australian market and therefore, there’s an onus on us to make sure that we are using the power of our global resources to educate Australian investors in this space,” she explains.

“It’s a hot topic now, but… it shouldn’t have to come from a regulator to provide the education. Fund managers like us should be absolutely educating our clients, especially on the kind of complex strategies they are invested in.”

With an eye to the future, Walsh is firmly focused on delivering the best possible outcomes for all her clients – and it’s likely she’ll keep doing so from right here.

“I didn’t really plan to come to Sydney for any particular length of time, but I knew as soon as I got here that I would not be going back home, and that was 11 years ago,” she says.

“I’m not saying I wouldn’t move somewhere else in the world, but I will absolutely be coming back here. Sydney is definitely my home.” fs

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