Stocks Special Reports LICs Credit Technical Analysis Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features Technical Analysis SMSFs Learn


Fund Times: Updates for APN, Australian Ethical, Legg Mason, Macquarie, Vanguard

Phillip Gray  |  28 Jan 2009Text size  Decrease  Increase  |  

Page 1 of 1

In recent news from the funds management industry you may have missed, APN Funds Management has launched a listed-only property fund; Australian Ethical and Legg Mason have hired small-caps portfolio manager/analysts; Macquarie has reorganised its fixed interest businesses; and Vanguard has appointed a new chief investment officer.


APN launches listed-only property fund
Property specialist APN Funds Management has launched APN AREIT, a fund designed to take advantage of buying opportunities in the sector, and which unlike the firm's other funds, invests only in listed property securities.

APN will invest the fund's assets in higher-yielding high-quality Australian real estate investment trusts (AREITs), aiming to provide tax-advantaged income, inflation-matching capital growth over five to seven years, and lower than market volatility. The fund manager states in the product disclosure statement that it intends to limit income from property-related entities whose earnings are from property development or management to 15.0 percent of the fund's total income, and limit any single investment to no more than 20.0 percent of the total portfolio. The fund has a minimum initial investment amount of A$1,000, and will pay income distributions monthly. The start-up ongoing price-tag of 1.05 percent per annum is competitive: the average annual ongoing fee for retail AREIT funds is currently 1.74 percent, and for wholesale funds, 0.75 percent.

APN suspended applications and redemptions from APN Property for Income and APN Property for Income No. 2 in October 2008, because of the illiquidity of the underlying direct property component. Unlisted property accounted for just under a third (31.62 percent) of the Property for Income fund, and about a quarter (22.80 percent) of the No. 2 fund. Our fund research analysts moved our Morningstar Recommendation to 'Hold' but described the move as "sensible given the circumstances", and commended the conservative and disciplined process, low turnover, and the house's specialist focus on property.


Australian ethical appoints in small-caps, income
Australian Ethical has made two recent appointments. The firm has hired David Macri to work in small-caps analysis and investing. Macri's background includes stints with Mercer Investment Consulting, Mellon HR & IS (formerly NSP Buck), Credit Suisse Asset Management, and most recently as an analyst with Macquarie Securities. He'll work with Andy Gracey running Australian Ethical Equities, which has a Morningstar Recommendation of 'Hold'. (Gracey has been responsible for the fund since April 2008, after former manager Alastair Clark stepped away from day-to-day management.) Around 30.0 percent of the fund's assets are typically in small-cap stocks, and it also invests in large-cap firms, New Zealand companies, and international shares. The largest holdings at 31 December 2008 included Arrow Energy, Origin Energy, Australian Pipeline Trust, and bionic ear manufacturer Cochlear.

The firm has also made changes to the management of Australian Ethical Income. Fixed Income Manager Noel Hyland is moving to work three days a week. Tim Kelly has assumed lead responsibility for the fund, and for the income component of Australian Ethical Balanced.


Legg Mason hires small-caps talent
Legg Mason's Melbourne-based business has hired Julian Mulcahy as Portfolio Manager and Research Analyst for domestic smaller companies. Mulcahy will manage Legg Mason's small-caps assets jointly with Shane Livingstone, who has run the portfolio since it was launched in 1996. Mulcahy has 21 years' investment experience, 14 of which have been in small-caps investing, most recently with Citigroup. Mulcahy will manage funds such as Legg Mason Australian Small Companies Class A. Legg Mason was at 31 December 2008 overweight Tower Australia and accounting firm WHK Group, Gunns, mining industry services provider WDS, and GUD Holdings (which markets the Sunbeam appliances, Oates cleaning hardware, Ryco automotive parts, and Lock Focus security products).


Macquarie reorganises fixed interest businesses
Macquarie Funds Group has made a number of changes to its Fixed Income, Currency & Commodities division. The firm has completed the integration of Four Corners Capital Management and Macquarie Allegiance Capital, and has appointed Dean Stewart to work with Ben Bruck as Co-Division Heads. Macquarie has also appointed Brett Lewthwaite to head the firm's Australian Credit and Fixed Income teams.

The funds affected by this change include Macquarie Master – Diversified Fixed Interest, a multi-manager vehicle employing both internal and external managers and investing in domestic and global government and investment-grade corporate bonds, as well as a tactical allocation to higher-yielding sub-investment-grade debt. This investment strategy has a Morningstar Recommendation of 'Recommended', our fund research analysts noting that while they consider this a quality income option, the emerging markets and high-yield exposures do increase the risks.


Vanguard replaces chief investment officer
Finally, Vanguard Investments Australia Chief Investment Officer Eric Smith has resigned, and the firm has appointed Joseph Brennan as his replacement from March. Brennan is currently a Principal and Director of the firm's Portfolio Review Group in the US, and has spent 18 years in the funds management industry and 15 with Vanguard. His current responsibilities include monitoring investment activities for both Vanguard's in-house funds and externally-managed portfolios. Our fund research analysts will be meeting with Vanguard in the near future to assess the implications of this change.