Archive for category: Insights

While the use of a value approach or value (factor) bias is often associated with equity portfolios, the extraordinary events in early 2020 served as a reminder of the value bias inherent in many multi asset solutions. This bias results from the valuation factors inherent in both asset allocation and security selection decisions.

The emphasis managers place on ‘value’ in their asset allocation and security selection processes has impacted portfolio performance over the past several years given the headwinds ‘value’ as a factor has faced. Lonsec’s recent review of multi-asset funds emphasised the need for adequate risk management systems to ensure any ‘bets’ in the portfolio are intended and in line with managers’ strategic decisions. Moreover, Lonsec was interested to discuss the role of ‘value’ in asset allocation decisions alongside other factors including liquidity, sentiment and policy, and the timeframe in which managers frame their decisions.

In this thought piece Lonsec aims to answer why the last five years has been a challenge for asset allocators, the role the ‘value’ factor has played and why Lonsec believes it is vital that asset allocators and their investors understand the drivers and extent of any bias’s present in portfolios and the likely effect this will have on portfolio performance at different points in the cycle.

Asset allocation

Investment managers who build diversified portfolios of assets with allocations to an array of asset classes (i.e., multi asset portfolios) often use an asset allocation approach as the core building block of their portfolio construction process.

While there are numerous asset allocation approaches, the most recognised are long term ‘strategic asset allocation’ (SAA), medium term ‘dynamic asset allocation’ (DAA) and short term ‘tactical asset allocation’ (TAA). While some managers have defined their own asset allocation approach and associated acronym, their approaches invariably sit somewhere between long term SAA and short term TAA.

For managers who build portfolios based on a clearly defined asset allocation approach, capital market assumptions (i.e., forecasts for asset class returns, asset class risks and cross-asset correlations) are key inputs into the setting of portfolio asset allocation, regardless of the approach used.

When defining capital market assumptions for the forecast period, asset allocators commonly use expected returns, expected risk and correlations as the essential inputs into the asset allocation process. For SAA decisions, expected returns are heavily reliant on current valuations. DAA processes by contrast focus on medium term horizons of circa 18 months to 3 years and can focus on broader factors in determining the under and overweights to particular asset classes. In Lonsec’s experience, valuation will still play a role, and in some cases a heavy role, in determining positioning over these periods. For example, if equity markets are deemed to be trading at high valuations relative to long term averages (e.g., on metrics such as price to earnings multiples), asset allocators may choose to down-weight equities in their current asset allocation. This decision may be driven by the assumption valuation multiples will normalise in the ensuing period towards the long-term average (e.g., where a compression in earnings multiples drives a fall in share prices). Likewise, in the fixed income sphere, low yields and narrow spreads have meant allocating to these sectors has been a challenge. The difficulty with this approach is that valuations can overshoot for an extended period of time, especially when liquidity is higher than average and central bank policy has been supportive. The use of valuation metrics as inputs in asset allocation approaches is likely to create a bias towards asset classes offering attractive valuations and in turn creating value biases in multi asset portfolios.

The dominance of macro factors in overshadowing asset specific factors has continued to be a discussion point between Lonsec and multi-asset managers. Lonsec has found those using a framework to assess the economic and market cycle to have a more holistic DAA framework when compared to others using more simple methodologies.

Security selection

Alongside asset allocation, another dominant driver of positioning for multi asset managers is security selection. Having identified the desired portfolio asset class exposures, in order to select the securities for inclusion in each asset class managers will often analyse the prevailing valuation levels of securities or sectors. This analysis can involve drilling down to the sub asset class level, geographical location level, and the sector/industry level to find the best opportunities within an asset class.

While some managers may seek to build portfolios with diversified factor exposures, many managers tilt security selection away from seemingly expensive areas of securities markets and towards undervalued areas of securities markets.

As Figure 1 shows, entering 2020 the valuation gap between growth equites and value equities had moved to highs not seen since the early 2000’s bubble:

Figure 1

While increasing exposure to cheaper areas of securities markets makes sense intuitively, where multi asset managers apply this approach across many of or all the underlying asset classes utilised, it may create a large value factor bias within portfolios. Lonsec believes managers need to be aware of these biases and ensure exposures are intended rather than unintended positions.

The last five years, and heading into 2020

In the years after the GFC, having taken official cash rates to record lows, the modus operandi of central banks has been to pump liquidity into economies and investment markets at any and every sign of trouble. This has helped to drive down bond yields and expected returns across all asset classes. The challenge of where to invest in this environment has been one impacting all asset allocators.

While managers have stuck to their investment and portfolio construction processes over this time, Lonsec notes there has been a disconnect between portfolio positioning and financial market performance. The challenge for managers over this period was to correctly form a view on the business cycle. With interest rates rising (albeit slowly) from late 2015 to 2018 and contrasting views on the emergence of inflation, there were divergent views on how portfolios should be positioned (over this period Lonsec has noted funds in its Variable Growth Assets > Real Return sector have been positioned at both ends of the risk spectrum). Likewise, views on the market cycle becoming later stage were predicated on valuations becoming more expensive across the board. Many of the managers we rate had been conservatively positioned due to this, and underperformed passive benchmarks which benefitted from the continued and increasing richness of valuations (particularly in geographies like the US, and sectors like Technology and Healthcare).

While there were signs of a pick-up in economic growth and a corresponding response from value and cyclical assets in late 2019 and some managers became more constructive on market outcomes, the three-year period leading into January 2020 undoubtably favoured strategies that invested in growth assets over value assets, as shown in Figure 2:

Figure 2

The 2020 experience – the bear market

The COVID induced sell off that began in February 2020 saw value stocks fall faster and further than growth stocks through late March 2020. Value orientated strategies have at times underperformed at the beginning of equity bear markets, arguably as investors throw in the towel and finally pull the sell trigger on their worst performing stocks, and this was the case in 2020. Figure 3 shows that from 1 Jan 2020 to 20 May 2020, the performance of value stocks materially lagged that of growth stocks.

Figure 3

Figure 4 shows that the valuation gap between growth equities and value equites continued to reach new multi-year highs during and coming out of the COVID induced bear market:

Figure 4

The 2020/21 experience (so far) – multi asset managers

The chart in Figure 5 shows the experience of a sample of managers in the Variable Growth Assets – Real Return sub-sector. While some multi asset managers suffered smaller drawdowns relative to peers by entering February 2020 defensively positioned based on valuations (and had been conservatively positioned for much of the prior two to three year period), other multi asset managers nimbly reduced risk exposures by reducing equity exposures or adding downside protection through derivatives.

Among the managers that suffered larger drawdowns relative to peers, many had pronounced value biases through their asset allocation and security selection approaches, in some cases adding significantly to cheap, cyclicals as the market sold off. These managers were impacted when growth styles started to recover more quickly. Lonsec notes, however, that those managers with value biases have bounced back (in some cases sharply) as the value rotation has taken hold since late 2020, though Lonsec notes it is too early to suggest how sustained this will be and may be somewhat dependent on the path of the economic recovery from here.

Lonsec believes articulation of the manager’s strategy to be important given it is likely to provide a greater understanding of how the manager and their fund is equipped to perform in different environments. Nonetheless, it is important to recognise that Lonsec’s ratings encompass a ‘through the cycle’ view on managers we assess.

Figure 5

Key takeaways

Whilst portfolios may be diversified at the asset class level, this may not be indicative of the inherent level of diversification overall within portfolios. As Lonsec has seen in its recent multi-asset review, biases towards the value factor have, in some cases, been high and exacerbated by biases coming from both asset allocation and security selection effects. Lonsec prefers to see diversification across not only style, but also strategy, geography, sector and factor. Value biases have been pronounced in some portfolios in recent years given high valuations and the belief in some quarters that the cycle was maturing. This positioning has proved a performance headwind against passively managed SAA weighted benchmarks in recent years and in recent months led to significant performance dispersion among different strategies.

Going forward, while it is difficult to time decisions over shorter periods, Lonsec expects greater levels of dispersion in markets which should provide greater opportunities for active asset allocators to extract alpha from markets. Lonsec continues to discuss the foundations for any active bets in portfolios and the framework behind such decisions. Moderately leaning into certain style or factor bets can be challenging but possible at points in the cycle when supported by a strong asset allocation framework.

When the value bias in an investment manager’s approach is compounded in the security selection process, Lonsec believes asset allocators must be cognisant of the degree of value bias in their portfolios to ensure this is in line with their strategy (or any factors for that matter). All bets must be intended with unexpected performance resulting for those unaware of their true exposures. As valuations have been shown to have stronger explanatory power on returns over longer term horizons, Lonsec also continues to progress conversations on the time horizon of manager’s decision making processes. Overall, Lonsec believes that asset allocators making shorter to medium term decisions should include value as one factor among others that may have increased forecasting power over the medium term.

Authors

Darrell Clark, Manager, Multi-Asset

Sebastian Lander, Senior Investment Analyst

Issued by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Warning: Past performance is not a reliable indicator of future performance. Any advice is General Advice without considering the objectives, financial situation and needs of any person. Before making a decision read the PDS and consider your financial circumstances or seek personal advice. Disclaimer: Lonsec gives no warranty of accuracy or completeness of information in this document, which is compiled from information from public and third-party sources. Opinions are reasonably held by Lonsec at compilation. Lonsec assumes no obligation to update this document after publication. Except for liability which can’t be excluded, Lonsec, its directors, officers, employees and agents disclaim all liability for any error, inaccuracy, misstatement or omission, or any loss suffered through relying on the document or any information. ©2021 Lonsec. All rights reserved. This report may also contain third party material that is subject to copyright. To the extent that copyright subsists in a third party it remains with the original owner and permission may be required to reuse the material. Any unauthorised reproduction of this information is prohibited. 

Generating a meaningful level of income within the risk constraints of a retirement portfolio has certainly had its challenges over the last 12 months.

When the full effects of the COVID-19 pandemic hit in March 2020, a number of usually very reliable income sources—such as the banks, REITs, and infrastructure—either reduced, suspended or cancelled their dividends altogether as the global economy came to an abrupt halt. Bond yields, which have been grinding lower for the better part of 30 years, plummeted further, reaching record lows. In fact, yields across an entire diversified portfolio came under enormous pressure and remained that way for the better part of a year.

At Lonsec we were able to generate in excess of the targeted 4.0% p.a. yield (before franking) across our Lonsec Retirement Managed Portfolios despite the difficult market conditions—a great outcome for our clients who rely on this income to fund their retirement needs.

Lonsec’s portfolios have generated income in excess of the 4.0% target
(12 months to end March 2021)

Source: Lonsec

The importance of active strategies and diversification

So how did we get here?

For us, the single most important factor was active management. Being active at all stages of the investment process—from asset allocation through to manager selection and security selection—was critical in helping deliver income objectives for our clients. With the potential for default rates to skyrocket and dividend traps around every corner, we wanted both our equity and credit managers to really test the balance sheets of companies and ensure the robustness of the businesses we were investing in or lending to.

Wide dispersion in outcomes also played out at the sector level, where the “stay at home” tech sectors, for example, did well out of COVID, while the travel sector was heavily impacted. In an environment where uncertainty is high and there is a large dispersion between the likely winners and losers, active management was key.

Secondly, diversification was, and will remain, very important in terms of how we construct retirement portfolios. COVID-19 has made that excruciatingly clear. If you were relying on the dividends of a few bank stocks to meet your living expenses in retirement, then you took an enormous hit to your income over the last 12 months. We aim to diversify income sources broadly across not only asset classes – but also across the underlying drivers of that income—whether that be dividends from equities, option premia, bond coupons, rental income from real estate and other sources.

Over the course of the year, we also broadened out the types and sources of income we were accessing in the portfolio. We invested in relative value strategies in the fixed income space that didn’t rely on credit or duration to generate returns as well as shorter duration credit strategies that had the ability to rotate across fixed income sectors to source income.

We also accessed some more idiosyncratic or alternative sources of income (via multi-asset income strategies), which allowed us to gain exposure to assets such as litigation finance, catastrophe bonds, healthcare and music royalties. Importantly, these additional sources of income were largely unrelated to what was going on in the broader economy and uncorrelated to existing income sources in the portfolio.

Crisis equals opportunity

It is often in times of crisis that the best opportunities emerge. We believe it is important to be opportunistic and have enough nimbleness in your process to take advantage of those opportunities as they arise. Shortly after the market sell-off in March 2020, good opportunities opened up in some of the higher yielding credit markets as spreads blew out. We entered a position in syndicated loans given the spread widening in that sector, funded by reducing our exposure to a traditional global equity dividend yield strategy which was facing headwinds from the COVID-induced shutdown.

We also tilted towards strategies where there was an obvious tailwind. For example, we increased our weighting to strategies employing option strategies which we felt were well positioned to take advantage of the increased volatility in markets. Key to being able to take advantage of these opportunities is having a robust decision-making framework in place that allows you to respond quickly.

Looking forward now, and with the worst effects of the COVID-19 shutdown largely behind us, we have adopted what we would consider to be a more ‘normal’ portfolio position in that we are now close to benchmark weights across the major asset classes. Yields have begun to normalise, not only in equities where companies are feeling more confident about paying distributions, but also in bond markets where higher bond yields underpin our more optimistic outlook for income across the remainder of the year.

 

IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

Debate in global property markets is now focused on office markets and how the global pandemic may have changed demand for office space on a permanent basis. In Australia, the immediate impact has seen CBD office vacancy levels rise in Sydney and Melbourne from 3.0–4.0% to around 8.0–9.0% over the year to January 2021.

Net absorption for Australia overall has reduced from +50,000 sqm in the six months to January 2020 to -90,000 sqm in the latest six months to January 2021. Sub-leasing levels have spiked as tenants with longer leases look to offload spare capacity. While face rents have remained largely unchanged, incentives have jumped to over 35% compared to around 25% pre-pandemic, dampening net effective rents.

The return to work in CBDs is progressive, but there is a growing realisation that more flexibility to allow working from home arrangements is both possible and desired. As corporates plan ahead and leases come to an end, already there is demand for core space plus an option for a flexible amount. Landlords will also need to ensure that buildings provide good quality space (including high environmental ratings) with facilities being upgraded in line with social distancing requirements.

While there will be some requirement for more space per person, it is likely that the trend for more flexible space and working from home arrangements will drag on demand while the world works its way through this pandemic. Given there is the possibility of more pandemics in the future, the outlook for office space will have a higher degree of uncertainty. A bright spot is medical and life sciences office space, where demand has been boosted by pandemic conditions.

Property sector will keep evolving

In the March quarter 2021 Australian property securities lost ground (S&P/ASX 300 A-REIT Index -0.5%) to the broader Australian equities index (+4.3%), although a stronger March almost made up for a poor first two months of the new year. Conversely, global property securities – AUD hedged (+7.3%) outperformed global equities – AUD hedged (+6.1%) during the first quarter of 2021.

Healthcare property continues to evolve with limited listed opportunities in Australia but increasing activity in unlisted funds. The highlight during the last quarter was the bid for Australian Unity Healthcare Property Trust by Canadian-based NorthWest Healthcare, with two conditional bids being rejected by Australian Unity as significantly undervaluing the patiently accumulated portfolio (December 2020 value was $2.4 billion) plus the ongoing development potential.

Heavily sold off early in 2020, retail property REITs have had bursts of recovery during the last six months as investors reacted to a vaccine-led recovery. Food and necessity-based shopping centres have continued to trade well and remain in demand by investors. Shopping strips and malls with a high proportion of discretionary spending have been hard hit, and owners face a period of readjustment in tenant mix and rentals. Nevertheless, in countries where lockdowns have lifted, foot traffic has rapidly returned to the ‘fortress’ shopping centres.

Secondary market for residential property expected to stabilise

A surprising area of strength is the residential market in Australia and some other parts of the globe where the COVID-19 response has been well handled (e.g. New Zealand). The combination of the RBA announcing that interest rates would stay low for a number of years and a shortage of supply in the secondary market has seen prices escalate quickly. This seems at odds with the underlying economic conditions in Australia where government income support (i.e. JobKeeper) has now ended and banks require mortgages to be serviced after a brief hiatus for those in need.

Lonsec expects some stabilisation to occur in pricing for the secondary housing market as these factors take hold and supply increases. Developers of primary housing stock will reap the benefits in the near term, although the apartment market is softer as demand is weak (no international buyers or renters) and rentals are about 20% lower than the pre-pandemic level. While values in regional and coastal areas have reacted to the work from home trend, this is also a reflection of relative value compared to the capital cities.

The residential rental and manufactured housing sectors are well developed internationally and have shown their resilience with a high proportion of recurring income from a multitude of tenants, although these sectors are not immune from some impact of a pandemic. Student housing is a good example, where travel restrictions have seen international student occupancy at very low levels. Longer-term trends of demand for high quality education should see these businesses recover in due course.

Property subsector winners include the Industrial and logistics and data centre sectors as growth continues off the back of accelerating trends towards e-commerce. However, pricing of assets in this area has become historically expensive and investors need to tread carefully to ensure the properties have tenants that are tied in not only by long leases, but by specialised fit-outs (preferably tenant funded). Similarly, hotels and lodging earnings are set to benefit as intra-national travel restrictions are eased and are dependent on how international travel patterns pan out.

A key positive that remains in place is low interest rates globally, which are having the impact of maintaining investor demand and underpinning tight market capitalisation rates (apart from discretionary retail assets). Lonsec maintains the view that these policy settings are artificially low, and as inflation resurfaces, bond rates and borrowing costs will rise (the US 10-year rate rose from 0.72% in October 2020 to 1.85% at the end of March 2021).

At this stage, REITs remain reasonably geared and investors should steer away from companies starting to push these boundaries. At the same time, highly priced property groups with components of funds management and development earnings can be vulnerable to a reversal of asset values.

Issued by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Warning: Past performance is not a reliable indicator of future performance. Any advice is General Advice without considering the objectives, financial situation and needs of any person. Before making a decision read the PDS and consider your financial circumstances or seek personal advice. Disclaimer: Lonsec gives no warranty of accuracy or completeness of information in this document, which is compiled from information from public and third-party sources. Opinions are reasonably held by Lonsec at compilation. Lonsec assumes no obligation to update this document after publication. Except for liability which can’t be excluded, Lonsec, its directors, officers, employees and agents disclaim all liability for any error, inaccuracy, misstatement or omission, or any loss suffered through relying on the document or any information. ©2021 Lonsec. All rights reserved. This report may also contain third party material that is subject to copyright. To the extent that copyright subsists in a third party it remains with the original owner and permission may be required to reuse the material. Any unauthorised reproduction of this information is prohibited. 

The investment product market has evolved over the decades to cater to a wide range of investor needs and objectives. Now, as more and more investors wish to see their portfolio align with their values, the product market is evolving once again to deliver a range of responsible investment solutions.

Lonsec has observed a significant increase in demand for responsible investment solutions over the past two years. Combined with this we have seen a proliferation of investment products adopting ESG, sustainable or impact investing principles within their investment processes. This product evolution has extended beyond equities and now covers most key asset classes, including fixed interest and infrastructure.

We expect the range of products across asset classes and investment structures (i.e. managed funds and ETFs) to continue to grow. The increased demand and subsequent growth in available products have allowed portfolio professionals like Lonsec to construct a diversified investment solution to cater to this market, which was not possible even two years ago when most products were focused primarily on equities.

We believe that the increasing demand has been driven by two key factors that have been instrumental in shifting responsible investing from a niche market to one where there are clear structural tailwinds supporting the adoption of responsible investment solutions.

The first has been a clear change in investor values. Investors are increasingly incorporating their own views on issues such as the environment within their investment decision-making process. While this is not a new phenomenon, it has taken on a new life over the past two years as we see more millennials enter the investment landscape. This is a generation that has been acutely aware of environmental and social issues throughout their lives and believe everyone has a role to play in improving the world, including through their individual investment decisions.

In a 2018 survey of high-net-worth millennials published in US Trust’s Insights on Wealth and Worth, 87% of respondents considered a company’s ESG track record an important consideration in their decision about whether to invest or not. Then you have natural disasters like bushfires—still fresh in Australians’ minds—which have prompted us to become more aware of the type of investments we want exposure to and which we want to avoid. Of course, it’s not just millennials driving this shift. Investors of all ages—from those entering the workforce to those nearing or in retirement—are proactively seeking investments that they believe will benefit future generations.

The second driver for increased demand has been changes in financial adviser behaviour as a result of the Future of Financial Advice reforms of 2012 (FOFA) and subsequently the Royal Commission into the financial services industry, which delivered its final report in 2019.

Focus on best interest duties and the need for advisers to be able to provide advice specific to investors’ needs has been instrumental in focusing adviser attention to responsible investing. In a June 2020 paper ‘Building Stronger Client Relationships with Responsible Investing’, Franklin Templeton noted that 88% of advisers see responsible investing as a meaningful way to evaluate investments. They also found that 84% of Australian advisers cite at least some level of fiduciary concern related to selecting responsible investments, compared to 61% of advisers globally. Remarkably, 88% of surveyed advisers expect to increase allocation to responsible investing strategies over the next two years.

Lonsec recently conducted a telephone survey of several advice practices, and the consensus view was that between 20% and 30% of clients actively communicate preference regarding responsible investing. For example, they may have a view on the environment and climate change, or views on industries such as gambling and alcohol.

Looking further afield we believe that responsible investing will become more mainstream with ESG and sustainable investment principles becoming an expectation rather than a nice-to-have. There is precedent for this within the institutional investment market. In Europe, fund managers will generally not be awarded investment mandates if they have not integrated ESG and increasingly sustainable elements within their investment processes.

We have already witnessed this in the wholesale space whereby fund managers who do not actively market themselves as ‘responsible’ managers will nevertheless exclude certain harmful industries such as tobacco. It’s clear that the trend towards responsible investing is heading in a positive direction, with all participants actively engaging in the sector. In the future, responsible investment will not be merely another option for investors to select from, but rather a core part of our investment toolkit.

IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.