Lonsec works closely with advisers to build solutions that enhance a practices ability to serve clients, while building greater operational efficiencies. As innovators in managed accounts, we’ve always believed in their power to transform an advice business. Research indicates that practices using managed accounts see a noticeable uplift in revenue, and profitability per adviser, by up to 32% and most importantly facilitates increased engagement with clients.

The potential for improved business outcomes is clear, however change can be hard so we’ve asked Tim Scott, small business owner, co-founder and adviser at Ford + Scott Financial Planning (Tasmania), to share his experience, thoughts and the process he went through, to re-imagine business.

Watch the video below

Get in touch with us to discuss how we can help you redesign your practice with Lonsec Managed Accounts

Steven Jessop 
Good morning, everybody. And welcome to Tim Scott, Principal from Ford Scott financial planning really pleased you could join us today. I’m Steven Jessop. I look after licensees and IFA’s nationally for Lonsec, and Tim has very kindly agreed to join us today to share some of the journey that he’s been on over the last number of years that we’ve known each other, where I’ve seen his business grow from strength to strength, and let’s take our audience through some of the big decisions that he’s had to make in a really tough regulatory environment.

Tim Scott
Yeah, so we’ll try to run a core of managed funds and have a good good quality managed funds. And with direct equities as a satellite around the side. And, it worked. And it was certainly no disrespect to the fund managers, they’re terrific. And we’re still partnering with these guys in other ways. But the issue we had was the time the blending, the construction side, was just taking us away from what our core skill was. And by having a Lonsec in our core, who actually do that for you, you can’t put a dollar figure on the benefit of business has been, there’s no doubt in my mind, and I’m sure, Luke and Mark, and the guys back at the office would understand it’s been a significant part of what we’ve had revenue growth, because we’ve been out of focus on working with existing clients and attracting new clients. As a business, we had a lot of direct equity exposure to the business, we loved bespoke portfolios and working closely with our clients. Ultimately, that was a value add, but it wasn’t the key value to providing advice. Scalability was an issue for us. And Mark Ford, my founding partner and I were wanting to expand the business. But we couldn’t do so with a laborious approach to portfolio construction, then with our clients it’s all about education and for them to understand what we were as a core financial planning business, so we weren’t stockbrokers. And we weren’t there to pick the eyes out of the market. Obviously, where the reforms have gone, that’s becoming harder and harder to do that. But it’s just a time aspect to act on research. We’re in a fast moving society. Technical analysis flies by the screen every 30 seconds or so it seems. And for financial planning business, how do you actually react to that? And how do you communicate that with the clients. And so it’s all about education with our clients to explain that we are working with investment professionals that are going to be able to do that, on our behalf on your behalf. And that’s going to free us up to actually work more with you about what’s important for you. Yeah, I think from a client’s perspective, they have been able to get their advisor back to advise on what their goals and objectives are. Rather than being the stockbroker and the fund manager or the portfolio constructor per se, we still position ourselves and our portfolio construction process, and we explain to clients how our investment committee works, and how our approach to philosophy to Investment Management is. So, it’s really key to have that belief and ability to articulate that to your clients. But I think, the feedback we’ve been getting from our clients is, all of a sudden we in our reviews are more efficient, we’re actually going in and whether the review was a zoom or a call or an email or face to face, it’s more pertinent to what they’re trying to achieve, and we’re able to spend more time on changes that might be coming up for them. And that allows us to, you know, focus on potentially the planning benefits are of things they need to consider or the you know, the trips and traps that might be involved with what they’re next do. It allows us to actually prepare reports as slide decks around our portfolio construction. And quite often that we go through that at their own leisure, without having to sit in a meeting and go through it. So we finding our meet. From a review perspective, we’re more thorough, you know, the Safe Harbor provisions, which are so important in financial advice now, always have been, but even some more so from a regulatory perspective, we are able to actually focus on that, and deliver that for the client and get better achieve those better outcomes. One of the great and I think my staff would reaffirm as well, if we have a query, we have all segments of the business that can support us right away whereas the direct equities analyst, the person who is in charge of managed portfolios or whatever it will be, and they will give us a reason and answer to any query, but also their communications are very timely and onpoint, which is really good. And I think it’s important. The updates when there’s a portfolio change, it’s a using the technology that we have in the business and I think it’s available to all all players, practices, that would use a Lonsec iRate or a good administration platform, we have the ability to distribute the portfolio changes, run by the manager in an educational email and the clients are feel like they’ve got a really, tangible benefit by being back in touch and feel the portfolio

 



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.

The Lonsec Board of Directors is very pleased to announce the appointment of Mike Wright as CEO of Lonsec effective 5th July 2021.

Lonsec Chairman Mark Spiers said, “Mike’s unique blend of leading teams to develop and implement client-oriented growth and service initiatives along with his strong industry relationships and knowledge were exactly the leadership attributes that we were seeking.”

“By continuing to stay close to our clients Lonsec has enjoyed significant growth across all its business units and I am excited to be able to work with the great team at Lonsec to continue to build on this,” said Mike.

Mike was most recently the CEO of Xplore Wealth, an ASX listed company specialising in providing managed account investment solutions to financial advisers. Xplore Wealth was successfully acquired by Hub24 via a Scheme of Arrangement, completed 2nd March 2021.

Prior to this, Mike had a long and successful career in the Westpac/BT Group, where he held senior executive roles with Westpac’s Retail & Business Banking, and was State General Manager of Queensland before leading the Advice business at BT.

Release ends

For more information, contact:

Rob Hardy
robert.hardy@lonsec.com.au
+61 2 8651 6744

Market Overview, Portfolio Performance & Positioning Update

Given the recent market conditions – increased volatility, fear of inflation, rotation away from growth and quality stocks towards cyclical and value stocks – we asked Lonsec’s Chief Investment Officer Lukasz de Pourbaix to give us an update on his views of the market and how Lonsec’s portfolios are positioned for the environment ahead. In this video, Lukasz provides an overview of Lonsec’s current asset allocation positions following the most recent Asset Allocation Investment Committee meeting, and explains how Lonsec’s portfolios are positioned to manage risk and recovery.


Transcript:

Hello, my name is Lukasz de Pourbaix, I’m the Executive Director and CIO of Lonsec Investment Solutions. Today, I wanted to give you an interim performance update on our managed account portfolios, and specifically in relation to market events, which has certainly caused increased volatility in markets.

What has occurred in markets during the last 12 months?

So what have we been seeing in markets over the course of this year? And I guess the one thing I’d point to is, we’ve seen US 10-Year Treasuries go up from about 0.9% at the end of last year to above 1.6%. So what does that mean? It means that, on the positive side, signals that the economy is recovering, and our view would be that we are seeing signs of economic recovery, we’re seeing improved payroll data, we’re seeing improved productivity numbers. So there’s a lot of things that are pointing to the right direction in terms of economic recovery. But at the same time, what the market has been factoring in is the prospect of inflation. So with all the stimulus, we’ve just seen the US approve $1.9 trillion worth of stimulus coupled with all the other stimulus we’ve seen over the course of the last 12 months, the market is worried that all of this stimulus and the accelerated recovery, will cause inflation. So from a market perspective, we’ve seen, and it started probably in November last year, a big rotation away from those parts of the market that are more growth focus, towards more of your value, your cyclical type of exposures, and the rotation has been very sharp and very pronounced. So if you think about the Australian market, for example, resources, and banks were up about 30% over the course of November last year. Conversely, sectors such as healthcare were down over that same period. So we’ve seen a very abrupt rotation. And if you sort of step back and think that for the last 10 years or so those cyclical and, in particular, value stocks have really struggled.

How have our Lonsec portfolios been positioned?

So from a portfolio perspective, if we look across the board, so the Listed diversified portfolios, certainly did have a bias towards that quality end of the market. So in terms of stocks, those stocks that have had solid balance sheets, have navigated the COVID environment very strongly. So if you think about some of those stocks, we actually had no stocks in the portfolio that needed to raise capital over that period, which goes to point out how strong some of those companies are. But what has performed well since November are some of those stocks that arguably are not in that quality part of the market, as well as some of your cyclical exposures. So the portfolios all in all have had underperformance notably, I’d say over the last three months. Now, we’re very well aware of this underperformance. And we recently had our investment selection committee, along with our asset allocation committee. And from a broad portfolio positioning perspective, so if you think back in terms of from an asset allocation perspective, how we’ve been positioned, we continue to think that risk asset, so equities, are where you want to be at this point in time, relative to bonds. And that equities still provide a reasonable risk premium to bond assets. So we’ve been underweight bonds, and we’ve been overweight risk assets. And we continue to believe that, over the medium term, that’s where you want to be positioned and the portfolios remain positioned in that way.

How are we diversifying our portfolios by investment strategy?

From a bottom-up perspective, in terms of investment selection, as I noted, we have been hurt over the last three months because of that bias towards some of the quality and defensive positions. And those positions have been there, from the perspective that while we think that markets and risk assets, in particular, are going to do well, we also note that there is the risk that the recovery may not be as strong, and we may see some stumbling blocks. So we do still want some of the defensiveness within the portfolios. Having said that, we are reviewing the portfolios at the moment and if you look at the Listed portfolios, where we’re focusing on is – do we add some more cyclical type of exposures just to balance some of the risks within the portfolio. So that is an area that we are exploring, particularly on the global equity side. We have already incrementally been doing that on the Australian equity part of the portfolio. And the other key area we’re focusing on is the bond part of that portfolio, which does have significant exposure to the duration or be it, we are underweight fixed interest. And we are looking at ways to further diversify the portfolios away from duration or interest rate risk within that defensive part of the portfolio. So, you recall, we did add Ardea back in January of this year, and that has proven to be a really good diversifier in this market environment. And we’re looking to further broaden that out. One of the challenges is obviously just identifying products because, in that bond space, the non-duration type of exposure is a little bit more limited. But we will be looking to adjust that part of the portfolio as well.

Are we making changes to our asset allocation positions?

So from a Listed portfolio perspective, overall, we’re relatively comfortable where we’re positioned. If you think about beyond these last three months, longer-term we still think that we will be in a lower rate environment. While we think inflation will go up marginally over the coming months, our base case is that we’re not going to see out-of-control inflation. So if you think about an environment where all things being equal, rates are still low, inflation is under control, and central banks are continuing to support markets, whether it be through monetary policy or fiscal policy, that type of dynamic is still conducive to having that long term quality exposure within the portfolios. So we are cognizant of the recent performance. Over the long term, though, we do think the portfolios are well-positioned in terms of the market environment we’re heading into. And we are making some adjustments just to limit some of those risks within the portfolios. If I just touch on very briefly in the other portfolios, our Multi-Asset portfolios, just by nature of the construct, and the ability to use different types of funds, have had a little bit more of that cyclical exposure, that value exposure, notably, managers like Allan Gray, for example, we have had less duration risk within those portfolios. One of the things we are looking at also in those portfolios is again reducing some of those more defensive exposures, keeping some in there because that is part of our process, as part of managing risk. But also just adjusting that given that our view on equities has become more constructive. And certainly, as I said before, we think that relative to bonds, equities will continue to look attractive.

We are here to support you.

So thank you for taking the time today to listen to this video. We will be coming out with more material to help you with your conversations with your clients relating to the portfolios. We’re working on a frequently asked questions document, which will delve a little bit deeper into some of the things I spoke about. And as always, we’ll do our quarterly update on our portfolios which again will provide an update on the performance and positioning. And with that, I hope you found today’s video useful and I want to thank you again for your support for the portfolios, and if there are any questions, please get in contact with our BDM team.


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.

As always there will be many different opinions on what might happen to markets in the coming year, but by and large most will agree it is unlikely to top the volatility and uncertainty of 2020. Amid the stimulus packages, lockdowns, PPE and politics, COVID-19 also brought to an end one long running market cycle and ushered in a new one, offering investors new opportunities with the potential for new risks and returns.

We believe understanding and navigating both will be more important than ever.

One of the main risks that still carries over from the last few years is the concentration of the index in just a few mega-capitalization companies. In fact, when considering the S&P 500, the top 10 companies still account for around 28% of the index, and as of late December 2020 the top 6 were worth more than the bottom 372 companies.

 

 

Why is this a problem?

Well if you’re buying the index you’re buying very expensive companies that have already grown substantially during 2020 such as Apple 86% and Amazon 76%. What’s riskier is Tesla (TLA) is nearly 2% of the index but only joined in late 2020, so index investors didn’t receive most of the benefit of its 700%+ growth, but bear all the downside if the stock were to fall.

Investors usually choose indices for their diversity – perhaps now they need to look again.

In addition, while global stimulus and support packages have helped economies from falling off a cliff, they have also pumped a lot more liquidity (cash) into the system. This, along with low interest rates may well support inflation for the first time in decades which even in small amounts can have a profound effect on stocks. Stocks with high valuations that are dominating the index (technology) are more susceptible to the increase in interest rates that usually accompanies inflation, meaning to get your money back you need to wait years if not decades. This is less the case with other sectors.

Is this likely?

While the potential for inflation is there, so too are signs of a rotation away from the tech stocks to those less highly valued sectors of the economy. From September to mid-December 2020, the S&P500 Value index outperformed Growth by around 8%, driven by more certainty about the real economy restarting on the back of a COVID-19 vaccine. While we can’t predict the future there is precedent here going back to the dotcom bust of 2000, where in the following 5 years Value had a resurgence to the point where it outperformed over the 10 years pre and post the bust.

 

To add to this are current data showing a significant increase in activity in the bellwether ISM New Orders Index which measures manufacturing activity, up 40% since the lows of 2020 and its highest level in over 3 years. The opportunity here lies in those sectors and regions that benefit from this new cycle economy, sectors that have been neglected, and so are cheap, but stand to benefit from the surge of global economic activity as populations slowly become vaccinated. The rewards here could be substantial.

Added benefit of options

Finally, the market is currently experiencing an unusual set of dynamics. Volatility (uncertainty) is higher than the long-term average, but so is the market. Usually the market is lower when volatility is higher.

This represents both heightened uncertainty alongside optimism, which has been fueled by some arguably unsophisticated market participants.

This creates unprecedented opportunity for professional investors, and especially for Talaria’s process of using put options to enter stock positions because:

  • There is a greater contracted rate of return on the put options we sell, which can generate 3-4% p.a. more option premium into the portfolio p.a. all else being equal.
  • The opportunity cost of not being fully invested is materially reduced given low expectations for equity market returns.
  • Heightened volatility allows us to widen our buffers against loss and maintain our risk credentials.

As we like to say, certainty empowers you.

Efficient portfolio implementation is sometimes overlooked as a ‘nice-to-have’ rather than something that adds value to the investment process. This attitude is far less viable today given recent market volatility and product rationalisation, which have made the ability to implement timely portfolio changes essential for advisers and their clients.

The market downturn in March prompted many of us to reassess our investment strategies. We tried to understand where the pockets of risk were in our portfolios and identify opportunities presented by the market dislocation. Most of the key platforms in the market recorded a significant increase in portfolio changes during this period as managers of managed portfolios repositioned their allocations, taking into account their revised view of the world.

This shift in the way we viewed the world resulted in changes to the overall asset allocation positioning of portfolios, as well as changes to underlying investments. Lonsec was no different. From an asset allocation perspective, we increased our exposure to risk assets such as equities and identified a window of opportunity to gain exposure to assets that in our view were mispriced by the market, such as parts of the credit markets.

An example of this was the syndicated loan and high yield market, which experienced a significant blowout in credit spreads as the market priced in a significant uptick in defaults in these assets. We believe the market over anticipated a rise in defaults and that a pricing opportunity presented itself. Lonsec acted on this view by adding the Bentham Syndicated Loan Fund to the Lonsec Multi-Asset portfolio in late May. We have subsequently reduced our allocation to the fund given the strong return the fund has generated as we have seen credit spreads narrow.

The addition of Bentham offers an excellent example of how timely implementation affects return. As at 30 November 2020, Bentham added 7.38% for the five months since the fund was added to the portfolios. If implementation was delayed by a month, the return would have been only 5.70%, and if a two-month implementation delay was experienced, the return would have been even less, at 3.52%.


Source: Lonsec iRate Bentham Syndicated Loan Fund

A one- or two-month implementation delay is not uncommon outside of a managed account structure, where advisers may be following a model portfolio and having to issue ROAs to clients to implement changes.

Efficient implementation can also be additive where a product issuer decides to close a product. Such occurrences can be difficult to predict, but there are times when the risk of a product being wound up increases, particularly where a fund may be in significant outflow.

A recent example has been the winding up of the CFM IS Diversified Trust. The trust was held in the Lonsec Multi-Asset portfolios before being removed earlier in the year. The rationale to remove the trust was primarily driven by the inconsistent nature of fund returns and a recognition of the challenges faced by systematic risk premia strategies, which generally struggled to perform in a market distorted by central bank policy.

Recently, the product issuer made the decision to wind up the trust. In contrast to a traditional model portfolio approach, whereby clients may still be invested in the trust because the portfolio change has not yet been implemented, the managed account structure ensured that—in the case of Lonsec’s Multi-Asset portfolios—all clients invested in the managed portfolio were exited from the trust.

There are numerous ways to measure value. We believe that one of the key value propositions of managed accounts is the ability to implement portfolio changes in a timely manner, allowing clients to capture portfolio exposure as intended by the model manager. We believe that platform technology will continue to evolve to allow model managers to increasingly finesse portfolio implementation with a view of adding value to end clients.

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 © 2020 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.

Watch the video.

Markets seem to have taken a sigh of relief post the US election result with risk assets seemingly returning to their upward trajectory. Lukasz de Pourbaix ED, CIO Lonsec Investment Solutions will discuss the latest insights for our recently held asset allocation investment committee. Specifically, Lukasz will discuss the rotation into value style stocks, a discussion of the key economic and market indicators and risks investors should look out for.



This information is provided by Lonsec Investment Solutions as a corporate authorised representative of Lonsec Research Pty Ltd who hold an AFSL number 421445. This is general advice, which doesn’t consider your personal circumstances. Consider these and always read the product disclosure statement or seek professional advice prior to making any decision about a financial product. You can access a copy of our financial services guide at lonsec.com.au

This video is provided 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. Past performance is not a reliable indicator of future performance. This is general advice, which doesn’t consider your personal circumstances. Consider these and always read the product disclosure statement or seek professional advice prior to making any decision about a financial product. While care has been taken to prepare the content of this video, LIS makes no representation or warranty to the accuracy or completeness of the information presented, which is drawn from public information not verified by LIS. The information contained in this video is current as at the date of publication. Copyright © 2020 Lonsec Investment Solutions Pty Ltd ACN 608 837 583

Watch the recording.

Many of you will be aware that your clients are increasingly seeking out investments that align with their personal values.

Further to the launch of the Lonsec Sustainability Score, the Lonsec Sustainable Managed Portfolios will utilise Lonsec’s extensive portfolio construction experience, together with detailed sustainable investing (and ESG) research, to provide a solution that genuinely caters to the needs of investors.

Listen to the key members of the Lonsec investment team to find out more about how the portfolios are formulated and how they can help deliver what your clients really need.

Lonsec’s managed accounts have posted the fourth consecutive month of record growth in October, adding $100m in net inflows across its broad suite of diversified, retirement and listed portfolios.

The results highlight the success of Lonsec’s research-backed managed account model, which combines Lonsec’s portfolio construction expertise with Australia’s largest investment product research team.

Lonsec CEO Charlie Haynes said more advisers were turning to Lonsec for a professional, actively managed investment solution, whether off-the-shelf or tailored to a licensee or practice’s needs.

“The success of our managed portfolios comes down to three things: our investment philosophy, the diversity of expertise on our investment committees, and our research capabilities,” said Mr Haynes.

“Our active approach to asset allocation and asset selection, coupled with our ability to identify high-quality investments based on our extensive research coverage is proving attractive to advisers.”

The growth in Lonsec’s managed accounts reaffirms the importance of knowledge as well as execution, positioning the company as a major provider of investment solutions, along with its traditional research offering.

Part of the appeal is the breadth of Lonsec’s solutions, including diversified multi-asset portfolios, objectives-based retirement portfolios, listed portfolios, and direct equity SMAs. All are underpinned by the same proven philosophy and dynamic approach to portfolio management.

“Lonsec is known for its research and investment insights advisers and investors can trust, but more and more advisers are approaching Lonsec as a one-stop-shop for their investment solution needs,” said Mr Haynes.

Lonsec will add to its suite of investment solutions with the imminent launch of its Sustainable Managed Portfolios. These draw on Lonsec’s latest sustainability research to construct high-quality, risk-managed portfolios that target sustainable themes.

“The Sustainable Managed Portfolios are a great example of how Lonsec continues to develop its offering to meet a wide range of investment needs,” said Mr Haynes.

“We want to help advisers provide a genuinely sustainable investment solution that aligns to their clients’ values and investment objectives.”

Release ends

Throughout history, financial crises have been caused by an economic shock or a fundamental demand/supply imbalance. This crisis is different. When the pandemic hit, the global economy was in a growth cycle and share markets were performing reasonably well. Lockdowns put economies effectively into hibernation and triggered an immediate and profound market response. Although the limits on movement and restrictions on discretionary spending such as travel and entertainment are universal, the greatest financial jolt has been felt mostly by individuals who are at the beginning and at the end of their working lives. It is the young, due to the cascading impact on savings and jobs, and the elderly, due to falling investment yields that are most impacted.

With central bankers around the world committing to keep interest rates low for many years to come, this creates an issue for retirees looking for income. Traditional defensive assets such as cash and fixed income which typically form a large percentage of retiree portfolios are producing levels of income significantly below historical averages.

In Australia, the RBA is keeping the 3-year yield for government bonds at 0.25%, in what is known as yield curve control. Interest rates have been suppressed for the last decade, however what is unique about the current economic climate, is that with inflation yet to emerge and central bankers focused on generating growth and employment, their signalling to the market has moved further out. Lower for much longer!

Important information: Any express or implied rating or advice is limited to general advice, it doesn’t consider any personal needs, goals or objectives.  Before making any decision about financial products, consider whether it is personally appropriate for you in light of your personal circumstances. Obtain and consider the Product Disclosure Statement for each financial product and seek professional personal advice before making any decisions regarding a financial product.