BasisPointA.M.I.

July-August 2013

Sponsors of the Australian Investment

This bi-monthly newsletter is for Australia’s $1.92 trillion managed investments Managers
Directory 2013
industry. It’s designed to be concise yet comprehensive and is offered with our
compliments due to the support from our sponsors. Your comments and news Gold Sponsors
contributions are welcome.
Contact me at david@basispoint.com.au
David Chin, Managing Director, Basis Point Consulting.

Directory of independent & hedge fund managers - launching soon

Basis Point Consulting’s 2013 Australian Investment Managers Directory will be launched on 11
September at a cocktail reception for fund managers and institutional investors in Sydney.

The 76-page hard-copy directory profiles 209 independent investment management firms, listed
investment companies, and specialist alternative investment managers including hedge funds.
Insights on institutional and HNW investors’ appetite for managed funds are also provided.

Directory sponsors are: (Gold), Moore Stephens, TMF FundServices and NYSE Liffe; (Silver)
Advent Software, Alceda, Australian Fund Monitors, Bloomberg, One Investment Group, Saxo
Capital Markets, Triple A Partners, and UBS. Silver Sponsors

Selected highlights:
 The 209 firms have combined AUM of $279 billion. There are 148 independent managers
with AUM of $235 billion, & 61 hedge fund managers with AUM of $44 billion.
 There are 16 managers with more than $5 billion AUM each.
 66% of managers who control 68% of total AUM are located in Sydney.
 Nearly a third of AUM ($85 billion) is deployed by 55 managers in global markets (such as
global/Asian equities, fixed income, & global macro).
 There are 135 investment managers investing predominantly in Australian equities.
 Australian institutions including superfunds, fund of funds, and Family Offices account for
53% of assets managed by the 209 investment managers.
 Australia’s top 50 superfunds manage $646 billion, or nearly two thirds of institutional
super AUM. Industry consolidation continues. In 2002, there were nearly 3000 superfunds,
by 2009 there were around 500 funds and as of March 2013 just 333 superfunds.
 Growth in superfund inflows will be boosted by the phased increase of the
Superannuation Guarantee rate from 9%to 12% over the next six years. A one percentage
point rise in the SG rate (9% to 10%) would equate approximately $10 billion in extra
annual contributions.
 This extra flow is considerable compared to the $16.1 billion net contribution inflows
received by institutional superfunds in the year to March 2013.
 SMSFs have allocated 18.2% of their portfolios to managed investments (comprising listed
and unlisted funds & trusts). The average allocation to the managed investment sector is
$211,000.
 The ‘wall of cash’ expected to flow out of SMSF cash holdings is estimated at just $26.8
billion. SMSFs have always maintained high weightings to cash. (The lowest cash allocation
in the past 10 years was 21.8% in the equities market ‘boom’ year of 2006. The current
cash allocation is 27.8%.)
 11.4% of SMSFs control 46% of total SMSF assets.

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 July-August 2013

Excluded in the directory are private equity, property and infrastructure managers (unless
Australian Investment
they invest in listed securities), fund-of-funds, and institution-owned investment managers
(except where they offer hedge funds). Managers Directory 2013.
Available 11 September.
Included in the directory are a selection of global managers marketing in Australia, and
service providers to the Australian investment management community.

Top 8 independent and hedge fund investment managers by AUM

Firm Strategy AUM $m
Platinum Asset Management Global equities - net long positions of 50% 19794
or more
Tactical Global Management# Global equity, bond, & currency markets - 19500
risk overlays
Perennial Investment Partners Australian & global equities, fixed income, 17707
real estate & multi asset class Highlights:
Vinva Investment Manage- Australian & Asian equities - long/short, 13500 209 firms control $279 billion in
ment (Australian long-only) AUM
Magellan Asset Management Global equities & global listed infrastructure 12921 148 independent managers
(mostly long-only, benchmark-
Ausbil Dexia Australian equities 9500 unaware) with $235 billion FUM
61 hedge funds with $44 billion
JCP Investment Partners Australian equities - long & long/short 9100 FUM
$85 billion (41% of sector AUM)
Maple-Brown Abbott Invest- Australian & Asian equities 7935 allocated to global equities, glob-
ment Managers al fixed income and CTAs/global
Source: Basis Point Consulting June 2013. #AUM in risk overlay strategies. Although not strictly ‘AUM’, this figure reflects investment/
macro.
risk positions deployed by the manager on behalf of clients. The 76-page (hard-copy only)
directory has 35 pages profiling
each of the 209 management
firms.
Plus details on 42 service provid-
ers (brokers, fund admin, opera-
tional, software/data/IT, business
services) and global managers
marketing into Australia.
Plus 10 pages of qualitative and
quantitative analysis on Australi-
an institutional and HNW inves-
tors
The directory is available for
A$495.

Email :
sales@basispoint.com.au
Details at :
www.basispoint.com.au

Basis Point Consulting www.basispoint.com.au info@basispoint.com.au 2

 July-August 2013

Fund managers – the new export sector? Invitation - Global Futures

Australian fund managers are on par with Australia’s wine, passenger vehicle and live animal Seminar, organised by
exports industries in terms of export revenues. Basis Point Consulting

The 55 independent and hedge managers profiled in Basis Point Consulting’s Australian Who: Complimentary entry for
Investment Managers Directory 2013 manage $85.6 billion in global/Asian strategies, and CTAs/fund managers/
thus function as an ‘import replacement’ service (i.e. investors would ‘normally’ select an off- institutional investors interested
shore manager to manage offshore investments but instead have selected an Australian in futures/family offices/
manager. Management fees are paid to an Australia firm rather than an offshore manager). proprietary traders/market mak-
ers/brokers and industry service
Based on an assumed 1.5% management fee, annual revenues from these managers total providers.
$1.28 billion. Comparisons to selected high-profile export industries (below) puts these fund
managers on par with cars, wines and animal exports. To apply for an invitation, please
email Clinton D’Silva at
Industry Annual Export Revenues $ billion cdsilva@basispoint.com.au

Independent fund managers in Basis Point’s Directory 1.28 Date and Time: Thursday, 12
Passenger motor vehicles 1.35 September 11:30am-3:15pm
(lunch and afternoon coffees
Wine 1.92 included)
Live animals 1.07
Where: Sydney. Venue details
Source: Basis Point Consulting, DFAT ‘Trade at a Glance 2012’ – based on 2011 recorded trade or balance of payments data from Aus-
will be included in the invitation
tralian Bureau of Statistics
emails.

2013 Australian Investment Managers Directory Speakers: A panel of leading

CTAs in Australia (GMO, Boronia,
A limited number of complimentary copies are available to Triple3 Partners) will be speak-
global and Australian pension funds, APRA regulated super- ing, as will representatives from
funds, family offices, sovereign wealth funds, asset allocation the global exchanges.
consultants, and funds of funds.
Event Sponsors:
 76-pages, hard-copy only.
 Profiles on 209 investment managers
 Top 10 managers ranked by AUM and by strategies
 Insights on Australian superfunds, SMSFs and HNW
investors
 Profiles on selected industry service providers and
global managers marketing into Australia
 RRP A$495
 For details email sales@basispoint.com.au

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 July-August 2013

Launch party for the 2013

SIV update Australian Investment
The Significant Investor Visa (SIV) programme will soon be reaching an important milestone Managers Directory
that will test forecasts of $5 billion in annual investment inflows into Australian funds and
businesses. Date and Time: Wednesday 11
September 5.30pm-7.30pm
Sept-Dec 2013 is when SIV approvals are expected to be granted by the Department of
Immigration and Citizenship (DIAC). The department had previously indicated a 6-9 month
Who: Complimentary entry for
SIV processing period and also indicated the bulk of the 171 applications (as at mid May) investment managers, institu-
were received after Chinese New Year (Feb) 2013. tional/wholesale/family office
investors and directory sponsors.
The SIV programme was officially launched in November 2012. Under the programme, DIAC
issues residency visas to investors who invest $5 million into specified investment categories To apply for an invitation, please
(including ASIC regulated managed funds investing in Australian assets) over a four year email Clinton D’Silva at
term. cdsilva@basispoint.com.au

Basis Point Consulting estimates the programme will attract 1000 SIV applicants per year Where: Sydney. Venue details
starting from the 2013/2014 financial year. This estimate is based on the success of similar will be included in the invitation
programmes in Singapore and Canada, and Basis Point’s eight SIV-specific events conducted emails.
since October 2012 that has generated feedback from 800+ industry participants. Details
here Gold Sponsors

Of particular interest to Australian managers is the potential for Chinese SIV applicants to
seek joint ventures with Australian firms with a view to build a wealth management business
in China. The nation’s investment management industry is forecast to grow three-fold to
US$1 trillion within four years, according to a Z-Ben/Citi report. Gaining the intellectual
property or ‘DNA’ of a fund’s business could be an attractive proposition to entrepreneurial
Chinese HNWI for replication in China.

Derivatives and private equity funds can be SIV compliant

The Australian government has introduced revised rules concerning derivatives and late-
stage private equity investments in relation to complying investments under the SIV
programme.
Silver Sponsors
The new rules allow managed fund investments to use ‘derivatives used for portfolio
management and non-speculative purposes which constitute no more than 20 per cent of
the total value of the managed fund.’ Note that existing provisions require managed funds
to invest in specified Australian assets.

The new rules also permit SIV funds to invest in ‘bonds, equity, hybrids or other corporate
debt in companies and trusts listed or expected to be listed within 12 months on an
Australian Stock Exchange’. Details here

The developments will widen the pool of potential SIV compliant fund managers to include
those using derivatives for portfolio risk management, and ‘late-stage’ private equity funds.

Basis Point Consulting www.basispoint.com.au info@basispoint.com.au 4

 July-August 2013

Top 100 alternatives managers top $3 trillion – Towers survey

Total assets managed by the Top 100 global alternative investment managers (by AUM size)
reached $3.1 trillion in 2012, according to research by Towers Watson and published in
conjunction with the Financial Times.

The 97-page Global Alternatives Survey covered seven asset classes (see below) with real
estate accounting for a third of AUM. Hedge funds, both direct and via fund of hedge funds,
accounted for 26%.

The research included a diverse range of institutional investors. Pension fund investors
represent over a third (36%) of the Top 100 alternative managers’ assets, followed by wealth
managers (19%), insurance companies (9%), sovereign wealth funds (6%), banks (5%), funds of
funds (3%) and endowments & foundations (2%).

Asset Class $ billion held by top 100 IM’s % of total

Real estate 1,000+ 34
Direct private equity 717 23
Direct hedge funds 612 20
Private equity funds of funds 315 10
Funds of hedge funds 176 6
Infrastructure 128 4
Commodities 118 4
Total 3,066 100
Source: Towers Watson. % does not add due to rounding

Events for fund managers (all Sydney except where noted)

 Monday 9th September - Australian Hedge Fund Education Forum. (lunch)
www.opsforum.com.au

 Tuesday 10th September - AIMA Hedge Fund Conference (full day) www.aima-
australia.org/Events.html

 Wednesday 11th September - Australian Investment Managers Directory launch &

cocktail party (evening) - Basis Point Consulting. info@basispoint.com.au

 Thursday 12th September - Global futures industry seminar. 11.30am -3.15pm - Basis
Point Consulting. info@basispoint.com.au

 Thursday 12th September - Hedge Fund Rocks and Australian hedge fund awards dinner
(evening) http://hedgefundsrock.com.au/

 30th October-1st November- Asset Allocation Forum. For the full brochure please click
here

 21st-22nd October- Superannuation Fund Back Office Forum 2013- Member Admin-
istration & Investment Operations. For the full brochure please click here

 18th-20th November- iPARM Australia- Investment Performance Measurement,

Attribution & Risk Management 2013 Forum. For the full brochure please click here

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 July-August 2013

Other developments
Thorney Investment Group has proposed to ASX-listed cash box Wentworth Holdings Limited
for a recapitalisation and conversion into an absolute return-focussed investment firm. The
proposal includes a capital raising of around $50 million. Thorney is owned by Alex Waislitz
and his wife, Heloise, who is one of the heirs to the Pratt family fortune.
*
Bennelong Group is creating a new wealth management advisory business targeting high and
ultra-high-net-worth investors. The unit will be headed by Fiona Rowland (ex-UBS) and will
operate independently of Bennelong’s funds management and private equity businesses. A
controlling stake in Melbourne-based wealth management and advisory firm Carnbrea & Co. is
being acquired as part of the build-out.
*
Local Government Super has switched a $780 million Australian equities index mandate with
State Street to an Australian equities quant strategy with the same manager, according to the-
instoreport. LGS also awarded $90 million in an Australian equities mandate to Ubique Asset
Management.
*
Christian Super has awarded a $4.5 million mandate to LeapFrog Investments, according to
the Sustainability Report. South-Africa headquartered Leapfrog manages a $135 million global
fund that invests in businesses which offer insurance and financial services to low income peo-
ple.
*
Montreal-based Presima, a boutique REIT fund manager partner of nabInvest, has been
awarded a mandate by Zurich Financial Services Australia to invest in global REITs. It is the
second mandate win following an MLC allocation last month.
*
ASIC has entered into 29 supervisory cooperation arrangements with European Union (EU)
securities regulators, agreeing to help each other supervise fund managers operating across
borders.

The cooperation is required to allow Australian fund managers to manage and market Alterna-
tive Investment Funds (AIFs) in the EU under the rules of the Alternative Investment Fund
Managers -Directive (AIFM-D). An AIF includes hedge funds, private equity funds and real es-
tate funds, among others.
*
BNP Paribas Investment Partners Australia (BNPP IP) will exclusively distribute alternative in-
vestment offerings of the Permal Group in Australia. Permal is part of the Legg Mason Group
of Companies, and is a global alternative asset manager with $23 billion in AUM.

People on the move

Auscoal Super is seeking a CIO to manage its $7.4 billion in AUM. Broadstreet Global is
conducting the executive search. The superfund is also abolishing the position of Head of
Investments with the incumbent Paul Coenraads to leave shortly.
*
Australian Unity Investments (AUI) has appointed Paul Banks as Head of Institutional Business.
He is ex-Morgan Stanley Head of pension client solutions. Banks will report to AUI general
manager of funds management Fiona Dunn.
*
US based MFS Investment Management is developing an Australian equities strategy,
according to theinstoreport. MFS’s head of Asian equities, Simon Gresham, is overseeing the
strategy which was seeded internally last July. A track record will be established before
seeking external investors. Marian Poirier heads the Australian business for MFS as a Senior
Managing Director.
*

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 July-August 2013

Russell Investment’s Seattle-based CIO Peter Gunning will return to Australia as CEO of the
firm’s Asia Pacific business. He replaces Alan Schoenheimer, who will transition to a non-
executive advisory role.
*
Russell has also appointed Jodie Hampshire as Head of Institutional Business in Australia. She
was previously Asia Pacific COO – Investments (Pacific) at Mercer.
*
Ibbotson Associates Australia has appointed Scott McIennan as Senior Relationship Manager,
reporting to Ibbotson’s head of distribution Matthew Esler. Mclennan was previously National
Director – Capital Markets Investor Sales & Distribution for Westpac Institutional Bank.
*
PM Capital has appointed Simon Rutherford as portfolio manager covering Australian shares.
He was previously an executive director at Northward Capital.
*
Market Vectors ETFs has appointed Mathew McKinnon, (ex Perpetual) as intermediary and
institutional director. The firm has also hired Russel Chesler, (ex Sunstone Partners) as Invest-
ments and portfolio strategy director. Market Vectors Australia was launched last year by US
based Van Eck Global which has AUM of US$29.6 billion. The Australian operation is headed by
Arian Neiron, Managing Director.
*
Treasury Group has appointed Andrew Howard as CIO, based in Melbourne. He is ex-CIO Asia
Pacific for Mercer Australia, and will lead the development of Treasury Group’s portfolio of
investment products for its partner boutiques, as well as being involved in the identification of
new boutique managers.
*
Northward Capital appointed has appointed Chris Haynes as senior analyst and Chris van Rijs-
wijk as analyst/dealer. Haynes was previously a managing partner and PM at Concord Capital.
Rijswijk was also at Concord. Northward as backed by nabInvest.

About David Chin, Managing Director, Basis Point Consulting

Established in 1996 by David Chin, Basis Point Consulting provides market intelligence on the
Australian and Asian funds & investment industry, and the region’s financial & futures/
derivatives markets. Clients include government entities in the Asia Pacific, exchanges & ex-
change groups in Europe & the US, and major corporations.

David is also:
1. Editor and Publisher of the Australian Investment Managers Directory
2. Author, Australian Trade Commission’s - Hedge Funds Industry Report
3. Author, Australian Trade Commission’s - Investment Management Industry Report
4. Author, Australian Trade Commission’s - Alternative Investments Industry Report
5. Consulting Editor “Australian Hedge” (covering the hedge funds industry)
6. Author, Thy Fiefdom Comes, a fantasy/science fiction novel

Visit us at: www.basispoint.com.au

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whole or in part, without written permission i s prohibited. Disclaimer This Basis Point Consulting Pty Ltd
report is provided for informational purposes only. The information contained herein does not constitute and
shall not be construed to constitute investment and/or legal advice. Basis Point Consulting makes no repre-
sentation as to the accuracy, completeness or timeliness of such information. This report should not be used
or relied upon by any person/entity for the purpose of making investment decisions and/or to provide invest-
ment advice to another person/entity based on the material discussed herein. Recipients of this report should
obtain guidance and/ or advice, based on their own particular circumstances, from their own investment advi-
sor. Basis Point Consulting Pty Ltd, its directors, employees, affiliates and consultants do not provide any
warranty as to the contents or accept any liability for errors or omissions or any losses or damages claimed
or suffered by the recipient or any other person in reliance on this report.

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