Quarterly Investment Update – October 2019

Whilst I am a Director and Personal Financial Adviser at Evalesco, I also sit on the AAN Investment Committee.  The AAN Investment Committee is responsible for researching products that our advisers can use, and also build, maintain and run the five managed account models that we have on Praemium.  The AAN managed account models allow all firms in AAN to work together to deliver significant fee savings to you (our client) and better investment outcomes through collaboration and shared learnings. 

How do the numbers look for the quarter?

Even with all of the turbulence that we saw in the markets as a result of the likes of Brexit and Hong Kong, each of the AAN models on Praemium delivered positive returns in the quarter ending 30 September.  The stand out being the AAN Growth Model which delivered a return of 4.37% for just three months, and 11.39% pa over the last three years, before fees.

Within the AAN Growth Model, Australian equities increased in value by 5.95% for the quarter, with International equities returning 4.20%, and Australian property falling in value by 0.44%.  Many portfolio holdings announced very strong financial results during the reporting season in August. Almost without exception, their results provided evidence of strong business momentum, better-than-expected near-term outlooks and positive long-term prospects. 

A selection of the largest contributors to performance includes Treasury Wine Estates, CSL and Afterpay.

Positive: Treasury Wine Estates (TWE) the producer of Penfolds and other wine brands, reported earnings in-line with its guidance of 25% earnings growth. It also reiterated already provided FY20 earnings guidance for 15-20% growth. Importantly, the result was enhanced by strong cash generation, which was better than expected despite the company’s additional investment in building up its inventory of luxury and ‘masstige’ branded wines for future year sales.

Positive: CSL (CSL) the global biopharmaceutical company, is a very well regarded company that reported a typically high-quality financial result in August. For the 2019 financial year, revenues and profits grew 11% and 17% respectively, and for the financial year, it has issued profit growth guidance of 7-10%. Industry growth continues at pace, and CSL is set up to continue taking market share.

Positive: Afterpay (APT) the buy-now-pay-later platform, beat expectations and its stock was one of the better performers in August. In Australian and New Zealand, sales through the platform almost doubled to $4.3 billion. In the US and UK, the business is scaling up much faster than expected. For example, the company attracted over 200,000 active users in the UK only 15 weeks after launching. The result confirmed traction in offshore geographies and strong momentum right through the business.

What else are we working on?

One of the projects that the Investment Committee is working on is to research, build and, if approved, launch a managed account model that will allow clients and advisers to invest in a Socially Responsible Investment (SRI).  SRI is more complex than the traditional investment landscape for many reasons, not least of which is that it means different things to different people and the levels of innovation are particularly high.  Whenever innovation and momentum are at play you will typically find a range of providers rushing to market with new offerings that present and market well but in our opinion are not investment grade. 

The AAN Investment Committee are investing the time to do the research, engage with stakeholders, researchers and influencers so as to obtain the right outcomes for our clients.  It is imperative that if we go to market with an SRI offering that it be well balanced, transparent, well priced and capable as our other models. 

If you have any questions about these models or would like to be kept in the loop with regards to the AAN SRI Model please speak with your adviser. Note that you can download each profile by clicking on the following link here.


It’s my job to work as my client’s financial ‘lifesaver’ to ensure that they swim between the flags and that they don’t get in over their heads.