Investment Strategies

Diversified

The BTIM diversified strategies bring together the investment skills within BTIM (Australia) and JOHCM, combined with strategies provided by our close external partners.

Our investment philosophy is to provide truly diversified returns while seeking to reduce risk via investment diversification and active management. In constructing a diversified portfolio, we seek to combine assets to minimise the dominance of any one risk factor within the portfolio and thereby reduce volatility and improve the consistency of investment outcomes. We strongly believe that the principle of diversification should permeate all parts of the modern diversified fund. In essence, we seek to diversify factor risks between and within component asset classes.

In a low return world, active management becomes even more crucial in delivering total returns and in managing risk. At BTIM we have a strong pedigree of selecting strong investment talent and harnessing these skills within our diversified strategies to benefit our clients.

FUND NAME Benchmark 1 year % 3 years % pa 5 years % pa
BT Wholesale Conservative Outlook Fund A 5.54 7.21 7.96
BT Wholesale Balanced Returns Fund B 6.15 8.23 10.38
BT Wholesale Active Balanced Fund C 6.08 8.30 10.99
BT Wholesale Future Goals Fund D 5.94 8.64 12.03
BT Total Return Fund E 4.81 5.97 5.04
BENCHMARK
A: BT Wholesale Active Conservative Benchmark1 6.77 6.69 7.42
B: BT Wholesale Balanced Returns Benchmark1 8.42 7.58 9.58
C: BT Wholesale Active Balanced Benchmark1 8.95 7.72 10.18
D: BT Wholesale Future Goals Benchmark1 9.40 8.07 11.08
E: Bloomberg AusBond Bank Bill Index 2.19 2.44 2.94
1 The benchmark is calculated by using the weighted average asset allocation neutral position and the index returns for each asset class

Our philosophy is to diversify broadly, but not gratuitously, to increase the probability of achieving our return objectives with the lowest risk. We do this at both the strategic asset allocation level and, where appropriate, through the diversification of strategies within asset classes.

We have demonstrable skill in identifying managers that deliver consistent active returns over the long term. BTIM’s business model is to bring these investment managers within the BTIM Group and distribute their investment strategies as well as make them available for our diversified funds. A significant amount of work has been done to identify those managers who typically have strong active track records at other investment houses. It is a competitive advantage for BTIM’s diversified funds to be able to use this skill set.

Where we do not presently have expertise in-house, we look to form a strategic partnership with a third party manager who is a specialist in that particular asset class. We currently have two such partnerships, with AEW in Boston managing our Global Listed Property Securities strategies and AQR in Connecticut managing our Core Global Shares and an Alternatives mandates.

The year just completed saw two significant developments within the funds we offer to investors. The first was the launch of the BT Wholesale Plus fund series in partnership with BT Financial Group. This saw us extend our range with the addition of two new strategies, Moderate and High Growth, which complement the existing strategies. These will be distributed by BT Financial Group via their lower cost platforms to both aligned and independent financial advisers who access these platforms.

The second development was a range of enhancements to our conservative and balanced sustainable diversified funds. After considerable research and planning, these two funds now benefit from the full range of investment techniques employed across our other flagship funds while ESG screening is applied to all securities in both Australian and international equities as well as Australian and international fixed interest.

Our strong calendar year performance in 2015 has seen us nominated as finalists for both Asset Allocator of the Year and Multi-Sector Fund of the Year at the 2015 Lonsec/Money Management Fund Manager of the Year Awards. This was the third consecutive year we have received this honour and this continual recognition highlights the strength of our process and the underlying skill set that exists within the broader BTIM business.

Whilst the funds gave back some of these active returns over calendar year 2016, our three year and five year track records still remain strong, especially in terms of returns generated for risk taken.

While it is always disappointing to lose a key staff member within our investment teams, the departure of Martyn Wild to become BT Financial Group’s CIO is recognition of the great work we have done over the years in managing monies on their behalf and the strength of the process we have built at BTIM. Stuart Eliot was appointed as Senior Portfolio Manager immediately following Martyn Wild’s resignation. An exhaustive search is under way to find an appropriately skilled and experienced portfolio manager to join the team.

We have observed a recent trend from investors choosing to invest into conservative, moderate and balanced strategies which may indicate a degree of caution amongst investors.

In the current environment, with risks more pronounced and returns harder to find, investing to build long term wealth has become more difficult than ever. Because of this and coinciding with the launch of the BT Wholesale Plus fund series, we have commenced a series of meetings with clients and advisers that will continue through 2017. In these meetings we discuss the importance of diversification and active management, both of which we believe are becoming increasingly critical in helping investors reach their savings goals.

We believe that BTIM’s capabilities in active management coupled with our strong partnership with AQR in delivering liquid alternative risk premia strategies should see us continue to deliver strong results for our clients. As always, we continue to look for ways to improve the risk efficiency in our portfolios and increase diversification of risk factors.