BT Wholesale Ethical Share Fund by lindash


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									                                                                                        BT Wholesale
                                                                                        Ethical Share Fund

                                                                                        Fact Sheet
                                                                                        August 2009

                                                                                        ARSN: 096 328 219

About the Fund                                                                                         Performance
The BT Wholesale Ethical Share Fund is an actively managed portfolio of                                       (%)                Total Returns          Benchmark
Australian shares that seeks to ensure that funds are invested in an ethical                                                 (post-fee)   (pre-fee)       Return
or socially responsible manner. Investors are becoming increasingly aware
                                                                                                         1 month                  6.34         6.42             6.64
of the link between a company’s sustainability focus and its long term
success and profitability. As a result, ethical fund investing combines the                              3 months                16.65        16.94            19.00
best of both worlds – the potential to achieve strong performance over the                               FYDT                    13.56        13.74            14.47
long term while contributing to a sustainable environment.                                               6 months                32.47        33.11            37.92
Fund objective                                                                                           1 year (pa)             -8.86        -7.99             -8.04
The Fund aims to provide a return (before fees) that exceeds the                                         2 years (pa)           -10.74        -9.89            -11.33
S&P/ASX300 Accumulation Index over the medium to long term (5+ years).
                                                                                                         3 years (pa)             0.93         1.86             0.04
Investment approach
                                                                                                         5 years (pa)            11.77        12.81             9.40
The Fund will not invest in companies which:
        directly mine uranium for the purpose of weapons manufacture
        produce alcohol or tobacco                                                                     Asset allocation
        manufacture or provide gaming facilities                                                         Energy                                                10.8%
        manufacture weapons and armaments                                                                Materials                                             23.9%
        have been subject to environmental and/or human rights
                                                                                                         Industrials                                            7.0%
                                                                                                         Consumer Discretionary                                 3.6%
Investment process
                                                                                                         Consumer Staples                                       4.3%
The Fund uses the same investment process as BTIM’s flagship Australian                                  Health Care                                            3.7%
equities products with the addition of sustainability screens.
                                                                                                         Telecommunication Services                             5.5%
1. The negative screen effectively determines the investment universe of                                 Utilities                                              0.6%
   the BT Wholesale Ethical Share Fund
                                                                                                         Financials ex Property Trusts                         33.1%
2. The positive screen identifies companies for active consideration, given                              Property Trusts                                        4.6%
    their focus on the production of sustainable goods and services. The
    ethical screen is provided by Monash Sustainability Enterprises (MSE), a                             Cash & Other                                           2.8%
    leading independent research organisation. Examples of positively                                  Top 10 holdings
    screened companies include those that derive greater than 20% of their
                                                                                                         BHP Billiton Limited                                  10.9%
    revenue from sustainable technologies, products and services.
                                                                                                         Westpac Banking Corporation                            7.5%
Investment team
                                                                                                         National Australia Bank Limited                        6.9%
BTIM’s nine-member Australian large-cap equities team is one of the
                                                                                                         Telstra Corporation Limited                            5.6%
largest in the industry. The portfolio manager for the Fund is Jack Chemello,
                                                                                                         Commonwealth Bank of Australia
who has more than 11 years industry experience.                                                                                                                5.3%
Investment guidelines                                                                                    ANZ Banking Group Limited                             4.9%
 Ex-ante (forward looking) tracking error                    2.0% - 6.0%                                 Metcash Trading Limited                               4.4%
 Min/max stock position                                      +/-4%                                       Rio Tinto Limited                                     3.8%
 Min/max sector position                                     +/-6%                                       QBE Insurance Group Limited                           3.5%
 Number of stocks                                            50-90                                       AMP Limited                                           2.9%

Fees                                                                                                   Other information
 Management fee                                              0.95% pa*                                   Fund size (as at 31 Aug 2009)          $197 million
                                                                                                         Date of inception                      May 2001
                                                                                                         Minimum investment                     $50,000
                       BT Investment Management (RE) Limited ABN 17 126 390 627,                         Minimum balance                        $50,000
                       AFSL 316 455, has been certified by RIAA according to the strict                  Buy-sell spread                        0.50%
                       disclosure practices required under the Responsible Investment
                       Certification Program. The Certification Symbol signifies that an                 Income distribution frequency          Quarterly
                       investment product or service takes environmental, social, ethical or
                       governance considerations into account along with financial returns.              APIR code                              RFA0025AU
                       See for details.

* You should refer to the latest Product Disclosure Statement for full details of fees and other costs you may be charged.
Market Overview                                                                        An overweight in Sonic Healthcare was another contributor to returns
The Australian equity market performed strongly in August, up 6.6%                     in August. Its result was also better than expectations as they continue
and marking six consecutive months of gains. Global sharemarkets                       to extract cost savings from the integration of bolt on acquisitions in the
continued to rally against an improved macro backdrop and with                         German and US markets. Not holding Wesfarmers and Woolworths,
investors increasingly convinced that the worst of the financial                       excluded stocks, also contributed to portoflio performance in August.
downturn is over. Australian economic data was also supportive with                    Strategy & Outlook
improving consumer and business confidence.                                            The drivers of the positive market sentiment remain in place. Firstly,
The reporting season was the main driver of market returns in August                   the developed economies have seen a stabilisation of growth after
with earnings delivery generally better than the low expectations, down                what was an unprecedented free fall at the beginning of the year.
only 19% on last year. In addition a number of companies flagged that                  Secondly, the Chinese economy is accelerating, which is driving better
operating conditions were showing signs of improvement.                                Asian growth and demand for commodities. Finally, the extremely
Financials (+12.1%) were the standout sector in August, with all sub                   loose monetary policy is generating surplus liquidity which is finding its
sectors: real estate, banks, insurance and diversified financials                      way into investment markets.
outperforming the market. This reflected signs that the loan loss cycle                These factors are driving a self-reinforcing rally in markets with the
for banks was nearing a nexus and also better than expected results                    higher prices enabling more capital raisings which in turn facilitate
from AMP and QBE. Industrials also performed well during the month                     bond issuance – all of which enables companies to de-risk their
(+9.4%) reflecting the improvement in the domestic economy being                       balance sheets. The situation in Australia is even more constructive
reflected in outlook statement of companies such as Qantas and Toll.                   with the emerging boom in China fuelling strong commodity prices and
The Resources sector underperformed the rising market, being only                      improving the terms of trade as well as supporting new investment.
flat for the month. This was driven by lacklustre results reflecting the               The fiscal stimulus has supported the retail sector and the rise in
difficult operating conditions experienced in recent months and                        unemployment has not been as dramatic as feared. This is feeding
cautionary comments from BHP and Rio on the outlook for Chinese                        through into evidence that housing prices are beginning to rise again.
commodity buying, with suggestions that the phase of inventory build                   Reporting season provided more evidence that the underlying
was coming to an end.                                                                  operating environment was improving particularly for domestically
                                                                                       exposed companies.
Telcos also detracted from market returns over the month, (-7.1%),
mainly due to the Future Fund selling down its holding in Telstra.                     The key themes that emerged from the reporting season were:
                                                                                           Clear signs that operating conditions had stabilised and in some
Capital raisings continued through August with Amcor ($1.6bn),
                                                                                           cases that they were showing signs of tentatively improving.
Goodman Group ($1.1bn) and Boart Longyear ($756m) among the
                                                                                           Substantial write-offs due to a combination of write downs on
main ones.
                                                                                           property, inventory and goodwill plus restructuring costs.
In other economic news, the RBA left its cash rate on hold at 3.0% and                     Stronger balance sheets, reflecting the raising of equity and
the Australian dollar consolidated recent gains to finish at 83.7c, hitting                terming out of debt through bond issues. This was enabling
a 10 month high over the month. Consumer and business confidence                           companies to take a more medium term approach to running the
indices both improved in July, reflecting the fact that the rise in                        business as compared to last February.
unemployment appears to be far more muted than expected.
                                                                                           Improved cash flow due to a greater focus on working capital.
Fund Performance
                                                                                       Overall the outcome was positive in that it demonstrates a clearing of
The portfolio finished marginally behind its benchmark over the month                  the decks preparing companies for the potential upturn. Herein lies the
of August though achieved strong positive returns in absolute terms on                 key issue, the pace and duration of any recovery. It is clear the level of
the back of a successful reporting season and positive economic data.                  policy medicine has been so overwhelming that it has revived the
Our position in Rio detracted from performance, due to the                             patient. While this medicine continues to be administered it is likely that
fundamentals for the resource sector beginning to turn down in August.                 the world economy will continue to be on a path for recovery and
Firstly, the spot price of iron ore and steel in China began to fall                   liquidity will remain strong. Australia will benefit in a more concentrated
reflecting over supply of product. Secondly, there was evidence that                   way, given its leverage to the strong Chinese economy and resource
the build up of inventory in China was coming to an end, this was                      prices. This is most evident in the level of investment in the commodity
reflected in a stalling of the rise in base metal prices. Finally, there               sector, notably some of the large scale LNG projects which have
were increasing concerns that the Chinese government was taking                        recently been announced. The risk to investors is what happens once
policy measures to slow the rate of stimulus to the economy.                           the policy medicine starts to be withdrawn, particularly now market
Our overall position to resources is underweight reflecting our                        valuations are pricing in some recovery. The early signs of policy
concerns that the sector faces some headwinds. This is reflected in our                conservatism were met with a sharp sell off in the volatile Chinese
underweight position in BHP and in the pure plays. In August we did                    stock market, but a timely warning of the fragility of financial markets.
see smaller resource stocks buck this trend, rising due to further                     For the time being we are of the view that policy makers are far more
investments by the Chinese into Australian companies with                              concerned about triggering a second slowdown than they are of
development assets such as Aquila Resources. We are wary of                            dealing with the widening fiscal deficits and will err on the side of
valuations in a number of these stocks given an easing in the                          stimulating for longer. This should support markets in the near term,
underlying fundamentals.                                                               but the risks remain that policy makers lose control of the situation.
Our overweight position in Metcash also detracted from performance                     Our portfolios are being positioned in a way to capture the benefits of
over the month as the defensive Consumer staples sector                                cyclicals where we see strong medium term fundamentals supporting
underperformed the market. Our overweight in Telstra was another                       the company beyond the immediate recovery in the economy. Stocks
detractor as the stock traded down over the month on the back of the                   such as Asciano, NAB and Worley fit this criteria, all of which now have
Future Fund selling part of its holding in the company.                                strong balance sheets as well as good cash flow. In addition we are
                                                                                       targeting other longer term themes such as the development of LNG
The portfolio’s overweight position in QBE was one of the main                         reserves with companies such as Origin and Oil Search. Finally we see
contributors to returns as the stock rallied strongly after it reported                value in certain companies which have demonstrated an ability to
better than expected results. The outlook for premiums is positive as                  consolidate their industry to produce higher returns, such as Sonic
the industry remains capital constrained. In addition their recent                     Healthcare and QBE.
acquisitions have performed well, re-enforcing their credentials as
disciplined and timely buyers of assets.

                         For more information
                         Please call 1800 813 886, contact your business development representative or visit

                         BT Investment Management (RE) Limited ABN 17 126 390 627, AFSL 316 455, is the responsible entity and issuer of units in the BT Wholesale
                         Ethical Share Fund. A product disclosure statement (PDS) is available for the Fund and can be obtained by contacting your business
                         development representative on 1800 813 886 or visiting You should obtain and consider the PDS before deciding whether to
                         acquire, continue to hold or dispose of units in the Fund. This information has been prepared without taking account of your objectives, financial
                         situation or needs. Before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and
                         needs. An investment in the Fund is not a deposit with or any other liability of the Westpac Banking Corporation (ABN 33 007 457 141) or any
                         other Company in the Westpac Group of companies. Performance data (post-fee) assumes reinvestment of distributions and is calculated using
                         exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the (post-fee) performance.
                         Past performance is not a reliable indicator of future performance. BT Investment Management (RE) Limited is a member of the Westpac Group.
                         Neither BT Investment Management (RE) Limited, nor any other company in the Westpac Group, guarantees the repayment of capital or the
                         performance of the product or any particular rate of return.
                         BT® is a registered trade mark of BT Financial Group Pty Ltd and is used under licence.

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