Fund Review BetaShares Australian High Interest Cash ETF

Transcription

1 Fund Review BetaShares Australian High Interest Cash ETF P 1-7 ANALYST: SHARMEEL SUKA APPROVED BY: JUDE MCDONNELL ISSUE DATE About this Review ASSET CLASS REVIEWED SECTOR REVIEWED FIXED INTEREST ENHANCED CASH AND DEPOSITS TOTAL FUNDS RATED 19 About this Fund ASIC RG240 CLASSIFIED FUND REVIEWED ASX CODE PDS OBJECTIVE DISTRIBUTION FREQUENCY NO BETASHARES AUSTRALIAN HIGH INTEREST CASH ETF AAA TO PROVIDE ATTRACTIVE AND REGULAR INCOME DISTRIBUTIONS AND A HIGH LEVEL OF CAPITAL SECURITY. THE FUND AIMS TO GENERATE A RETURN THAT EXCEEDS THE 30 DAY BANK BILL SWAP RATE (AFTER FEES AND EXPENSES) MONTHLY FUND SIZE $1,182 MILLION (APRIL 2017) FUND INCEPTION MANAGEMENT FEE RESPONSIBLE ENTITY About the Fund Manager FUND OWNERSHIP CAPPED AT 0.18% P.A. OF THE NET ASSET VALUE OF THE FUND. BETASHARES CAPITAL LTD BETASHARES CAPITAL LTD 55% OWNED BY MIRAE ASSET GLOBAL INVESTMENT GROUP, 42% OWNED BY BETASHARES MANAGEMENT TEAM, 3% OWNED BY PRIVATE INVESTORS. ASSETS MANAGED IN THIS SECTOR $1,182 MILLION (APRIL 2017) YEARS MANAGING THIS ASSET CLASS 5 Investment Team PORTFOLIO LOUIS CROUS, THONG NGUYEN, DON HOANG, CHAMATH DE SILVA INVESTMENT TEAM SIZE 4 INVESTMENT TEAM TURNOVER STRUCTURE / LOCATION LOW SYDNEY Investment process STYLE ACTIVE AMONGST APPROVED BANKS AND AUTHORISED DEPOSIT TAKING INSTITUTIONS BENCHMARK Fund rating history MAY 2017 APRIL 2016 MAY DAY BANK BILL SWAP RATE RECOMMENDED RECOMMENDED RECOMMENDED What this Rating means The Recommended rating indicates that Lonsec has strong conviction the financial product can generate risk adjusted returns in line with relevant objectives. The financial product is considered an appropriate entry point to this asset class or strategy. Strengths The BetaShares Australian High-Interest Cash ETF (the Fund ) represents an efficient way to gain exposure to the Australian cash market. Given the size of the Fund, investors are able to gain exposure to longer dated deposit accounts and receive a higher rate of interest compared to retail deposits, whilst maintaining daily liquidity via the ASX. BetaShares can draw on the global resources and experience of its strategic shareholders, which can help enhance the overall sustainability of the business. Current pricing is competitive relative to other Enhanced Cash and Deposit products. Weaknesses The Fund s name is open to potential confusion as the underlying investments are neither AAA rated or have the liquidity of cash. There is no guarantee that current pricing dynamics will exist in the future. An investment in the Fund is not a deposit with a bank and investors do not receive the benefit of any government guarantee associated with bank deposits. The Fund can have a very high proportion (up to 80%) in less liquid 31-day notice accounts. Lonsec notes that the current allocation (approximately 60%) is high relative to peers. The Investment Team relies on published ratings and credit outlooks to evaluate the underlying banks but, unlike peers, does not conduct independent fundamental credit research. BetaShares has not articulated to Lonsec a contingency plan to deal with a sudden and largescale redemption of units in the Fund which, given the heavy allocation to 31-day notice accounts, could potentially affect the daily liquidity of the Fund (notwithstanding liquidity available via the ASX). We strongly recommend that potential investors read the product disclosure statement or investment statement. Lonsec Research Pty Ltd ABN AFSL. No This information must be read in conjunction with the warning, disclaimer and disclosure at the end of this document. This report supersedes all prior reports.

2 P 2-7 ANALYST: SHARMEEL SUKA APPROVED BY: JUDE MCDONNELL ISSUE DATE Fund Risk Characteristics BUSINESS SUSTAINABILITY RISK CAPITAL VOLATILITY CREDIT RISK FOREIGN CURRENCY EXPOSURE INTEREST RATE RISK LEVERAGE RISK REDEMPTION RISK SECURITY CONCENTRATION RISK SECURITY LIQUIDITY RISK LOW MODERATE HIGH Risk categories are based on Lonsec s qualitative opinion of the risks inherent in the financial product s asset class and the risks relative to other financial products in the relevant Lonsec sector universe. BIOmetrics Aggregated risks STD RISK MEASURE A Standard Risk Measure score of 1 equates to a Risk Label of Very Low and an estimated number of negative annual returns over any 20 year period of less than 0.5. This is a measure of expected frequency (not magnitude) of capital losses, calculated in accordance with AFSA/FSC guidelines. Features and benefits COMPLEXITY Fee profile FEES VS. UNIVERSE FEES VS. ASSET CLASS FEES VS. SUB-SECTOR LOW MODERATE HIGH LOW MODERATE HIGH Fee BIOmetrics are a function of expected total fee as a percentage of expected total return. What is this Fund? Exchange Traded Funds (ETFs) are investment vehicles traded on a stock exchange like ordinary shares. ETFs are generally structured to provide investors with returns that track a particular index or asset class. The Fund allocates money to deposit accounts (including notice deposit accounts of typically 31 days but not exceeding 90 days) held at APRA regulated banks. At least 20% of the Fund s assets will be held in at call accounts, and no more than 30% of the Fund s assets will be held in deposits with greater than 31 days notice. Unlike most passively managed ETFs, there is an element of discretion with the Responsible Entity able to open and close deposit accounts after assessing the risk and return characteristics of the eligible banks. Using this Fund This is General Advice only and should be read in conjunction with the Disclaimer, Disclosure and Warning on the final page. Exchange Traded Funds (ETFs) are investment vehicles traded on a stock exchange like ordinary shares. ETFs are generally structured to provide investors with returns that track a particular index or asset class. ETFs are suited to those investors who believe the market average provides an efficient long-term return or are unwilling to pay the additional fees involved with active investment management. Enhanced Cash and Deposit products are generally liquid in normal market conditions. However, exposure to term deposits and 31-day notice accounts may result in delays processing withdrawals in stressed conditions or if the withdrawal requests exceed the level of securities able to liquidated overnight. At the time of this review, the ETF s exposure to Term Deposits and 31-day notice accounts was approximately 60% and the Manager has indicated the maximum in ordinary conditions would be 80%. The Fund may be suitable for investors seeking a regular income stream and capital stability and protection, particularly in rising rate environments. Investors should note that whilst the Fund s ASX code is AAA, this does not equate to or should be read as a AAA credit rating. Suggested Lonsec risk profile suitability SECURE DEFENSIVE CONSERVATIVE BALANCED GROWTH HIGH GROWTH For guidance on appropriate asset allocations and risk profiles, refer to the latest Lonsec Strategic Asset Allocation Review and Risk Profile Definitions on our website. Changes Since Previous Lonsec Review Chamath De Silva joined the Portfolio Management team as an Assistant Portfolio Manager in May Thong Nguyen was promoted to the position of Senior Portfolio Manager in Head of Quantitative Research and Portfolio Manager Thomas Reif departed BetaShares in December Lonsec notes that, prior to his departure, Reif s responsibilities had changed to focus on product development and research rather than day-to-day portfolio management. The Manger has confirmed a formalised risk limit has been put in place stipulating the Fund will only invest in investment grade banks. This is not a change for the Fund, but a formal acknowledgement of the acceptable investible universe. Lonsec Opinion of this Fund People and resources BetaShares is a specialist provider of ETFs with approximately $4.2 billion in funds under management (FUM) across 39 exchange traded products as at April At current levels of FUM, the company is profitable. BetaShares was formed in 2009 through a strategic partnership with Horizons ETFs ( Horizon ), which maintains a significant equity interest in the firm (57%). Post BetaShares s inception, Horizon was acquired by Mirae Asset Management, a South Korean asset management firm with significant scale.

3 P 3-7 ANALYST: SHARMEEL SUKA APPROVED BY: JUDE MCDONNELL ISSUE DATE The Fund is officially managed by an investment team of four: Louis Crous (CIO), Thong Nguyen (Portfolio Manager), Don Hoang (Senior Portfolio Manager) and Chamath De Silva (Assistant Portfolio Manager). While the current size of the investment team is small relative to peers, Lonsec is comfortable with the firm s current resourcing given the simple structure of the Fund. The Fund is currently supported by multiple market makers and authorised participants. Lonsec believers this arrangement benefits investors, as it promotes competition and tighter spreads within the primary and secondary markets. Research and portfolio construction The Fund is very simple in that it only allocates money to deposit accounts held at APRA regulated banks. However, unlike most ETFs, there is an element of discretion with the Responsible Entity able to open and close deposit accounts after assessing the risk and return characteristics of the eligible banks. Lonsec believes that, given the current nature of the Australian banking landscape, this task is well within the resource capabilities of the Responsible Entity. However, this could be expected to grow more complex in the event of the Australian banking system suffering stresses similar to those experienced by many European banking systems during the global financial crisis. Lonsec notes that the Fund is not restricted to AAA rated banks or daily liquid cash instruments, as may be implied by the Fund s ASX code or Fund name. Although no misrepresentations regarding the nature of the product are made in the Fund s marketing materials or PDS, Lonsec believes that the Fund s name and ASX code may be open to misinterpretation by less sophisticated investors. The Manager constructs the portfolio largely based on the interest rates on deposit accounts (including 31-day notice accounts) it is able to negotiate with APRA regulated banks. Investors are able to capitalise on BetaShare s size and banking relationships to receive a greater yield than they would otherwise receive as retail customers of APRA regulated banks. Lonsec notes that a key feature of the Fund is the ability to gain exposure to longer dated deposit accounts (essentially an illiquidity premium) and receive a term premium whilst maintaining daily liquidity via ASX trading as well as the engagement of authorised participants and market makers. Lonsec believes the effectiveness of authorised participants and market makers are important drivers for reducing indirect costs and increasing liquidity in the form of reduced bid/ask spreads and premium/ discounts to NAV. Despite the liquidity offered from trading on the ASX and given the high allocation to 31-day notice accounts, large scale and sudden selling of units (in excess of 20% of NAV) could potentially see investor funds locked into the Fund. The maximum allowable allocation to 31-day notice accounts is the highest in the Enhanced Cash and Deposits peer group at 80%. The exposure within the Fund to 31- day notice accounts has remained stable at roughly 60% since its introduction to the portfolio in 2015, however this allocation is substantially higher than peers. Lonsec acknowledges that a lock up of the Fund is an extreme event with a low probability of occurrence in normal market conditions. Barring an extreme credit event at an underlying bank, it is more likely that the timing of a return of capital would be delayed in this scenario rather than a capital loss. Lonsec also notes that BetaShares has the right to reject investments by institutional clients, to avoid the impact of a large investor withdrawing from the Fund on retail investors. Risk management The Fund is managed in accordance with a clearly defined set of rules and is monitored daily by the investment team. Importantly the Fund must maintain at least a 20% exposure to at-call deposits. Lonsec believes the Fund s risk constraints, as well as the monitoring systems in place, are appropriate for the given strategy. Relative to more active peers, however, Lonsec notes that the Fund s risk management procedures, limits and systems are less sophisticated. The Manager considers credit ratings and outlooks for investible banks when constructing the portfolio and requires a minimum Investment Grade rating for underlying banks. Lonsec notes that the Manager does not undertake modelling around the impact of a large-scale run on the Fund, nor has the investment team articulated a contingency plan should such an event occur. Although the Fund utilises several sources of liquidity (market making facilities, a loan facility, minimum allocation to at-call deposits) the Manager has not sufficiently demonstrated that investors will be protected should the Fund face large-scale redemptions on the ASX. While the probability of such an event is low, Lonsec believes that liquidity is the key concern of investors in cash and cashlike investments and as such Lonsec would like more comfort that liquidity will be maintained in all circumstances.lonsec has queried the Manager about its modelling and contingency plans in the event of a run on the Fund. The Manager may utilise a few levers in managing liquidity (in the first instance for investors the market making offered by authorised participants, loan facility, investment in at call deposits, pro rata of redemptions by authorised parrticipants). While the probability of such an event is considered low, Lonsec believes there is benefit in more clearly articulating a plan, particularly given the general expectation that a listed cash fund will be highly liquid. Performance The Fund has met its objective over all periods assessed. The Fund outperformed the 30 Day Bank Bill Swap rate by 0.38%, 0.42% and 0.62% p.a. (net of fees) over the one, three and five-year periods to March 2017, respectively. ETF investors incur both direct and indirect costs/ fees. Direct fees include the management expense ratio (MER) and brokerage incurred when buying and selling units. The Bid / Ask Spread represents an indirect cost to investors. Investors can limit the effects of wide Bid/Ask spreads by using limit price

4 P 4-7 ANALYST: SHARMEEL SUKA APPROVED BY: JUDE MCDONNELL ISSUE DATE orders to nominate a price at which they can buy and sell. Overall Lonsec has assigned the Fund a Recommended rating following the most recent review. Lonsec views the use of an ETF structure as an efficient way to access higher yielding deposit accounts whilst maintaining liquidity. Lonsec also notes that BetaShares portfolio management team is well equipped to manage the Fund given its simple structure. The offering is also competitively priced relative to peers. However, Lonsec holds concerns around the high allocation to 31-day notice accounts relative to peers and investors should be aware of the implications for the Fund s liquidity in the unlikely event of a large sell down of the Fund. As such, Lonsec would like to see that the manager has undertaken further analysis, such as modelling and developing a contingency plan, around such a scenario before gaining further comfort. People and Resources Corporate overview BetaShares Capital Ltd (BetaShares) is the Fund s Responsible Entity and is accountable for the ongoing management of the Fund s underlying assets. It is a wholly-owned subsidiary of BetaShares Holdings Pty Ltd (BetaShares Holdings). BetaShares Holdings was established in 2009 as a specialist provider of exchange traded products. It is 57% owned by Horizons, 40% owned by BetaShares s management team and the remainder owned by private investors. Horizons is a fully controlled subsidiary of the Mirae Asset Global Investments Group. Mirae is a Korean based asset management entity with over US$100b of FUM. Mirae is particularly active in emerging market equities and is currently expanding its ETF platform globally. The Horizons family of ETFs has over US $13 billion in assets in ETFs listed across 6 countries. BetaShares has over $4.2bn of FUM across 39 ETF products as at April Size and experience NAME LOUIS CROUS THONG HGUYEN DON HOANG CHAMATH DE SILVA POSITION SENIOR PORTFOLIO & CIO SENIOR PORTFOLIO ASSISTANT PORTFOLIO ASSISTANT PORTFOLIO EXPERIENCE INDUSTRY / FIRM 17 / 7 13 / 6 7 / 3 6 / <1 The BetaShares business currently employs 32 dedicated financial service professionals. More broadly, BetaShares benefits from access to the broader distribution, research, infrastructure and risk management systems and resources of its strategic partners, Horizons and Mirae. Research Approach Overview The Fund will invest all of its assets into deposit accounts maintained with one or more APRA regulated banks in Australia. The Manager does not undertake fundamental credit research on underlying banks before investing in deposit accounts however there is a requirement that investible banks hold a minimum Investment Grade credit rating. Credit quality is a consideration of the Manager and credit ratings and outlooks are monitored by the Portfolio Management team on an ongoing basis. The majority of the Portfolio Managment team s analysis of potential investments focuses on negotiating attractive interest rates on deposit accounts with APRA regulated banks. Due to its scale and banking relationships, BetaShares is able to negotiate rates at a margin above what individual investors are able to access via retail deposit accounts. Portfolio Construction Overview Unlike other BetaShares products, the Fund is not run to replicate a particular benchmark. Instead, the Fund invests in deposit accounts based on the highest interest rate the Manager is able to negotiate with APRA regulated banks. As at the date of this review, the was invested with six banks, being: Bank of Queensland Limited Bankwest ME Bank Rabobank Australia Limited Westpac Banking Corporation National Australian Bank There are no formal rules around redeeming funds deposited with banks in the event of a credit rating downgrade or other adverse events. Instead, the PDS refers to the Responsible Entity having the discretion to establish new accounts or close existing accounts after examining the risk and return characteristics of the deposit accounts. Lonsec notes that diversification of deposit banks is not a consideration of the Manager and the Fund s assets are technically able to be invested with only one bank, although in practice this would be an unlikely scenario. Liquidity The Fund s units trade intra-day at prevailing market prices in a similar manner to other securities on the ASX. Any economic benefits such as interest earned from holding assets will accrue to the benefit of the Fund. The Fund s indicative net asset value (inav) is not as volatile as other ETFs, particularly ETFs invested in equities, and each day will reflect an additional day s interest accrual, prior to the monthly distribution. BetaShares has appointed multiple authorised participants to facilitate liquidity in the creation/ redemption facility (the primary market). Authorised participants are the only counterparties who can deal with the Responsible Entity in relation to the creation and redemption of units in the Fund.

5 P 5-7 ANALYST: SHARMEEL SUKA APPROVED BY: JUDE MCDONNELL ISSUE DATE BetaShares has also appointed multiple market makers. Market makers are obligated to maintain pre-agreed spreads and volumes (on the Australian Stock Exchange) through the course of each trading day. Lonsec notes that there are circumstances where market making obligations may cease to apply and market makers will no longer be required to maintain the liquidity of the Fund. Examples of this include the closure of the exchange and the occurrence of price feed disruptions. The Manager ensures that at least 20% of the portfolio his invested in at-call deposits to ensure that the Fund is sufficiently liquid to meet redemption requests. In the event that at-deposits are not sufficient to meet redemptions, longer dated deposits, such as 31-day notice accounts, will be liquidated and market makers will hold inventory until the accounts are able to be settled. The Manager also has access to a borrowing facility, through the Bank of Queensland, to be used in the event that the liquidation of at-call deposits is insufficient to fund redemption requests. Lonsec, however, has limited information regarding the facility and hence cannot ascertain its effectiveness in funding a large scale sell down of the Fund by investors. The Manager can, at its discretion, charge authorised participants a 1% redemption fee, to discourage the redemption of units. Risk Management Risk limits The Fund invests in at call deposit accounts as well as notice deposit accounts. Based on current market conditions, the Fund s Portfolio Managers have adopted the following internal limits: At least 20% of the Fund s assets should be held in at call accounts, and No more than 30% of the Fund s assets should be held in deposits with greater than 31 days notice. Deposits can only be held with banks that hold a minimum Investment Grade rating. Risk monitoring The Fund s restrictive investment universe means risk monitoring is a relatively simple process. The profile of deposits is closely monitored to ensure a spread of maturities and funds held in maturing accounts are reinvested in a timely manner. Members of the Portfolio Managment team also monitor the credit ratings and balance sheets of invested/potential banks and maintain close relationships with banks management. Risks An investment in the Fund carries a number of standard investment risks associated with domestic and international investment markets. These include economic, political, legal, tax and regulatory risks. These and other risks are outlined in the relevant PDS and should be read in full and understood by investors. Lonsec considers the major risks to be: Performance risk There is no assurance or guarantee the returns of the Fund will meet its investment objective. Interest Rate risk Changes in interest rates may have a direct impact (positive or negative) on the Fund s returns. Credit risk Investors are exposed to the creditworthiness of the banks the Fund invests with. Liquidity risk the inclusion of the 31-day notice accounts as permissible investments have the potential to impact the liquidity of the Fund, notwithstanding units in the Fund are listed on the ASX.

6 P 6-7 ANALYST: SHARMEEL SUKA APPROVED BY: JUDE MCDONNELL ISSUE DATE Quantitative Performance Analysis - annualised after-fee % returns (at ) Performance metrics 1 YR 2 YR 3 YR 5 YR FUND PEER MEDIAN FUND PEER MEDIAN FUND PEER MEDIAN FUND PEER MEDIAN PERFORMANCE (% PA) STANDARD DEVIATION (% PA) EXCESS RETURN (% PA) OUTPERFORMANCE RATIO (% PA) WORST DRAWDOWN (%) TIME TO RECOVERY (MTHS) SHARPE RATIO INFORMATION RATIO TRACKING ERROR (% PA) FUND: BETASHARES AUSTRALIAN HIGH INTEREST CASH ETF LONSEC PEER GROUP: FIXED INTEREST - ENHANCED CASH AND DEPOSITS BENCHMARK USED: 30 DAY BANK BILL SWAP RATE CASH BENCHMARK: BLOOMBERG AUSBOND BANK BILL INDEX AUD TIME TO RECOVERY: NR - NOT RECOVERED, DASH - NO DRAWDOWN DURING PERIOD Growth of $10,000 over five years Snail trail Risk-return chart over three years Outperformance consistency

7 ISSUE DATE P 7-7 ANALYST: SHARMEEL SUKA APPROVED BY: JUDE MCDONNELL Glossary Total return Top line actual return, after fees Excess return Return in excess of the benchmark return Standard deviation Volatility of monthly Absolute Returns Tracking error Volatility of monthly Excess Returns against the benchmark (the Standard Deviation of monthly Excess Returns) Sharpe ratio Absolute reward for absolute risk taken (outperformance of the risk free return (Bank Bills) / Standard Deviation) Information ratio Relative reward for relative risk taken (Excess Returns / Tracking Error) Worst drawdown The worst cumulative loss ( peak to trough ) experienced over the period assessed Time to recovery The number of months taken to recover the Worst Drawdown Snail Trail A trailing 12-month relative performance and relative risk measurement over the benchmark. The trail is generated using a 12-month rolling window over the specified period About Lonsec Lonsec Research Pty Ltd (Lonsec) is an investment research house with specialist areas of expertise, that was originally established in 1994 and the current entity was registered on 23 June From 1 July 2011, Lonsec became a fully owned subsidiary of Lonsec Fiscal Holdings Pty Ltd, a privately owned entity with a multibrand strategy of providing leading financial services research and investment execution. Lonsec believes that professional financial advisers need informed opinions on the best investment strategies and financial products to provide real value for their clients. To meet this need, Lonsec has in place an experienced research team, which draws on a robust research process to undertake in-depth assessment of managed fund products. Analyst Disclosure and Certification Analyst remuneration is not linked to the research or rating outcome. Where financial products are mentioned, the Analyst(s) may hold the financial product(s) referred to in this document, but Lonsec considers such holdings not to be sufficiently material to compromise the rating or advice. Analyst holdings may change during the life of this document. The Analyst(s) certify that the views expressed in this document accurately reflect their personal, professional opinion about the matters and financial product(s) to which this document refers. LONSEC STRONGLY RECOMMENDS THIS DOCUMENT BE READ IN CONJUNCTION WITH THE RELEVANT PRODUCT DISCLOSURE STATEMENT OR INFORMATION STATEMENT IMPORTANT NOTICE: This document is published by Lonsec Research Pty Ltd ABN , AFSL No (Lonsec). Please read the following before making any investment decision about any financial product mentioned in this document. Disclosure at the date of publication: Lonsec receives a fee from the fund manager or product issuer(s) for researching the financial product(s) set out in this document, using objective criteria. Lonsec may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec services. Lonsec s fee is not linked to the rating(s) outcome. Lonsec does not hold the product(s) referred to in this document. Lonsec s representatives and/or their associates may hold the product(s) referred to in this document, but details of these holdings are not known to the Analyst(s). Disclosure of Investment Consulting services Lonsec receives fees for providing investment consulting advice to clients, which includes model portfolios, approved product lists and other financial advice and may receive fees from this fund manager or product issuer for providing investment consulting services. The investment consulting services are carried out under separate arrangements and processes to the research process adopted for the review of this financial product. For an explanation of the process by which Lonsec manages conflicts of interest please refer to the Conflicts of Interest Policy which is found at: 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 (as defined in the Corporations Act 2001(Cth)) 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. It does not constitute a recommendation to purchase, redeem or sell the relevant financial product(s). Before making an investment decision based on the rating(s) 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 our advice relates to the acquisition or possible acquisition of particular financial product(s), the reader should obtain and consider the Investment Statement or Product Disclosure Statement for each financial product before making any decision about whether to acquire a financial product. Lonsec s research process relies upon the participation of the fund manager or product issuer(s). Should the fund manager or product issuer(s) no longer be an active participant in Lonsec s research process, Lonsec reserves the right to withdraw the document at any time and discontinue future coverage of the financial product(s). The rating in this publication relates to the fund outlined in the publication which may have related funds or be associated with other funds and platforms. The rating may only be applied to the fund outlined in this publication at first instance and whether it applies to related or associated funds and platforms should be investigated by your financial adviser before you make an investment decision in relation to the related or associated funds and platforms. You should be aware that the mandate, fees, underlying investments, the issuers of the related and associated funds and platforms may be different from the fund specified in this publication. You should satisfy yourself that the related and associated funds and platforms meet your financial circumstances, needs and objectives before making an investment decision. Disclaimer: This document is for the exclusive use of the person to whom it is provided by Lonsec and must not be used or relied upon by any other person. 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 Lonsec. Financial conclusions, ratings and advice are reasonably held at the time of completion but subject to change without notice. Lonsec assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, Lonsec, its 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 2017 Lonsec Research Pty Ltd (ABN , AFSL No ) (Lonsec). This report is subject to copyright of Lonsec. Except for the temporary copy held in a computer's cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth), no part of this report may, in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of Lonsec. This report may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to Lonsec copyrighted material, applies to such third party content.