Fund Product, Company and Regulatory Updates as at 4 June 2019

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Product Updates

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Perennial launches active ETF with an ESG strategy
Perennial Value Management has a new exchange traded fund (ETF), now with an environmental, social and governance (ESG) bent. The eInvest Future Impact Smalls caps Fund (ASX:IMPQ) is the first actively managed ESG-driven ETF in Australia.

The fund will hold between 20 and 70 Australian and/or New Zealand stocks, excluding companies that derive more than 10 per cent of their revenue from fossil fuels, alcohol, tobacco, weapons, forestry activities, gambling, modern slavery and unhealthy fast foods.

Legg Mason launches new ‘deeper green’ ESG fund
The Legg Mason QS Investors Global Responsible Investment Fund is launching in the face of growing investor demand. The fund is aiming to outperform the MSCI World ESG Leaders Index.

The fund will use a specialised ESG assessment model that allows rankings and reviews of companies through several lenses to ensure ESG relevance. Specific filters include tobacco, gambling, alcohol, defence and weapons, fur, genetically modified crops, nuclear energy, oil, sands and thermal coal.

Moelis Australia launches insto credit fund on the ASX
The Moelis Australia Fixed Income Fund is open to wholesale investors, soon to launch on the ASX. The fund targets the RBA cash rate return plus 4 per cent per annum or 5.5 per cent.

The fund invests in diversified credit such as inventory funding, specialised commercial debtors and strata funding and personal lending for consumers. The minimum investment is $100,000, and expressions of interest close on 30 June.

BetaShares launches Indian ETF
The BetaShares India Quality ETF is to invest directly into a diversified portfolio of carefully screened Indian companies. The ETF uses a quality-focused index. India is one of the fastest growing economies globally, with the Indian stock market one of the most concentrated in the world.

SSGA to launch ETF model portfolios
State Street Global Advisors (SSGA) has launched four new multi-asset ETF model portfolios. The portfolios sit into two investment strategies: State Street Risk-Based ETF Model Portfolios and State Street Income ETF Model Portfolio. An official launch date has yet to be set.

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Company Updates

Alleron IM relaunching brand
Boutique Australian equities fund manager Alleron Investment Management is now Australian Eagle Asset Management. The fund manager is looking to retail, moving from being exclusively institutional. The rationale behind the name is that ‘Australian Eagle’ is the panoramic view of - and swooping in on - opportunities. There has also been a transfer of ownership of the business to staff.

MLC Life appointed group insurer by Maritime Super
MLC Life is replacing AIA Australia as group insurer for Maritime Super. Maritime Super has 27,000 members and around $6 billion in assets under management.

Cartel class action launched against major institutional investors
Maurice Blackburn lawyers have filed a class action against UBS, Barclays, Citibank, Royal Bank of Scotland and JP Morgan, alleging the banks colluded to rig foreign exchange rates across several years.

The allegations include that traders from each bank used chat rooms with names such as The Cartel, The Bandits’ Club, and The Mafia to discuss the FX benchmark rate fixing, control spread pricing, and trigger client stop loss orders and limit orders. The time frame in question spans January 2008 to October 2013.

Maurice Blackburn’s principal lawyer Kim Nishimura said the conduct has been extensively investigated in the United States and Canada. The action is on behalf of foreign exchange customers that bought or sold currency during these dates, where the total value of transactions was over $500,000 across that period.

The lead plaintiff is J. Wisbey and Associates, a dental and medical equipment importer. Wisbey says he relies on forex trading as his company does business with international companies.

Natixis joins Future Females in Finance
Natixis Investment Managers has joined gender diversity program, Future Females in Finance, whereby it will offer six-week work experience programs to university students, offering young women the opportunity to solve problems in real working conditions under the guidance of a Natixis mentor.

Australia still has plenty of work to do on gender diversity and equality, with the World Economic Forum ranking us 39th in gender gap size. New Zealand, by comparison, was ranked 7th. Women’s economic participation was ranked even worse at 46th.

Sunsuper integrates CBH Super in another merger
CBH Super, a not-for-profit Perth corporate superannuation fund for CBH Group, a grain industry cooperative, has merged into Sunsuper. CGH Super adds 1,300 members and $300 million in funds under management into Sunsuper. This is the fourth merger into Sunsuper in the past year.

Blue Sky placed into receivership
Alternatives fund manager Blue Sky has been placed into receivership. Its financier, Oaktree Capital Management, appointed administrators after Blue Sky breached a term of its $50 million loan facility. The $50 million was borrowed in September 2018 in a convertible note facility, with the terms stating that Blue Sky must maintain a minimum cash balance, minimum cash recurring EBITDA, minimum net tangible assets and minimum annual capex, measured quarterly.

Blue Sky breached the minimum recurring cash EBITDA covenant as at March 31. The appointment does not apply to Blue Sky Alternative Access Fund (ASX:BAF) or other subsidiaries. BLA has been suspended from trading.

NAB sells Ausmaq to German group
Deutsche Borse has bought National Australia Bank’s (NABs) managed funds services business Ausmaq. Ausmaq is a specialist managed funds and term deposit administrator, and was purchased via Deutsche Borse’s international central securities depository subsidiary, Clearstream.

Clearstream will enter the Australian market later in 2019, with Ausmaq’s service offering also expanding with Vestima (a fully automated global funds processing platform) access for Australian custodian banks, wrap platforms and wealth managers.

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Regulatory Updates

APRA zeroing in on IOOF group companies
The Australian Prudential Regulation Authority (APRA) issued directions to companies within the IOOF group for failing to comply with their imposed licence conditions, extending the deadline to June 30 to create a dedicated business function.

This is the first time broader directions powers have been used, which were granted under new legislation just over a month ago, in April 2019. In December 2018 additional conditions were imposed on the licences or registrations of IOOF-owned subsidiaries, I.O.O.F. Investment Management Limited (IIML), Australian Executor Trustees Limited (AET) and IOOF Ltd (IL). This came after disciplining five IOOF directors and executives.

Aurora fund takeover bid fails
Aurora Funds Management won court orders against Primary Securities after a rogue shareholder meeting on January 15. Activist investor Tim Staermose and Primary Securities set a meeting for unitholders of the Aurora Absolute Returns Fund (ASX:ABW) to vote on resolutions to switch the responsible entity for the fund from Aurora to Primary Securities.

The vote was successful according to Primary Securities, however Aurora refused to recognise the switch, stating not all shareholders were given enough prior notice of the meeting. A Supreme Court decision said the meeting and its resolutions were invalid, saying that a quarter of shareholders did not receive enough notice. Primary Securities was ordered to pay Aurora’s costs.

Macquarie Securities pays $300,000 penalty
The Markets Disciplinary Panel (MDP) has given an infringement notice to Macquarie Securities for $300,000 after the MDP believed that Macquarie breached market integrity rules regarding the provision of regulatory data to the ASX and Chi-X over a four-year period.

Tens of millions of orders transmitted included wrong regulatory data or did not contain regulatory data, and trade reports submitted over the same period omitted the same data.