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Perpetual gains SMSF traction with SMA

Perpetual’s separately-managed account (SMA) model portfolio was almost specifically designed as a vehicle to target Australia’s $480 billion-plus self-managed superannuation fund (SMSF) segment, its portfolio manager said today.

Perpetual portfolio manager and senior analyst Vince Pezzullo said the SMSF market was a challenging sector to crack for the company, however, its SMA portfolio, Direct Equity Alpha, was gaining traction among direct investors and advisers.

“The SMSF market is a hard one to crack and for good reason,” Pezzullo told selfmanagedsuper.

“These are people who want to control what they are buying and they want to see outcomes, they don’t want to hear a lot of rhetoric.”

He said since the portfolio’s launch in May, after a five-year incubation period, the Direct Equity Alpha team had been “sculpting” its strategy based on feedback from advisers and direct investors.

“You’ve got to understand what they want and at the end of the day they want returns,” he said.

“I’m happy for the fund to do well, obviously for the client, but I’m not going to be chasing markets personally, because you chase risk.

“Now from what I’ve learnt from SMSF investors is that they say good positive returns are great, but don’t lose my money. That’s how they think, so it’s great because that’s how we think.”

Under Pezzullo’s management, the Direct Equity Alpha team selects Australian mid-large-cap stocks for long-term capital growth and income.

The limited $300 million strategy adopts a bottom-up approach for the portfolio that is based on Perpetual’s four filters: recurring earnings/profitability, sound management, quality of business and good balance sheet.

Pezzullo said he was comfortable with the concentrated nature of the portfolio, with its 10 to 24 stocks and 20 per cent cash exposure.

“We’re comfortable with all those and not much is going to change with the fund,” he said.

“It’s more now about getting out to advisers and talk to them about how this could complement what they do. It’s not a replacement, it’s a complement to some aspects of their direct share investing.”

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