Benefits of investing in the NWQ Fiduciary Fund - Wholesale A

The Fund is designed to realise lower volatility than the wider Australian equities market over time (volatility describes the extent to which the value of an investment varies - the higher the volatility, the greater the value swings - in other words, the Fund aims to have smoother returns over time).

The Fund aims to deliver an absolute return investment outcome. Absolute return investing is simply one where the focus is on returns that do not completely depend on the direction of the market, allowing the Fund the possibility of producing positive returns in both rising and falling markets.

Risk level

Medium

Investor suitability

NWQ expects that investors in the Fund will principally be seeking capital growth from the Fund and income will be a secondary consideration. The Fund should be regarded as a long term investment.

About the Fund

The Fund, which commenced in May 2013, is open to wholesale investors. 

The Fund aims to produce returns, after the Investment Management Fee and after Usual Expenses, of between 8% to 11% pa over rolling 5 year periods. Its goals include lower volatility and risk-managed investment outcomes through exposure to three broad investment strategies managed by a range of leading fund managers.

NWQ actively manages the allocations made to each fund in which the Fund invests (an underlying fund) . Underlying funds are managed by investment managers (underlying fund managers) that meet stringent criteria and are aligned with NWQ's core absolute return investment philosophy.

A robust investment process is employed with the aim of generating for investors attractive positive returns, irrespective of market direction, with a moderate risk of loss. However, investing involves risk, and you can lose as well as make money. Neither returns nor the money you invest in the Fund is guaranteed.

The Fund utilises a research driven, fund of fund approach to generate returns and is designed to complement traditional investments, such as stocks, bonds, and property, and form part of a diversified and balanced portfolio.

By adopting this approach, the Fund seeks to deliver consistent, positive returns irrespective of whether the equity market is rising or falling. It aims to deliver these returns with a lower level of volatility than the broader Australian stock market over the medium to long term. 

We believe that our approach of constructing a portfolio of carefully selected equity hedge fund managers is the most prudent way for investors to gain exposure to this asset class within a traditional investment portfolio. The Fund offers meaningful exposure to the returns generated by Australia's leading equity hedge fund managers combined with the benefits of holding a diversified portfolio of these managers, within a single investment.

How we invest your money

The Fund invests in an individually selected portfolio of Australian investment funds managed by some of Australia's outstanding fund managers which share NWQ's core investment philosophy of absolute return investing. Usually, there are between 8 and 12 underlying funds. The underlying funds use specialist, actively managed local and international - principally developed countries in the Asia-Pacific region - equities and fixed-income strategies, and can also give some exposure to cash.

NWQ chooses and actively manages the underlying fund mix with the goal of achieving the Fund's investment objectives. NWQ's investment process consists of a bottom-up, fundamental, underlying fund manager selection process aiming to choose the leading managers and the leading funds, combined with top-down, market aware portfolio analysis which drives the balance amongst the different underlying investment strategies.

Asset allocation

The Fund represents a multi-asset class portfolio. It invests in underlying funds which use specialist, actively managed local and international equities and fixed-income strategies, and can also give some exposure to cash.

There are 3 core allocations, the mix of which is actively managed by NWQ:

• Defensive / Cash & fixed income strategies (Cash, enhanced cash, fixed income): 0-70%

• Growth / Beta strategies (Long only equity, active equity extension, variable beta and REITs): 0-70%

• Hedge / Alpha strategies (Equity market neutral): 0-70%

Some cash may be held directly by the Fund but the intention is that the Fund will be fully invested.

The underlying fund managers have different styles and skills, some more traditional, others less traditional. Underlying fund managers will almost always invest directly in Australian equities and many will also invest in international equities. Many underlying fund managers will also use a range of sophisticated investment techniques such as derivatives and short selling with the goal of achieving the best investment results from their chosen strategy.

NWQ manages the mix of underlying funds so as to obtain a combination of investment strategies that NWQ believes will achieve the Fund's risk and return objectives.

The maximum target exposure to any one underlying fund is generally 15% of the net asset value of the Fund.

The target minimum number of individual managers is generally 8 separate funds.

Note that these targets can and will vary over time depending on factors including availability of managers that NWQ considers to be appropriate for investment together with NWQ's assessment of the underlying fund size, risks and returns.