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PRIVATE EQUITY | Cesar Tordesillas, Australia
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BNY Mellon to manage Australian equities for Russell

The Australian equities specialist for BNY Mellon has been named to manage an Australian equity mandate for Russell Investments. Ankura Capital’s mandate forms part of Russell Investments’ newly launched Australian Shares Enhanced Income Fund.

This is the second mandate Ankura has been awarded as part of its Australian Equity High Yield strategy. In May, IPAC awarded Ankura a high yield mandate within their new diversified High Yield fund, AXA Generator.

“This strategy has been developed to recognise both the increase in demand for income focused strategies, and as a response to the lower growth investment environment that is likely to prevail for some time,” said Greg Vaughan, CIO and Managing Director of Ankura Capital. “Particularly as investors move from wealth accumulation to retirement, income from equity investment becomes more important.”

According to Vaughan, the essence of this strategy is to focus on sustainable yield, including franking credits. “The preference for yield generally excludes resource stocks. It boils down to filtering the market on quality of yield, excluding those with deficient free cash flow or high leverage," he added.

In recent research undertaken by Ankura, investing for real income via such a strategy was shown over the medium term to lift income generation while maintaining income growth when used as a substitute for all or part of the Australian equity allocation of a diversified fund. Such an income focus can maintain a level of growth return that matches or beats inflation while at the same time paying consistent and reliable income streams to underlying investors.

 

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