In the business world, crises don't come much bigger than the scandal engulfing Australia's oldest bank, Westpac, over allegations it breached anti-money laundering laws 23 million times and may have financed child pornography and exploitation. Fund manager Nathan Parkin, who was formerly deputy head of equities at Perpetual and is now investment director at Ethical Partners, is not convinced the damage will just be in the short term. "The shocking nature of the allegations, and especially the exploitation element, does affect the brand long term and could affect the flow of business in mortgages and deposits," says Parkin, who has been reducing his fund's already underweight exposure to Westpac in the days since the crisis began.
Investors and proxy advisers ramped up pressure on Westpac’s embattled board on Monday, demanding answers, and further action on compliance failings and accountability for 23 million alleged breaches of the law. Ethical Partners Funds Management investment director Nathan Parkin said more accountability was required at Westpac as large fines would result from the Austrac action. “In the midst of cash (Austrac penalty) going out the door of shareholders’ funds ... who says that’s OK, let’s just go on?” Mr Parkin said. “The bank needs to show someone is accountable for the large fine and penalties that are likely to occur,” he added, noting accountability had to occur at a “high level”. Ethical Partners owns Westpac stock, but moved underweight on the shares in May, after paring its stake on concerns the bank had been “too slow to act” on its capital position and cutting its dividend. It has further reduced its Westpac position on the back of the legal allegations.
Westpac Banking Corp.’s board stood behind its management team on Friday, offering embattled chief executive Brian Hartzer some respite from mounting criticism over allegations of a breach of money-laundering laws, including failing to detect payments linked to child abuse. The “allegations clearly indicate there may have been a lack of attention to” human-rights issues “within the corporate culture of Westpac,” Ethical Partners Funds Management CEO Matt Nacard and Chief Investment Officer Nathan Parkin said in a statement. The fund has sold some of its Westpac shares since the allegations were aired, they said.
After a horror October so far, the Aussie sharemarket is the cheapest it’s been since 2015. The benchmark ASX 200 index is trading on a 12-month forward price-to-earnings ratio of 14.7 after starting the month at 16, according to JP Morgan. Nathan Parkin of Ethical Partners Funds Management is similarly inclined to see more opportunities than risks from the sell-down. The turmoil has “shaken people out of positions at the wrong price for them and at the right price for us” is how Parkin puts it. It’s not often that you get a chance to top up your positions across your portfolio at a good price, but now is one such time, he says. Parkin is not as gloomy about the housing market as many, and sees great value in building materials firm CSR and has added to his position in recent days.
Have you participated in the market's rotation and do you believe the slight re-rating of value will stick?
A very crowded momentum trade, including low volatility and high P/E growth stocks, shifted somewhat towards value and cyclical stocks during September. Our funds are heavily positioned in value stocks, cyclicals and small caps and have started to benefit from this shift. We think there are good grounds for this to continue. (For the other six questions click through to the full article)
Superannuation fund, Christian Super has announced the appointment of Ethical Partners Funds Management, an independent boutique with funds under management (FUM) of $1.6 billion, for its Australian equities mandate.
Ethical Partners Funds Management has launched the Ethical Partners Australian Share Fund, an ethical fund which will invest in 30 to 50 stocks on the S&P/ASX 300.
Dexus, Vicinity and Mirvac are three REIT operators taking the biggest steps to identify supply chain risks that are going to become an issue for large Australian companies when new federal and state anti-slavery legislation comes into effect next year, fund manager Ethical Partners says. Dexus, which has already has an embargo policy for suppliers that do not meet its modern slavery standards, Vicinity, which reviewed security contracts at its malls and changed some providers based on their employment practices, and Mirvac which is about to take a "deep dive" into its cleaning services supply chain, are the leading companies Ethical Partners chief executive Matt Nacard said.
Most sustainability reports fail to address matters of substance and provide information filled with positive optics but limited depth, according to the $1.5 billion Australian investment firm Ethical Partners. Ethical Partners published its annual ethical standards report last week, concluding that while transparency around sustainability issues is generally improving, it is of a "low standard" except for a handful of high achievers. The fund manager evaluated 214 stocks, of which 58 companies improved disclosure and 14 regressed. The 14 companies where reporting got worse were marked down on account of deteriorating worker safety or emissions, underpayment of employees and an absence of clear targets in relation to saving water, energy or waste, among other things.
It’s the ultimate feel-good investment, a fund that eschews tobacco, coal, alcohol, gambling, firearms and big pharma. Supporters say that these funds are making the world a better place but critics believe that environmental, social and corporate governance strategies are little more than the latest sophisticated money-making marketing tool. "To us it’s about buying everyday companies that do things well," says Ethical Partners Funds Management chief executive Matt Nacard.
Sitting in the "middle of nowhere" in Cambodia, surrounded by kids with few of the privileges enjoyed by the average Australian, tends to provide some perspective. "You get some clarity around what you want to do," says Matt Nacard, co-founder of Ethical Partners Funds Management. Accompanying Nacard on that school-building mission was Nathan Parkin, then a star stock picker and fund manager at investment powerhouse Perpetual. Accompanying Nacard on that school-building mission was Nathan Parkin, then a star stock picker and fund manager at investment powerhouse Perpetual. The two had first met professionally many years ago – Nacard is a former co-head of Asian equities at Macquarie. The duo became friends, then their families became close. In addition to their day jobs, both were heavily involved in philanthropic activities. Nacard was on Macquarie's Foundation Global Board, while Parkin and his family had raised money to build two child and maternity health centres in Cambodia.
Former Perpetual Investments rising star Nathan Parkin is making an ambitious return to local funds management, seeking to raise $3 billion for a new ethical investment fund. Street Talk understands Parkin, who left Perpetual abruptly in late 2016, has teamed up with former Macquarie Securities equities desk head Matthew Nacard to establish new boutique Ethical Partners Funds Management. Sources said the pair had set up office in Sydney's Pitt Street - not far from Parkin's old hunting ground at Angel Place - and were in the process of obtaining an Australian Financial Services Licence so they could start managing money.