Australia: MSCI Sydney

Ryan Hessenthaler and Tim Bradbury

My final meeting in Sydney was with Tim Bradbury at MSCI.  This meeting was made possible by Mike Gandy at MSCI in San Francisco and I’m sincerely grateful for Mike’s efforts to coordinate the meeting.

Tim and I immediately hit it off, despite the fact that our meeting was the only thing standing between him and his weekend from getting started.  As a general rule (and one that I’m a firm believer in), meetings simply shouldn’t be scheduled for 4pm or later on Friday afternoon because virtually everyone (scratch “virtually”)… everyone is ready to just be done with the week and catch their breath for the weekend.  Despite my strongly held “no late Friday meetings” beliefs, I broke my own rule and tried to squeeze in just one more visit before the weekend arrived.  In the true Aussie spirit of, “It’ll be right, mate,” Tim was gracious enough to accommodate my request.  I am certainly grateful he did so because of the insights I gained from our conversation.

Tim and I quickly learned that we have many things in common, not least of which was our strong belief that ETFs are an excellent tool to build portfolios and manage assets.  Tim spent over a decade with iShares prior to joining the MSCI team a few years ago.

Tim noted that there aren’t many ETF strategists (or firms that would describe themselves in such terms) in Australia at this point.  He noted that it’s a function of time… RIA-like firms will emerge and thrive in Australia, we’re still just a bit early in the cycle.  The current structure in Australia is more similar to the wire house model in the US – investment management operations are largely all tied in with the major banks.  Tim noted that given the unique investment climate in Australia, he believes it is fertile ground for independent firms who offer innovative investment options.  That sounded like a good description of what Lunt Capital does… so I am officially volunteering to open the first Lunt Capital Management office in Australia.

We continued our conversation about ETFs in Australia and Tim said there are about 120 ETFs listed in Australia so far, representing 6 different asset classes.  Tim described Australia’s size and stage in the ETF timeline as similar to Canada.  While still in the early phases, AUM in Australian ETFs has grown at 45-50% per year over the past 5-6 years.  ETFs in Australia have largely been quite “standard” to this point with the regulators only recently approving fixed income and factor-based products.

Super Fund assets came up and Tim re-enforced what others had said.  There is a lot of money searching for investments, a lot of opportunity for financial professionals to build a business catering to the self-managed crowd, and a lot of people clamoring to be involved in whatever capacity they can because of the stickiness and long-term nature of the assets.  Regulators are watching closely to ensure everything stays above board.  Tighter rules and regulations related to SMSF (self-managed super fund) are likely on the horizon to ensure everyday Australians are doing the best they can with their assets ear-marked for retirement.

Thanks again to Tim for his graciousness in taking a late Friday afternoon meeting.

 

Special thanks to Brennan Staheli, Devin Lindley, and the Lunt Capital team for their contributions to this report.