Australia’s Talaria Capital launches active ETFs

Jamie Mead, Talaria Capital

Jamie Mead, Chief Executive Officer of Australia’s Talaria Capital talks to ETF Express about his firm’s recent ETF launches.

Tell me about your firm?

Our purpose is to help people and communities enjoy a more certain financial future. Talaria Capital was founded over 16 years ago to provide investors with a greater level of certainty through global equity investing. Talaria Capital offers two active global equity funds with the same strategy (one is currency hedged) that invest in a diversified portfolio of 25-40 large cap global stocks with stable earnings and strong balance sheets. Our strategy is centred around being paid for taking market risk, that the investor journey is as important as the destination and that having a greater level of certainty with your investments is crucial. We believe this is a better way to manage money. 

Our unique process includes bottom-up research, a focus on company fundamentals and long-term value. Although we are a global equity fund, we enter our stock positions using put options, which acts as an insurance policy to increase certainty of returns, create a differentiated and high source of income and reduce volatility. Over the past decade, our Global Equity Fund has delivered high average income of nearly 9 per cent per annum.

Were these ETF launches effectively conversions of existing funds and if so, is that a first for Australia?
Yes, our recently launched ETFs give investors access to Talaria’s two actively managed funds, so they are not passive index funds as is most common with ETFs. Our active ETFs are about providing investors greater access to Talaria’s unique strategy so that more people can enjoy the high, consistent income and greater certainty our funds deliver.

With our active ETFs now listed, investors can trade via the listed or unlisted process in a dual access model. The active ETF versions deliver accessibility benefits such as visibility of live unit pricing, higher liquidity, and no minimum investment (previously it was AUD5,000). Since investors can now directly buy units using their online share trading app, it also results in less administration work than the unlisted versions.

In Australia, passive funds continue to dominate the ETF landscape, while active ETFs account for approximately 15 per cent of total funds under management. Despite passive ETFs accounting for most of the market, active ETFs are currently the fastest growing ETF product due to the access they provide to institutional investment strategies.

Tell me about the two new ETFs?

This month we were delighted to list our two successful global equity funds as active ETFs on the Chi-X Australia exchange. Following a period of growth and strong fund performance, the listings represent an exciting new chapter for us at Talaria.

The two active ETFs give investors access to Talaria’s global equity funds, Talaria Global Equity Fund (Managed Fund) and Talaria Global Equity Fund – Currency Hedged (Managed Fund). Both products listed last week on Australia’s Chi-X exchange as ticker codes TLRA and TLRH.

With funds under management of approximately AUD510 million, both funds offer unitholders exposure to a diversified portfolio of 25-40 large cap global equities in developed markets. Every asset in our portfolio is selected using a bottom-up research approach and held for the long-term, with the aim of generating a high, consistent income stream that protects and rewards through varying market conditions. The end result for investors is high, consistent returns exceeding an average of 10.8 per cent per-annum over the last decade.

What is the appetite like for ETFs in Australia – is it growing and who is buying them? Retail or institutional investors?

Like the rest of the world, investor appetite for ETFs in Australia has never been stronger. In August this year, Australia marked 20 years since its first ETF was launched in 2001. Since then, the Exchange Traded Product market has grown to over AUD117 billion, with more than 200 products available.
In recent years, ETFs have become especially popular in the portfolios of both Australian retail and sophisticated investors due to their ability to provide simple, widespread access to certain market segments or strategies. In Talaria’s case, our active ETFs offer the same exposure as our unlisted funds, but do not require a minimum investment. They also enable investors to trade units intra-day using their share trading app of choice, with higher liquidity and access to live unit pricing. Characteristics like these have made ETFs increasingly popular investment products.

What future plans do you have in the ETF arena?

Talaria is a global equity fund manager. While the team is currently based in Australia, we hail from the UK, mainland Europe, South Africa & Asia in addition to Australia. 

Consequently, as we continue to grow we will look to establish local presences across the world and it is likely we will re-visit the active ETF arena when doing so.

As always, our number one focus remains maintaining excellent fund performance and delivering high, consistent income with increased certainty and lower market risk.
 
Tell me about the Chi-X exchange – what is it and why did you choose it to list on?

Recently acquired by CBOE Global Markets, Chi-X Australia launched in 2011 and has captured ~20 per cent market share in Australia equities. Chi-X has become a recognised market leader for its ETF and Quoted Fund products and the go to exchange for funds looking to list. They also have particularly strong networks and relationships with the retail broking community among others. 

During our due diligence process and in discussions with the team at Chi-X, it became clear that they would be much more than an exchange to list our funds. It was clear that they considered this to be a partnership with us and our experience so far has demonstrated exactly that. We look forward to partnering with them well into the future. 

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