AUSTRALIA Series 1 - Accessing an Australian equity recovery

For those advisers familiar with Liontamer's range of capital protected funds*, AUSTRALIA Series 1 represents a slight departure. Typically, Liontamer focuses on the capital protection component, and this latest fund certainly has that aspect covered, but after spending some time talking to advisers it became apparent that there was significant pent up demand from clients for a recovery fund that offered a boosted exposure to the Australia market, hence the introduction of a new feature - Unprotected units.

First, why Australia?

In our experience, Kiwi investors tend to have a local bias to Australasian equities, either directly, or via a managed or exchange traded fund. Throughout the global credit contagion this has left many investors exposed to declining Aussie share prices; for example the benchmark S&P/ASX 200 Index has fallen around 40% since its high in November 2007¹.

AUSTRALIA Series 1 has been designed for advisers seeking to a) put a floor under any further Australian equity losses but who want to participate in any future gains, or b) have a positive outlook for the Australian sharemarket and who want a boosted exposure to any market recovery over the medium term.

Any pick-up in the Australian equity market is clearly dependent on the prospects for the Australian economy in
general. So how is Australia placed in the global scheme of things? Well, on the surface it looks to be doing it tough. The 2009 budget, titled "Nation building for the recovery", noted that the annual tax take is down, unemployment is rising, the economy is expected to stay flat in 2008/2009 and shrink 0.5% in 2009/2010 and debt levels are poised to escalate dramatically.