Five reasons to consider BlueSky for the portfolio

Dean Fergie

Cyan Investment Management

 

1. Globally proven industry tailwinds – Australian investors (both institutional and retail) have been reluctant to venture far from the ‘traditional’ asset classes of listed equity, bonds, cash and property.  However as returns in these assets have become increasingly squeezed due, in the most part, to depressed interest rates, those looking to generate alpha have had no choice but to look ‘outside the box’ to alternative assets.   As such, domestic allocations to alternative assets have tripled to around 17% in the past decade,  yet this is still well below global allocations of 24%.

 

2. Impressive track-record – Both at a corporate level and fund level, BLA has provided outstanding results for its clients and shareholders.  BLA’s average annual return  across its stable of managed funds is in excess of 16% p.a.; the performance of the listed fund (BAF.ASX) is up over 9% p.a.; and the head stock (BLA.ASX) has risen more than 50% p.a. since listing.


3. Institutional growth – 2016 marked the first year in which BLA made meaningful inroads into the substantial institutional market, winning almost $800m in institutional mandates.  It is not unreasonable to expect this trend will continue, significantly accelerating BLA’s overall AUM.

 

 

4. Financial transparency – A major attraction of any funds management business is the relative ease in which to predict their financial outcomes.  With relatively straightforward management and performance fee models, stable staffing trajectories and, in BLA’s case, a high proportion (80%) of closed-end AUM, earnings predictability can be considered high.

 

5. Business scalability – last, but certainly not least, is the enormous scalability of any growing funds management business.  BLA has, in a global sense, a miniscule level of FUM; Blackstone, for example, has over $250bn of AUM.  Despite the modest level of AUM to date, BLA’s operating expense (as a % of AUM) has still managed to decline every year.  As BLA’s AUM grows, shareholders can reasonably expect that a growing proportion of these revenues will flow through to company profits and dividends.


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Director & Portfolio Manager
Cyan Investment Management

Dean has over 25 years experience in the funds management industry covering all major asset classes. He holds as Master of Applied Finance and is a Graduate of the Australian Institute of Company Directors.

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