Fund Manager Commentary€¦ · dragged the DAX 30 lower by -3.8% to see it finish among the worst performers for major global share indices. The nearby FTSE 100 fared better; it

Fund Manager

Commentary

September 2016

Contents

Australian Shares 3

International Shares 10

Australian Fixed Income 15

International Fixed Income 15

Credit 18

Cash 20

Australian Property 23

International Property 25

Active Balanced 28

Performance as at 30 September 2016 30

Fund Manager Commentary – September 2016 3

Australian Shares

BT Wholesale Core Australian Share Fund

Market review

The S&P/ASX 300 Accumulation Index edged higher by 0.5% in September, following a relatively

range-bound August. Investor sentiment was rattled early in the month by a heavy bond market sell-off.

However, this was offset in the following weeks by supportive central bank activity, which also helped to

compensate for fears over the future of Germany’s largest lender, Deutsche Bank.

In the US, the Federal Reserve left rates on hold at its September gathering and comments from

Chairwoman Yellen had a dovish lean. This was in contrast to fairly hawkish statements from her

colleagues earlier in the month. Data-wise, the closely-watched Non-Farm Payrolls report missed the

consensus forecast with only 151,000 jobs added. Meanwhile, Core CPI beat expectations with a 0.2%

month-on-month increase. Other indicators were mixed with falls in services and manufacturing sector

activity surveys, but an increase in Consumer Confidence to its highest reading since August 2007.

Across the Atlantic, the ECB also left policy unchanged and its apparent absence of post-QE plans did

little to instil confidence in investors. Sentiment in the region was also damaged by concerns over a $14

billion fine against Deutsche Bank, which was compounded by Chancellor Merkel’s position that no

government aid would be offered. The ensuing drop in Deutsche’s stock price to a new record low

dragged the DAX 30 lower by -3.8% to see it finish among the worst performers for major global share

indices. The nearby FTSE 100 fared better; it left ‘Brexit’ fears in the rear view mirror with an impressive

1.7% gain, which took it to a new record high (on a total return basis).

Turning to Asia, the Bank of Japan seemingly impressed markets with its new yield targeting policy

aimed at containing 10 year JGB yields near 0%. However, a monthly inflation reading stuck in

deflationary territory at 0.5% was less impressive. Meanwhile in neighbouring China, a string of upbeat

data prints helped stoke strong gains for commodity prices, including an astounding 57% increase in

coking coal.

At home, Glenn Stevens maintained a cash rate of 1.5% with few changes to his statement at his final

meeting as Governor of the RBA. Labour data was mixed with a loss in total jobs, but increase in full-

time positions and drop in the unemployment rate to 5.6%. Q2 GDP also crossed the wires during the

month with a 3.3% expansion in the economy year-on-year – the fastest pace in four years.

In terms of sector performance, the Materials area (+5.7%) was the standout, driven by a recovery in

prices of key commodity exports for the miners. Financials also outperformed with a more modest

increase of +0.6% as concerns over headwinds facing the major banks abated. At the other end of the


spectrum, REITs (-4.3%), Telcos (-4.0%) and Utilities (-3.2%) were the worst performers. This was likely

attributable to their rate-sensitive constituents suffering with the rise in bond yields.

At a more stock specific level, in the wake of another busy reporting season, there were several

noteworthy highlights. In the suffering Energy space, Woodside Petroleum agreed to acquire 50% of

BHP’s Scarborough Area Assets. Other major deals included JB Hi Fi’s takeover of rival retailer The

Good Guys as well as acquisitions by IRESS and Covermore.

Portfolio performance

The BT Wholesale Core Australian Share Fund returned 0.35% (post-fee, pre-tax) in September 2016,

underperforming its benchmark by 0.16%.

Contributors

Rio Tinto, RIO, OW, +8.4%

Shares in Rio Tinto (+8.4%) enjoyed a strong bounce-back during the second half of the month, more

than recouping the losses suffered in August. The likely catalyst behind the gain was the healthy price

increase for its key commodity exports. Its announcement of another debt reduction program valued at

US$3 billion was also received positively by investors. Management cited improved liquidity and market

conditions as reasons behind the decision which will bring total debt reduction for the year to US$9

billion. We believe management’s balance sheet management and successful cost reduction measures

have placed the miner in a more competitive position than rival BHP. We also like its purer leverage to

the rebound in iron ore prices and more attractive valuation.

Scentre Group, SCG, OW, -5.4%

Scentre Group’s (-5.4%) share price decline accelerated during September before clawing back a

portion of its losses at the end of the month. The tumble took place alongside a pullback for the broader

REITs space and other rate-sensitives due to a rise in bond yields. Company developments were

limited with the major highlight being the unveiling of a $1 billion development pipeline. However, we

believe its current plans are heavily skewed to Perth with projects expected in Carousel, Innaloo,

Whitford City and Mandurah. In the absence of more attractive and diversified growth prospects we

prefer to remain underweight the REIT.

ANZ, ANZ, OW, +2.7%

Shares in ANZ (+2.7%) continued their recovery and ended the month higher despite a brief mid-month

dip. Investor sentiment towards the major banks has become more constructive in recent months as

concerns over capital adequacy, a housing bust and intense mortgage competition ameliorate. As these

hurdles are cleared we see further upside for the sector, which is at a multi-decade valuations discount


to industrials. Within the area, ANZ is particularly attractive based partly on the turnaround measures

already undertaken and potential for continued cost-outs.

Detractors

South 32, S32, UW, +26.3%

A continued rebound in prices of its key commodity exports helped South 32 (+26.3%) maintain its

upward trajectory in September. This included nickel prices, which benefited from speculation over

further mine closures in the Philippines, which accounts for roughly half of the metal’s global production.

The impressive 57.0% increase in the price of coking coal also offered an updraft for the stock. We

recognise these developments have improved the outlook for the miner, however valuations remain

more attractive for rivals like Rio Tinto (RIO).

Amcor, AMC, OW, -3.6%

Shares in packaging giant, Amcor (-3.6%), erased their post-earnings result gains during the month.

The global plastics producer announced the acquisition of North American blow moulding operations

from Sonoco. As part of the US$280 million deal the company will take over seven manufacturing plants

that produce food and beverage containers. This in turn will allow AMC to continue its expansion in the

region which management believes has attractive growth prospects. Looking forward, we believe its

stable earnings growth from both organic and acquisition opportunities will help the stock outperform.

GPT Group, GPT, OW, -5.1%

GPT (-5.1%) shares finished the month lower with a bounce-back at month’s end unable to push it into

positive territory. The property group was dragged lower alongside its peers in the REITs space as

bond yields tracked higher. In terms of company-specific news flow, management unveiled a $2.1 billion

plan to develop its shopping mall portfolio. This included an expansion of its flagship Highpoint

Shopping Centre in Melbourne’s West, which underwent a $300 million redevelopment in 2013. It also

increased its interest in the GPT Wholesale Shopping Centre Fund by $157 million, bringing its share

up to 25.3% from 20.2%. Going forward, we acknowledge the risks posed by a continued run up in

bond yields, however we believe GPT will outperform its REITs peers thanks in part to its strong retail

and office portfolio.

Strategy & Outlook

The defining feature of the Australian share market right now is the possibility we are seeing a shift in

performance leadership. The defensive bond-sensitives which have done well for several years - and

then surged again over the year-to-date – have been underperforming over the past two months. The

macro theme supporting their re-rating – persistently declining bond yields – may have reached its nadir

as signs emerge that central banks are re-thinking their flirtation with negative yields and are instead

turning to fiscal policy as the engine for further growth. While yields may not rise much from here, the


lack of any further compression removes a degree of support for highly-valued defensives and at the

moment the momentum in that trade is waning.

At the same time, the recent reporting season demonstrated that the market is demanding more from

some previously-loved high growth stocks, several of which have underperformed after disappointing

the market. Meanwhile some previously unloved stocks which were able to demonstrate some

resilience or signs of a turnaround have done relatively well. Crucially, the stock price reaction may be

exacerbated by the historically extreme divergence in valuations between the cheapest and most

expensive stocks.

In short, it is a good environment for our strategy. As the thematic effect on markets wanes, stock-

specific factors come to the fore. Some companies are well set to navigate what remains a challenging

economic environment – others face more challenges, either due to the nature of their industry or the

strategy employed by management. This plays to our strengths of a large team of analysts with deep

insight into industry dynamics and corporate management and strategy.


Australian Shares

BT Wholesale Smaller Companies Fund

Market review



However, this was offset in the following weeks by supportive central bank activity, which also helped to

compensate for fears over the future of Germany’s largest lender, Deutsche Bank.

In the US, the Federal Reserve left rates on hold at its September gathering and comments from

Chairwoman Yellen had a dovish lean. This was in contrast to fairly hawkish statements from her

colleagues earlier in the month. Data-wise, the closely-watched Non-Farm Payrolls report missed the

consensus forecast with only 151,000 jobs added. Meanwhile, Core CPI beat expectations with a 0.2%

month-on-month increase. Other indicators were mixed with falls in services and manufacturing sector

activity surveys, but an increase in Consumer Confidence to its highest reading since August 2007.

Across the Atlantic, the ECB also left policy unchanged and its apparent absence of post-QE plans did

little to instil confidence in investors. Sentiment in the region was also damaged by concerns over a $14

billion fine against Deutsche Bank, which was compounded by Chancellor Merkel’s position that no

government aid would be offered. The ensuing drop in Deutsche’s stock price to a new record low

dragged the DAX 30 lower by -3.8% to see it finish among the worst performers for major global share

indices. The nearby FTSE 100 fared better; it left ‘Brexit’ fears in the rear view mirror with an impressive

1.7% gain, which took it to a new record high (on a total return basis).

Turning to Asia, the Bank of Japan seemingly impressed markets with its new yield targeting policy

aimed at containing 10 year JGB yields near 0%. However, a monthly inflation reading stuck in

deflationary territory at 0.5% was less impressive. Meanwhile in neighbouring China, a string of upbeat

data prints helped stoke strong gains for commodity prices, including an astounding 57% increase in

coking coal.

At home, Glenn Stevens maintained a cash rate of 1.5% with few changes to his statement at his final

meeting as Governor of the RBA. Labour data was mixed with a loss in total jobs, but increase in full-

time positions and drop in the unemployment rate to 5.6%. Q2 GDP also crossed the wires during the

month with a 3.3% expansion in the economy year-on-year – the fastest pace in four years.


The BT Wholesale Smaller Companies Fund returned 0.69% (post-fee, pre-tax) in September 2016,

underperforming the S&P/ASX Small Ordinaries Accumulation Index by 0.84%


Contributors

Northern Star Resources (NST) (Overweight)

Gold miners continued their strong run in September. While most gold miners in Australia are now

reasonably lean and reducing debt at a rapid rate given strong cash flow, the gold price remains the key

driver of stocks from this point – and that, in turn, ultimately relies on geopolitical and macroeconomic

themes. In September, it was supported for most of the month by weaker than expected US economic

data, increasing doubt around the Fed’s ability to raise rates. That said, Chair Yellen’s affirmation late in

the month that the US remains on course for a hike before Christmas saw the price come off again. We

retain gold exposure, but are underweight in aggregate, given the already strong run enjoyed by gold

stocks and the balance of probabilities lying against the Fed cutting rates further in the near term.

Macquarie Atlas (MQA) (Underweight)

The key feature of the market since reporting season has been the underperformance of the defensive

bond-sensitives in the REIT, utility and infrastructure sectors, including Macquarie Atlas, which operates

toll roads. This is the combination of two elements: a sense that bond yields are unlikely to fall further,

even if they cannot rise that much, coupled with historically extreme valuation ratings reached by many

bond-sensitives as investors hid in them. Macquarie Atlas had not reached the same rating as several

of its peers, but nevertheless has been under pressure in recent weeks. This has been exacerbated by

Macquarie Group selling down part of its stake.

Detractors

Synlait Milk (SML.NZ) (Overweight)

New Zealand-based diary producer Synlait Milk announced that its annual profit had tripled in FY16,

based on a large increase in infant formula sales. However, it gave back some of the strong gains that it

has made over the last year as it announced a significant rights issue in order to help fund expansion

plans, including a second production site in order to diversify its risk.

Programmed Maintenance Services (PRG) (Overweight)

PRG is Australia's largest workforce business and put out an unexpected 18% earnings downgrade to

its FY17 forecast. It's June and July workforce hours in some of its FMCG and manufacturing

customers were down, when they were expected to be up in those months. We believe that the

weakness has stabilised in September. We are still strong supporters of PRG. It is a 50+ year old

business and has survived many business cycles. It is cheap on a sub 10x earnings multiple, with

strong cashflow, reducing debt levels and a strong dividend yield.


Strategy & Outlook

Small caps outperformed the large end of the market in September, led by energy stocks and gold

miners as they continued to benefit from strong leverage to improved product prices. The portfolio rose

over the month, but lagged the index. Several stocks which have dragged in recent months bounced

back, including Mantra Group and Village Roadshow, while the exposure to gold miner Northern Star

Resources was also beneficial. However, this was offset by underperformance from a few of the

portfolio’s core positions, including Programmed Maintenance Services and Synlait Milk.

The small cap sector is at an interesting juncture following a year of strong outperformance – and one

that demands a very stock-specific approach to the market. The premium placed upon growth stocks, in

an otherwise low-growth environment, has driven some stocks to the point where it is increasingly

difficult to justify quite heady valuation ratings. This was demonstrated in the most recent reporting

season where several high-profile and previously loved stocks fell dramatically after disappointing

investor expectations. When coupled with a correction in defensive bond-sensitive stocks, also from

high valuations in many instances, it leaves some pockets of small cap land looking very vulnerable.

They key is to identify those areas which combine a decent outlook with a reasonable valuation.

As we see signs that the momentum in bond-sensitives may be waning – given central banks seem to

be backing away from their flirtation with negative yields – the resource trade remains the key macro-

thematic in the small cap sector. While Chinese policy remains supportive, key commodity prices are

unlikely to collapse, allowing highly-leveraged small cap miners to churn out decent cash flow and

repair balance sheets. The key question is how long Chinese policy remains supportive – for once that

strut disappears the supply and demand fundamentals underpinning iron ore and several other

commodities could potentially normalise, placing downward pressure on prices.

For this reason, we are not chasing resource stocks from this point. As always, we have positioned the

portfolio to benefit from those areas where we have greater degrees of visibility and conviction in

outcomes. There are attractive stocks and pockets in the small cap market at the moment. We like

companies such as Bapcor, which is driving growth through consolidation in the auto parts industry. We

also like Technology One, which is a great example of an Australian company establishing a global

presence via a niche technology platform.


International Shares

BT Concentrated Global Share Fund

Market review

Commencing our tour of global markets in the US, the Federal Reserve left rates on hold at its

September gathering with the spotlight on the quarterly post-meeting press conference. When

questioned on the outlook for rates, Chairwoman Yellen delivered surprisingly dovish comments, which

in turn weighed on the US Dollar. Her responses also stood in contrast to relatively hawkish remarks

from her FOMC colleagues earlier in the month.

Data-wise, the closely-watched monthly Non-Farm Payrolls report printed at 151,000, missing the

consensus forecast. Meanwhile, Core CPI beat expectations with a 0.2% rise, driven by the greatest

monthly increase in medical expenses in over 30 years. Other indicators were mixed with falls in

services and manufacturing sector activity and retail sales, but an increase in Consumer Confidence to

its highest reading since August 2007.

Across the Atlantic, the ECB left rates unchanged as expected. However, the apparent absence of a

plan post the scheduled end of their quantitative easing programme left investors lacking confidence.

Eurozone economic data did little to reinvigorate their spirits with a disappointing Composite PMI

reading and static unemployment rate print of 10.1%. Concerns in the region were also fanned by

demands of the US Department of Justice on Deutsche Bank for payment of a US$14 billion fine. These

were furthered by Chancellor Merkel indicating that the German government would not provide the

troubled financial institution with state aid. An ensuing fall to new record lows for Deutsche’s stock price

dragged the DAX 30 lower by -3.8%, leaving it among the worst performing global indices in

September. The nearby FTSE 100 fared better; it left ‘Brexit’ fears in the rear view mirror with an

impressive 1.7% gain, which took it to a new record high (on a total return basis).

Continuing to Asia, the Bank of Japan was at the centre of intense policy speculation in the lead-up to

its September meeting. Governor Kuroda and company surprised the market by unveiling a new yield

targeting measure aimed at containing 10 year Japanese Government Bond yields near 0%. This came

alongside a firm commitment to achieving its 2% inflation target. Figures released later in the month

revealed the disparity between its objective and reality with core CPI stuck in deflationary territory at -

0.5% year-on-year.

Meanwhile, the majority of major data releases surpassed expectations in neighbouring China. An

encouraging month of economic prints from the world’s largest commodities consumer helped support

strong performances from the base metals and an astounding 57% rise in coking coal prices. Iron ore

bucked the trend and slipped 5.3%, which was attributable to a seasonal slowdown. Also in the

commodities space, gold was confined to relatively wide trading band but managed to finish the month

higher by a modest 0.5%.



The BT Concentrated Global Share Fund returned -1.96% (post fee, pre tax) in September 2016,

underperforming its benchmark by 0.64%

The performance of the Fund was impacted by our 11% position in domestic regional banking

franchises (Wells Fargo & Lloyds Banking group representing the vast majority of this exposure)

following the decision by the US Federal Reserve not to raise interest rates in September.

Our 7% positions each in integrated resorts and beverage companies exposure contributed positively to

the fund during the month.

Las Vegas Sands (an integrated casino operator with assets in the USA, Singapore and Macau) rallied

15% on positive gross gaming revenue (GGR) in Macau, and the opening of their $2.9 billion Parisian

integrated resort in Macau. While it is pleasing to see positive momentum in GGR data out of Macau,

our positive view on Las Vegas Sands is predicated less on short-term monthly changes in GGR data,

and more about the strategic position that Las Vegas Sands has in Macau. With five casinos and $22

billion of infrastructure coming on stream over the next four years that will allow mainland Chinese to

enter Macau directly, Las Vegas Sands is uniquely positioned to take advantage of the future influx of

mainland tourists. Las Vegas Sands is ex capital expenditure following the Parisian completion; the

business has little debt and currently is paying a dividend yield of approximately 5% per annum.

Anheuser Busch Inbev (ABI) performed well following the SAB Miller shareholders vote in favour of the

proposed acquisition by ABI in September. While this was something we expected, recent volatility in

the stock has reflected the market’s uncertainty regarding the outcome of the transaction. With the

transaction now all but complete, the focus of the market has reverted back to the combined company

and the significant earnings accretion this deal brings to ABI. The combined company will produce

approximately 30% of global beer industry volumes and represent 50% of the global beer industry profit

pool. ABI’s EBIT margins are 31.5% and the increased scale resulting from this deal should result in

further pricing power. In our view this will sustain healthy revenue and the expansion of margins over

time. ABI have a demonstrated history of cost control, we view the 1.4 billion euro cost savings

guidance as a result of the transaction as conservative.

Wells Fargo fell 13% this month following their announcement of a $185 million settlement with the

office of the LA City Attorney related to allegations of aggressive sales practices, including employees

opening fake deposit and credit card accounts in order to meet internal sales targets. Analysis carried

out by Wells Fargo by PwC found roughly 1.5 million deposit accounts and 565,000 credit cards may

not have been authorised by clients and the fees incurred totalled $2.6 million. The fees incurred by

these actions were immaterial to Wells Fargo and represented less than 0.003% of total company

revenue, but the market fears the reputational risk to the franchise due to these actions. Wells Fargo

has taken steps to address the issue including terminations over the last five years of managers and

employees, as well as changes to the sales practices and training. John Stumpf (CEO of Wells)


attended congressional hearings to explain the situation and also forfeited $41 million in stock based

compensation. We find the valuation for Wells compelling following this fall and have added to our

position. Wells Fargo valuation stands at 11x 2016 Price to Earnings and a Price to Book value near 1x.

For a business that in 2015 had a Return on Tangible Equity of 15.4% and a 2015 Core Tier One ratio

of 11%, it looks undervalued, while paying out free cash flow back to shareholders of 7% per annum via

dividends and buy backs.

Bolsa Mexicana de Valores SA (Mexican incumbent stock and derivatives exchange) fell 10% this

month as it reported lower than expected monthly volumes in its cash equity business (+2% month on

month, -1% year on year) and weaker derivative volumes (-14% month on month and up 1% year on

year). With a lack of new equity listings in the short term, near term earnings may also come under

pressure. We continue to hold Bolsa shares, as it currently has a monopoly position in Mexico, with high

returns on assets (2015 at 247%), net margins at 34% and net cash on its balance sheet. It is possible

that in the future another exchange could enter the market disrupting this return profile, however this

risk is mitigated somewhat due to the regulatory environment. With the current volumes being

depressed cyclically due to a weak Latin American economy, over time we expect these volumes to

normalise and we are currently being paid a 4% dividend yield to wait for this normalisation.

Strategy & Outlook

While we are cognisant of the market risks posed by global central bank decisions and the upcoming

US and Italian elections, we are confident the companies we own are in a good position to weather any

impending macro storm by virtue of their strong balance sheets and dominant market share positions.

Our five year investment time horizon allows us to focus on finding companies to invest in that are

strategically positioned to grow and prosper over time, as the global economy and interest rate cycle

normalises.

Looking forward we believe we are entering a stage in equity markets that is best suited to stock picking

rather than broader market exposure.



BT Wholesale Core Global Share Fund, managed by AQR

Market review






Data-wise, the closely-watched monthly Non-Farm Payrolls report printed at 151,000, missing the

consensus forecast. Meanwhile, Core CPI beat expectations with a 0.2% rise, driven by the greatest

monthly increase in medical expenses in over 30 years. Other indicators were mixed with falls in

services and manufacturing sector activity and retail sales, but an increase in Consumer Confidence to

its highest reading since August 2007.
















0.5% year-on-year.









The BT Wholesale Core Global Share Fund returned -0.76% (post-fee, pre-tax) in September 2016,

outperforming its benchmark by 0.56%.

The Fund outperformed its benchmark over September 2016 with positive contributions from each of

the North American, European and developed Asian regions.

In terms of notable thematic performance drivers, the outperformance in North America was driven by

the strong performance of indirect and direct momentum signals, outweighing weakness in relative

value measures. In Europe, positive results were most notably due to strength in investor sentiment and

indirect momentum signals, offset somewhat by negative results to industry-momentum and business

quality measures. In Japan, relative value measures were the strongest performers over the month,

while business quality and investor sentiment themes detracted somewhat.

Active industry/sector tilts were a minor positive over the month, led by positive contributions from an

underweight to Financials and overweight to Information Technology. The only material detractor was

the underweight to Energy, which outperformed the broader market over the month. The majority of

outperformance over the month was attributable to stock selection within sector groups; most notably

within Industrials and Materials, while stock selection within the Energy sector detracted somewhat.

At a stock level, strongest positive contributions came from: an underweight position in Johnson

Controls, an American multinational conglomerate producing automotive parts and HVAC systems; an

overweight position in Hewlett Packard, a US headquartered multinational information technology

company; and an overweight position in Osram Licht, a German multinational lighting manufacturer.

Largest detractors were overweight positions in: E. ON, a German headquartered public utility holding

company, operating a portfolio of energy plants across Europe; McKesson, an American

pharmaceuticals retailer and health care services provider; and Tyson Foods, a US headquartered

multinational operating in the food industry.

Strategy & Outlook

Entering October, the largest active sector positions are overweights to Information Technology and

Utilities and underweights to Financials and Energy. Relative to long-term allocations, we remain mildly

tilted towards higher quality companies with positive momentum and away from cheaper industry peers

in Europe, while mildly tilted towards relative value considerations in Japan and the US.


Australian Fixed Income

BT Wholesale Fixed Interest Fund

Market review

During the month Australian three-year bond yields rose by 11 basis points to 1.48% from 1.37% and

ten-year bond yields rose by 8 basis points to 1.94% from 1.86%, with the 3-10s yield curve flattening to

46 basis points. The Reserve Bank of Australia left the cash rate unchanged at 1.5% at its September

meeting. In its statement the Reserve Bank noted that economic growth in Australia is continuing

despite the very large decline in business investment. Low interest rates have been supporting

domestic demand and the lower exchange rate since 2013 is assisting the export sector. The Reserve

Bank is comfortable with the housing market, noting that more cautious lending and the increased

supply should result in slower price appreciation. Inflation remains quite low and is expected to remain

the case for some time, given subdued labour costs domestically and low cost pressures globally.

Second quarter gross domestic product was slightly weaker than expected and resulted in an annual

growth rate of 3.3%. The labour market continues to be mixed with a falling unemployment rate but

much weaker full time employment relative to part time employment. Credit growth is slowing and

investor housing credit growth has slowed to 4.6% while credit growth to business slowed to 5.7%.


The BT Wholesale Fixed Interest Fund returned -0.31% in September 2016 (post-fees, pre-tax),


The Portfolio underperformed its benchmark in September. The Alpha overlay underperformed with FX

and Yield Curve strategies being the main detractors. Duration and Cross-Market strategies added to

performance and the Macro strategy was flat. The Government bond component underperformed its

benchmark. Losses in the Duration strategy offset gains in the Cross-Market strategy. The Credit

component outperformed its benchmark with positive contributions coming from excess accrual and

long exposures to Domestic Bank subordinate paper, Infrastructure, Utilities and Real Estate.

Strategy & Outlook

The Reserve Bank left the cash rate unchanged at its October meeting and had a neutral bias to the

statement. The next key data release that will shape monetary policy expectations is the third quarter

inflation, released in late October. Non-inflation related data has been solid enough not to warrant

monetary policy easing: inflation data, particularly first quarter, had just been too weak for the Reserve

Bank to ignore.


International Fixed Income

BT Wholesale Global Fixed Interest Fund

Market review

In offshore events, Central Bank meetings were the main focus in the month of September. The Federal

Reserve kept rates unchanged and indicated that rate hikes were likely to occur prior to the end of the

year. Three members dissented from the decision, preferring to raise rates by 25 basis points at the

meeting. The statement highlighted that risks to the economic outlook appear roughly balanced and the

case for hiking has strengthened, but they decided to wait for further evidence of continued progress

towards its objectives. The European Central Bank disappointed the market. It refrained from

announcing further policy accommodation and Mario Draghi refused to discuss other options such as

changes to the capital key, extension of the QE program or a widening of the scope of asset purchases.

The Bank of Japan announced that it is adopting Quantitative and Qualitative Monetary Easing (QQE)

with yield curve control, with CPI inflation aimed at 2%. Over the month, US and UK bond yields rose by

1 and 10 basis points respectively. Japanese bond yields fell by 3 basis points. Australian bond yields

underperformed US yields with the spread widening by 7 basis points. The Australian Dollar

appreciated over the month with the trade weighted index rising by 1.11%. Equities recovered from a

mid-month dip and commodities rallied over the month.


The BT Wholesale Global Fixed Interest Fund returned 0.06% in September 2016 (post-fees, pre-tax),


Over the month the Duration and Cross-Market strategies added to performance while the FX and Yield

Curve strategies detracted and the Macro strategy was flat. In the Duration strategy we added to long

duration positions in the Australian, US and New Zealand markets which benefitted from the rally into

month-end. The Cross-market strategy performed strongly over the month with all trades adding to

performance. The majority of gains were from the long Australian vs short US in the long end of each

curve and our long New Zealand vs short Australian position in the front end. Losses in FX strategy

were from long USD positions against JPY and ZAR, both of which were stopped out in the month.

Losses in the Yield Curve strategy were mainly from USD curve positions which were closed out during

the month.

Strategy & Outlook

The Bank of Japan’s new iteration of extraordinary monetary policy to control the yield curve is

inconsistent to its quantitative easing goals. In the case of lower inflation, its zero interest rate policy will

be undermined as real interest rates rise. Globally there is no lack of catalysts that could see risk


aversion increase quickly. The US election is due to be held in early November. The Italian referendum,

due to be held in early December, and the state of the Italian banking system are key concerns in

Europe and likely to result in financial market volatility increasing later in the year. In the US, the market

currently has the Federal Reserve as more likely than not to raise rates further by the end of the year.

Emerging markets have been the beneficiaries of capital inflows as yield starved investors look to credit

markets and emerging markets to generate additional return. A mass unwind of these positions will see

risk aversion rise quickly.


Credit

BT Wholesale Enhanced Credit Fund

Market review

Domestic cash credit spreads tightened during September. During the month credit ground in on the

back of continued demand for yield and limited secondary market supply. Resource prices remained

stable. Negative headline news from China waned as economic data globally was mixed. Domestically

the data remained tepid.

During the month there was relatively limited new market issuance of domestic corporate credit whilst

intermediaries held limited inventory. This resulted in new primary issues such as Qantas performing

well as investors sought good quality corporate credits.

During the month the US experienced continued mixed economic data whilst investors appeared to

favour higher quality issuers in the face of the imminent US federal election in November. Total

investment grade issuance was $168 billion, a 24% increase from August and 85% increase from

September of 2015.

During September commodity pricing continued to remain relatively stable. Brent oil increased from

US$47 to US$49/barrel. Metallurgical coal pricing has been stable as supply from coal mines in China

has decreased due to flooding and lack of cost competitiveness. Iron ore, whilst weakening slightly,

continued to remain above US$55/tonne.

Mid-month concerns arose over a reported US$14 billion DOJ fine discussed with Deutsche Bank AG

for its role in RMBS selling during the GFC. Given the bank’s comparatively weaker capital and modest

buffer on its ability to pay coupon on its AT1 securities, the market reacted negatively with the bank’s

CDS widening 60 basis points to 255 basis points.

During the month the better performing sectors were infrastructure and domestic banks. In

infrastructure it was the higher yielding issuers such as Qantas and Perth Airport that performed the

strongest. The best performing domestic bank was Bank of Queensland.

The Australian iTraxx and US CDX tightened by 7basis points and 4 basis points, respectively. EU Main

remained unchanged.


The BT Wholesale Enhanced Credit Fund returned 0.03% in September 2016 (post-fees, pre-tax),

outperforming the benchmark by 0.02%.


The Fund outperformed the benchmark in the month of September. Performance from credit was strong

during the month. Positive performance was experienced from long infrastructure, utilities and bank

paper. Performance was positive from being short in supra-nationals.

Activity over the month involved participating in primary issuance of NAB subordinate paper whilst

picking up further Asciano paper in the secondary market.

Strategy & Outlook

Our macro credit view remains neutral. There continues to be near-term headwinds as risk markets

continue to perform but exhibit low liquidity increasing the risk of future volatility. Commodity demand

and pricing uncertainty and potential central bank actions represent risks to the downside in the latter

part of calendar 2016. We believe this will continue to make a volatile and uncertain mix in the near

term.

Whilst we maintain a more sanguine longer term view we believe near term volatility could be

encountered and be injurious to credit performance. Risk markets will continue to suffer from

uncertainty and unexpected consequences from events such as Brexit. In addition, continued

commodity price fragility, and shifting expectations on central bank interventions will feed volatility.

Whilst the global growth pulse is waning we continue to be constructive on global growth underpinning

corporate creditworthiness as companies focus on margins with soft top-line conditions. We remain

positive longer-term here.

With near term top-line revenue softness management are at risk of looking to purchase growth through

M&A. Further, companies might consider strategy changes if they are challenged in the current slow

environment. We will continue to maintain a watching brief on any developments.

Accordingly, whilst the near term market tone is weaker we remain cautious albeit positive in our longer

outlook. Domestically we see growth largely dependent on commodity price stability and housing and

we continue to recommend a defensive approach that is flat with any overweights in operationally

resilient sectors such as utilities and infrastructure that provide a higher yield to index returns as we

don’t foresee continued strong compression of spread to swap as experienced in the prior years.


Cash

BT Wholesale Managed Cash and BT Wholesale Enhanced Cash Funds

Market review

The Reserve Bank of Australia left the cash rate unchanged at 1.5% at its September meeting. In its

statement the Reserve Bank noted that economic growth in Australia is continuing despite the very

large decline in business investment. Low interest rates have been supporting domestic demand and

the lower exchange rate since 2013 is assisting the export sector. The Reserve Bank is comfortable

with the housing market, noting factors such as more cautious lending, supervisory measures that have

strengthened lending standards and the increase in apartment supply should result in slowing price

appreciation. Inflation remains quite low and is expected to remain the case for some time, given

subdued labour costs domestically and low cost pressures globally.

Second quarter gross domestic product, released after the Reserve Bank meeting, was slightly weaker

than expected at 0.5% and resulted in an annual growth rate of 3.3%. Components within the number

showed net trade contracting during the quarter (-0.2%), contributing 2.2% to growth over the past year.

Domestic demand remains weighed down by the fall in mining investment, adding 0.6% to the quarter

and 1.2% for the year.

Labour continues to be a mixed bag. The unemployment rate fell from 5.7% to 5.6% in August, however

employment fell by 3,900 jobs in the month. Full time employment has now fallen by 51,300 jobs in

2016, with part time employment rising by 118,200 jobs.

Private credit growth data will have provided some relief, and disappointment, for the Reserve Bank.

Annual credit growth increased by 5.8% and investor housing credit growth has fallen from a peak of

10.8% in early 2015 to 4.6% most recently. However, credit growth to business is also slowing, peaking

at 7.3% in April and now falling to 5.7%.

In offshore events, Central Bank meetings were the main focus in the month of September.

The Federal Reserve indicated rate hikes were likely to occur prior to the end of the year. Three

members dissented from the decision, preferring to raise rates by 25 basis points at the meeting. The

statement from the Federal Reserve noted risks to the economic outlook appear roughly balanced and

the case for hiking has strengthened, but decided to wait for further evidence of continued progress

towards its objectives. Three members also found no further rate hikes this year to be appropriate. The

committee is more split now than it has been for a long time.

Expectations for further monetary policy stimulus from the European Central Bank (ECB) were low, and

the market was still disappointed. The ECB refrained from announcing further policy accommodation,

which was not unexpected, however it was ECB president Mario Draghi refusing to discuss other


options such as changes to the capital key, extension of the QE program or a widening of the assets

that could be purchased that underwhelmed the market. Draghi emphasized the need for fiscal and

regulatory authorities to support economic growth. There is a limit to what monetary policy can achieve!

There is also the damage that negative interest rate policy is inflicting on the financial and insurance

sectors.

The Bank of Japan announced it is adopting Quantitative and Qualitative Monetary Easing (QQE) with

yield curve control. The Bank of Japan will continue to expand the monetary base until CPI inflation

exceeds 2%. The Bank of Japan abandoned the guideline for the average remaining maturity for its

purchases and will adjust purchases of 10 year Japanese Government Bond purchases so the yield

remains around 0%.

Australian three and ten year bond yields ended the month higher in yield, rising by 11 and 8 basis

points respectively to 1.48% and 1.94%. Three month bank bills were unchanged at 1.74% and the

Australian dollar and Trade Weighted Index ended 1.9% and 1.1% higher at 0.7663 and 63.9

respectively.


Managed Cash

The BT Wholesale Managed Cash Fund returned 0.16% in September 2016 (post-fee, pre-tax),


The Fund returned 17 basis points, outperforming its benchmark by 3 basis points for the month and 22

basis points for the year. With a higher running yield than the index the Fund remains well positioned to

outperform. Themes and credit exposure remain consistent with prior months, with excess spread from

A-1 rated issuers likely to be the main driver of outperformance. The Fund ended the month with a

weighted average maturity of 69 days (maximum limit of 70 days). Yields further out the curve continue

to offer better relative value and the weighted average maturity has consistently been longer than

benchmark due to this. With longer dated yields offering better value and with Reserve Bank monetary

policy tightening a distant prospect we will remain longer than benchmark. The Fund is well positioned

to continue to outperform its benchmark.

Enhanced Cash

The BT Wholesale Enhanced Cash Fund returned 0.26% in September 2016 (post-fee, pre-tax),


The portfolio had another strong month outperforming the benchmark by 12 basis points in September.

Positive performance came from financials, RMBS, industrials and infrastructure sectors.

Activity during the month included investing in financials and transport sectors funded out of cash.


As at the end of the month, the portfolio had a credit spread of 84 basis points over bank bills, interest

rate duration of 0.13 years and credit spread duration of 1.59 years.

Strategy & Outlook

The Reserve Bank left the cash rate unchanged at its October meeting and had a neutral bias to the

statement. The next key data release that will shape monetary policy expectations is third quarter

inflation, released in late October. Non-inflation related data has been solid enough not to warrant

monetary policy easing: inflation data, particularly first quarter, had just been too weak for the Reserve

Bank to ignore.

There is no shortage of catalysts that could see risk aversion increase quickly. The US election is due

to be held in early November. The Italian referendum, due to be held in early December, and the state

of the Italian banking system are key concerns in Europe and likely to result in financial market volatility

increasing later in the year. In the US, the market currently has the Federal Reserve as more likely than

not to raise rates further by the end of the year. Emerging markets have been the beneficiaries of

capital inflows as yield starved investors look to credit markets and emerging markets to generate

additional return. A mass unwind of these positions will see risk aversion rise quickly.


Australian Property

BT Wholesale Property Securities Fund

Market review

The ASX AREIT index was down 4.3% in September, underperforming the broader market which was

up 0.5%. Year rolling, the sector is up 20.8%, outperforming the broader market by 7.6%. The best

performing REITs over the month were Growthpoint Properties Australia (+6.9%) and Investa Office

Fund (+0.2%). The worst performing stocks were Charter Hall Group (-12.6%), Dexus Property Group (-

5.9%) and Cromwell Property Group (-5.8%).

Global equity markets were mixed over the month, with a slight retracement in bonds upsetting

investors. The US curve steepened with the spread between long and short rates widening 6bp. Bond

yields were also higher in Australia, closing the month +8bp to close at 1.91%. Data out of the US has

been mixed with 2Q16 GDP revised higher from 1.2% to 1.4% and the unemployment rate steady at

4.9%. However, US retail sales were soft, slipping 0.3% and the ISM services survey was down 4.1bp

to 51.4 and US housing starts were down 5.8% to 1,142,000.

The US Federal Reserve Board left the Fed funds rate unchanged in September 2016, but debate

continues around whether the Fed will tighten rates in December 2016, or if at all. The Bank of Japan

announced its intention to steepen its yield curve and that it would target 10 year bond yields to

gravitate around 0%.

The RBA left the cash rate unchanged at 1.5% and 2Q GDP growth slowed to 0.5%. Unemployment

unexpectedly contracted over the month (-3, 900 jobs), however as a result of a falling participation rate

(from 64.9% to 64.7%) the unemployment rate fell from 5.7% to 5.6%.

During the month GPT Group announced it had acquired 164M securities in the GPT Wholesale

Shopping Centre Fund, lifting their stake from 20.2% to 25.3%. The acquisition, funded by debt will be

earnings accretive. The Gandel Group sold down its 19.2% interest in Charter Hall and 5.7% stake in

Charter Hall Retail Trust. Investa Office Fund announced the sale of its 50% interest in 800 Toorak

Road Hawthorn for $140 million, an impressive 10% above its recent valuation. Scentre Group also

provided details of its $2 billion development pipeline with Carousel, Coomera, Newmarket and Innaloo

all planned for major redevelopments.

The portfolio performed in line with the benchmark over the month. Overweights in Investa Office Fund,

Aventus Retail Property Group, Lifestyle Communities Limited, Stockland Trust Group and Centuria

Metropolitan REIT all added to performance. Overweights in Propertylink Group and Charter Hall

Property Group and underweights in Growthpoint Property Australia, Iron Mountain Incorporated and

BWP Trust detracted from performance.



The BT Wholesale Property Securities Fund returned -4.38% in September 2016 (post-fee, pre-tax),


Over the month we reduced our overweight positions in Aventus Property Fund, GPT Group and

Scentre Group, increased our overweight position in Charter Hall Group and increased our underweight

position in Dexus Property Group.

Strategy & Outlook

The sector is priced on an FY17 dividend yield of 4.6%, 33% premium to NTA and a PE ratio of 18.6

times, well ahead of its long term average. However, earnings and balance sheets are stable with

sector gearing at 29% and falling slowly as asset prices continue to rise. Low bond yields and cash

rates continue to be supportive. The better managed REITs continue to use the buoyant direct market

as an opportunity to divest non-core assets. AREITs are beginning to have a competitive cost of capital

and we would expect equity capital issuance to pick up in the balance of 2016.


International Property

BT Wholesale Global Property Securities Fund, managed by AEW

Market Review (In USD)

Performance of the global property securities market (on an ex-Australia basis) as measured by the

FTSE EPRA/NAREIT Developed Index continued to decline in September, posting a total return of -

0.8%. North America (down 1.8%) was the weakest performing region, followed by Europe (down

1.5%), while Asia Pacific (up 2.5%) was a positive performer for the month. In Asia Pacific, all countries

were in positive territory for the month, with the exception of New Zealand. Hong Kong (up 4.0%)

posted the largest gain, followed by Singapore (up 2.9%) and Japan (up 1.4%), while New Zealand

declined (down 3.0%). In Europe, results were mixed: Italy (down 3.8%) posted the largest decline,

followed by Germany (down 2.7%) and the United Kingdom (down 2.5%). Conversely, Norway (up

5.8%) and Austria (up 4.1%) posted positive gains. Within North America, the U.S. and Canada

returned -1.8% and -0.6%, respectively.


The BT Wholesale Global Property Securities Fund returned -0.86% in September 2016 (post-fee, pre-

tax), outperforming its benchmark by 0.20%.

North America

Performance relative to the benchmark (in USD) was driven by positive stock selection results, which

were partially offset by negative sector allocation results. In terms of stock selection, results were

strongest in the office, apartment and industrial sectors and were weakest in the triple net lease, data

centre and health care sectors. Regarding sector allocation, negative results were largely attributable to

the portfolio’s underweight to the outperforming triple net lease sector and an overweight to the

underperforming regional mall sector. Among the portfolio’s holdings, top individual contributors to

relative performance included overweight positions in outperforming Equity Residential (EQR), Rexford

Industrial Realty (REXR), and Prologis (PLD). Detractors most notably included overweight positions in

underperforming Host Hotels & Resorts (HST) and Simon Property Group (SPG) and a lack of

exposure to outperforming Realty Income Corp. (O).

Europe

Marginal underperformance relative to the benchmark was driven by negative country allocation results

which were partially offset by positive stock selection results. Regarding country allocation, negative

results were attributable to the portfolio’s lack of exposure to the outperforming Belgium market and an

underweight to the outperforming Austrian and Swiss markets. In terms of stock selection, results were

strongest in the United Kingdom, Spain, and Ireland and were weakest in Germany, Netherlands and


Switzerland. Among the portfolio’s holdings, top contributors to relative performance included an

overweight position in outperforming Gecina SA (France) and a lack of exposure to underperforming

Intu Properties Plc. (United Kingdom) and Grand City Properties SA (Germany). Detractors most

notably included overweight positions in underperforming ADO Properties SA (Germany) and Deutsche

Wohnen AG (Germany) and a lack of exposure to outperforming Wereldhave NV (Netherlands).

Asia

Modest outperformance relative to the benchmark was attributable to both positive stock selection

results and positive country allocation results. In terms of stock selection, positive results in Hong Kong

were partially offset by negative results in Japan and Singapore. Regarding country allocation, positive

results were driven by the portfolio’s lack of exposure to the underperforming New Zealand market and

an overweight to the outperforming Hong Kong market. Among the portfolio’s holdings, top contributors

to relative performance included overweight positions in outperforming HongKong Land Holdings (Hong

Kong), GLP J-REIT (Japan) and Japan Retail Fund Investment Corp (Japan). Detractors most notably

included an overweight position in underperforming Invincible Investment Corp (Japan) and a lack of

exposure to outperforming Kerry Properties Ltd (Hong Kong) and City Developments Ltd (Singapore).

Strategy & Outlook

North America

Nationally, rents are still moving up in all property types (though a bit more slowly in the case of

apartments and hotels) and some longer-lease property types are transitioning into an environment

where leases will be signed at higher rents than the in-place ones that were signed after the Global

Financial Crisis, providing a boost to net operating income. Overall, for the sector, we expect average

cash flow growth for REITs to be in the mid to upper single digits in 2016 and 2017. After the third

quarter sell-off, the REIT market is slightly more attractive than average versus other asset classes, as

healthy yield spreads to bonds largely offset higher than normal valuations versus general equities. At

the end of the third quarter, REITs were attractive relative to private real estate given the sector was

trading at an average 2% discount to net asset values, with some sectors trading at much larger

discounts (and some at significant premiums). REITs continued to be most attractive relative to bonds

as a yield vehicle. REIT dividend yields rose by one basis point to 3.66% during the third quarter, but

the Moody’s BAA corporate bond yield fell 12 basis points, making the REIT yield more competitive with

corporates. While Treasury yields moved up, REIT dividend spreads to both Treasuries and corporate

bonds are much wider than average, providing some cushion to values if base rates move up further.

Looking ahead, while the REIT market is likely to continue to react nervously to any changes in the

supportive interest rate environment, earnings growth should support ample dividend growth that should

be especially attractive in the current low yield environment and which should help offset slow increases

in interest rates if they continue to rise going forward. Looking forward, we expect REIT returns to be

driven more by current yield and improving earnings fundamentals than by additional multiple

expansion.


Europe

European property equities are well positioned in the currently low growth and low interest rate

environment. We expect capital flows to real estate as a safe yielding asset class will continue.

Additionally, we expect rental growth to be relatively favourable for most REITs as the companies invest

in the larger cities which benefit from the urbanization trends we see in many parts in Europe. ‘Brexit’

could lead to a period of a couple of years of uncertainty, which could weigh on investor sentiment, but

the UK REITs are well positioned with strong balance sheets and long leases. At quarter-end, a

potential fall in real estate values appeared to be priced in as UK REITs traded at an average discount

of more than 10% to net asset value. REITs with significant exposure to London offices traded at a

discount of 25% to net asset value. Overall, European REITs are trading at a 5% premium to net asset

value. European REITs offer an earnings yield of 4.7% and a dividend yield of 3.6%.

Asia

Looking ahead, we are beginning to see some relative value emerging in some markets like Australia

and Singapore after the recent correction. With interest rates likely to remain low, the private market

continues to price assets at tighter cap rates than public market valuations, providing some upside to

NAVs. At a fundamental level, the picture remains mixed, with some areas continuing to see improving

property trends, such as the office and retail sectors in Australia while some sectors continue to be

impacted by pockets of weakness, including the retail sectors in Singapore and Hong Kong and the

office sector in Singapore. The portfolio continues to seek the best relative value in the sub-property

markets where we expect to see improving property fundamentals, with potential earnings, dividend,

and net asset value upside.


Active Balanced

BT Wholesale Active Balanced Fund

Market review



However, this was offset by supportive central bank activity later in the month, which also partly

compensated for fears over the future of Germany’s largest lender, Deutsche Bank.





















0.5% year-on-year.








Concluding our tour at home, Glenn Stevens maintained a cash rate of 1.5% at his final meeting as

Governor of the RBA. Few changes were evident in the statement which continued to highlight low

inflation and mixed labour market data. The latter was echoed in August’s employment figures that

revealed 3,900 jobs were lost during the month, but full-time positions increased by 11,500 and the

unemployment rate dropped to 5.6%. Q2 GDP data also crossed the wires during the month and

revealed the fastest year-on-year increase in four years at 3.3%.


The BT Wholesale Active Balanced Fund returned -0.26% (post-fee, pre-tax) in September 2016,


September saw the Fund deliver a pre-fee return of -0.18% driven by relatively flat market returns in

Australian Equities (+0.51%) and Australian Fixed Income (-0.22%). Australian Listed property

(-4.33%) saw a reversal for the month whilst still delivering an annual return of 20.80% for the year to

end September. Alternative Assets, sourced through the BT Total Return Fund added both absolute

returns and portfolio diversification.

Active returns were challenging with the Fund outperforming the benchmark for the month (pre-fees).

International Equities (+0.64% active) and Global Property (+0.26% active) and Alternative Assets

(+0.38% active) delivered positive active returns, partially offset by Australian Equities (-0.11% active).

Strategy & Outlook

The Bank of Japan’s new iteration of extraordinary monetary policy to control the yield curve is

inconsistent to its quantitative easing goals. In case of lower inflation, its zero interest rate policy will be

undermined as real interest rates rise. Globally there is no lack of catalysts that could see risk aversion

increase quickly.

The upcoming US election provides some level of market uncertainty although at the time of writing the

case for the Republican presidential candidate appears to be self-distracting. The downstream impact

to the Congress and Senate Races remains to be seen, providing some potential for the Democrats to

take back the Senate.

The Italian referendum, due to be held in early December, and the state of the Italian banking system

are key concerns in Europe and likely to result in financial market volatility increasing later in the year.

In the US, the market currently has the Federal Reserve as more likely than not to raise rates further by

the end of the year.


Performance as at 30 September 2016

F YT D 1 year 2 Years 3 Years 5 Years Since

(pa) (pa) (pa) (pa) Incp. (pa)

Australian Shares - All Cap

B T Who lesale C o re A ustralian Share F und A P IR - R F A 0818A U

Total Return (post-fee, pre-tax) 0.35 4.42 5.88 4.42 7.31 5.23 5.16 10.82 9.75

Total Return (pre-fee, pre-tax) 0.41 4.61 6.28 4.61 8.15 6.07 5.99 11.70 10.76

Benchmark 0.51 5.24 9.43 5.24 13.50 6.18 6.03 11.02 9.86

B T Who lesale Imputat io n F und A P IR - R F A 0103A U



Benchmark 0.51 5.24 9.43 5.24 13.50 6.18 6.03 11.02 8.47

B T Who lesale F o cus A ustralian Share F und A P IR - R F A 0059A U

Total Return (post-fee, pre-tax) -0.04 5.09 6.32 5.09 9.68 7.20 6.98 11.89 8.46


Benchmark 0.51 5.24 9.43 5.24 13.50 6.18 6.03 11.02 6.99

B T Who lesale Ethical Share F und A P IR - R F A 0025A U


Total Return (pre-fee, pre-tax) -0.14 4.10 5.72 4.10 8.25 6.88 6.52 11.62 9.11

Benchmark 0.51 5.24 9.43 5.24 13.50 6.18 6.03 11.02 7.75

Australian Shares - Mid Cap

B T Who lesale M idC ap F und A P IR - B T A 0313A U



Benchmark -0.52 7.02 13.25 7.02 27.71 16.22 13.44 12.83 4.60

Australian Shares - Small Cap

B T Who lesale Smaller C o mpanies F und A P IR - R F A 0819A U



Benchmark 1.53 8.50 14.84 8.50 29.16 10.83 7.07 5.27 7.68

Australian Shares - Micro Cap

B T Who lesale M icro C ap Oppo rtunit ies F und A P IR - R F A 0061A U



Benchmark 1.53 8.50 14.84 8.50 29.16 10.83 7.07 5.27 2.22


B T Who lesale C o re Glo bal Share F und A P IR - R F A 0821A U

Total Return (post-fee, pre-tax) -0.76 2.71 4.49 2.71 -1.33 8.86 12.81 17.35 5.25

Total Return (pre-fee, pre-tax) -0.69 2.95 4.98 2.95 -0.39 9.90 13.90 18.47 6.42

Benchmark -1.32 1.95 6.41 1.95 1.95 10.08 13.41 17.30 6.80

B T Glo bal Emerging M arkets Oppo rtunit ies F und - Who lesale A P IR - B T A 0419A U

Total Return (post-fee, pre-tax) -0.04 7.58 13.33 7.58 7.46 7.48 9.69 N/A 10.02

Total Return (pre-fee, pre-tax) 0.07 7.95 14.11 7.95 8.97 8.99 11.40 N/A 12.54

Benchmark -0.53 6.08 10.32 6.08 7.17 3.82 6.31 N/A 8.84

B T C o ncentrated Glo bal Share F und A P IR - B T A 0503A U

Total Return (post-fee, pre-tax) -1.96 N/A N/A N/A N/A N/A N/A N/A -0.52

Total Return (pre-fee, pre-tax) -1.86 N/A N/A N/A N/A N/A N/A N/A -0.32

Benchmark -1.32 N/A N/A N/A N/A N/A N/A N/A -0.05

Property

B T Who lesale P ro perty Securit ies F und A P IR - B T A 0061A U

Total Return (post-fee, pre-tax) -4.38 -1.44 7.82 -1.44 20.23 19.63 17.17 19.15 7.85

Total Return (pre-fee, pre-tax) -4.33 -1.26 8.18 -1.26 21.01 20.39 17.93 19.91 8.68

Benchmark -4.31 -1.88 7.18 -1.88 20.88 20.48 17.68 19.58 7.71

B T Who lesale Glo bal P ro perty Securit ies F und A P IR - R F A 0051A U



Benchmark -1.06 1.54 4.98 1.54 13.68 12.57 13.02 16.00 9.67

Fixed Interest

B T Who lesale F ixed Interest F und A P IR - R F A 0813A U



Benchmark -0.22 0.93 3.82 0.93 5.69 6.30 6.21 5.97 7.00

B T Who lesale Glo bal F ixed Interest F und A P IR - R F A 0032A U



Benchmark 0.00 0.22 3.46 0.22 8.49 7.62 7.75 6.98 7.69

B T Who lesale Enhanced C redit F und A P IR - R F A 0100A U



Benchmark 0.01 1.24 3.51 1.24 4.97 5.48 5.65 6.03 6.16

Cash & Income

B T Who lesale Enhanced C ash F und A P IR - WF S0377A U



Benchmark 0.14 0.48 1.05 0.48 2.19 2.33 2.44 2.94 5.10

B T Who lesale M anaged C ash F und A P IR - WF S0245A U



Benchmark 0.14 0.48 1.05 0.48 2.19 2.33 2.44 2.94 6.78

B T Who lesale M o nthly Inco me P lus F und A P IR - B T A 0318A U



Benchmark 0.12 0.40 0.86 0.40 1.88 2.07 2.22 2.75 3.23

Diversified

B T Who lesale A ct ive B alanced F und A P IR - R F A 0815A U



Benchmark -0.22 2.72 6.30 2.72 8.95 7.40 7.72 10.18 7.45

(%)1 M o nth 3 M o nths 6 M o nths

For more information Please call 1800 813 886, contact your Business Development Representative or visit btim.com.au

All returns calculated by BT Investment Management (Fund Services) Limited, ABN 13 161 249 332, AFSL 431426 (BTIM). No part

of this Fund Manager Commentary (Commentary) is to be circulated without this page attached.

This Commentary is dated 14 October 2016 and has been prepared by BTIM. The information in this Commentary is for general

information only and should not be considered as a comprehensive statement on any of the matters described and should not be

relied upon as such. The information contained in this Commentary may contain material provided directly by third parties and is

believed to be accurate at its issue date. While such material is published with necessary permission, neither BTIM nor any

company in the BTIM Group of companies accepts any responsibility for the accuracy or completeness of this information or

otherwise endorses or accepts any responsibility for this information. Except where contrary to law, BTIM intends by this notice to

exclude liability for this material.

This Commentary has been prepared without taking into account your objectives, financial situation or needs. Furthermore, it is not

intended to be relied upon for the purpose of making investment decisions and is not a replacement of the requirement for individual

research or professional tax advice. Because of this, before acting on this information, you should seek independent financial and

taxation advice to determine its appropriateness having regard to your individual objectives, financial situation and needs.

BTIM does not give any warranty as to the accuracy, reliability or completeness of the information contained in this Commentary.

This Commentary is not to be published without the prior written consent of BTIM.

Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs.

Performance data (pre-fee) is calculated by adding back management costs to the (post-fee) performance. Past performance is not

a reliable indicator of future performance. The term ‘benchmark’ refers to the index or measurements used by an investment

manager to assess the relative risk and the performance of an investment portfolio.

BTIM is the issuer of the following products:

BT Wholesale Core Australian Share Fund ARSN 089 935 964

BT Wholesale Smaller Companies Fund ARSN 089 939 328

BT Concentrated Global Share Fund ARSN 613 608 085

BT Wholesale Core Global Share Fund#

ARSN 089 938 492

BT Wholesale Global Fixed Interest Fund ARSN 099 567 558

BT Wholesale Enhanced Credit Fund ARSN 089 937 815

BT Wholesale Fixed Interest Fund ARSN 089 939 542

BT Wholesale Property Investment Fund ARSN 089 939 819

BT Wholesale Global Property Securities Fund ARSN 108 227 005

BT Wholesale Managed Cash Fund ARSN 088 832 491

BT Wholesale Enhanced Cash Fund ARSN 088 863 469

BT Wholesale Active Balanced Fund ARSN 088 251 496

A product disclosure statement (PDS) is available for each of the above products and can be obtained by contacting BTIM on

1800 813 886, or by visiting btim.com.au. You should consider the relevant PDS in deciding whether to acquire, or to continue to

hold, the product. BT® is a registered trade mark of BT Financial Group Pty Ltd and is used under licence.

# AQR began managing international equity for BT Financial Group in June 2006.

http://www.btim.com.au/

Documents

Fund Manager Commentary€¦ · dragged the DAX 30 lower by -3.8% to see it finish among the worst performers for major global share indices. The nearby FTSE 100 fared better; it