Case Study - Intelligent Investor Australian Equities Growth Fund (IIGF)

InvestSMART plans to list its third managed fund - the Intelligent Investor Australian Equities Growth Fund (IIGF) - on the Australian Stock Exchange in early October. The IIGF will be an exchange traded (actively) managed fund that invests in 10 to 35 diversified quality ASX-listed shares - with a maximum holding in any one company of 15 per cent.

Marketing manager Julie Huynh spoke to Industry Moves about the many moving parts that need to work together to get a new product off the ground.

How did you research market opportunities prior to the launch of this fund?

Following the recent listing of both the Ethical Share Fund (ASX: INES), and the Income Fund (ASX: INIF), the Intelligent Investor Australian Equities Growth Fund (IIGF) always made sense from a product perspective because it completed our trio of Intelligent Investor managed funds. We have model portfolios for our Income, Ethical and Growth portfolios and the only model portfolio that was lacking a listed counterpart was the growth portfolio. The listing of IIGF will mean that all model portfolios will have listed counterparts. The decision to list all three funds on the ASX recognises that many investors' favour the benefits of holding listed investments - greater portfolio transparency, fewer fees, better liquidity when buying/selling and potential tax advantages - over less stream-lined, off-market, unlisted structures.

What goes into launching a new product?

Once we committed to the idea of launching the Intelligent Investor Australian Equities Growth Fund (ASX: IIGF), it was quickly communicated across the company so each team could start on their piece of the puzzle. From a marketing perspective, the first step is understanding all the details required in order to brainstorm and identify unique selling points and target markets.

A critical part of the process is reviewing what we did in the past by revisiting previous fund launch post implementation reviews, plans and timelines, before coming up with a marketing plan covering the activities and goals for these key stages:

• Pre-expression of interest
• Expression of interest
• Initial offer (closes Friday 25th September at 5:30pm), and
• Post launch.

We are intimately involved in the marketing process, including communication, marketing collateral development (web page content videos, webinars, emails, digital ads) - building most of this in-house. Communication is also key, and we are in regular dialogue with all key teams (CEO, head of funds Management, portfolio manager, the sales and tech teams) to ensure we are all across what is happening and how we are tracking. It really is a companywide co-ordinated effort.

Why did you decide to launch now?

We were always going to launch IIGF this year based on the goal of listing the trio of Intelligent Investor managed funds. The success of the Ethical Fund, INES, as the best performing Ethical/ESG fund in the country over the past 12 months was also a contributing factor to the launch date. Another influencing factor is demand for growth, with interest rates at an all-time low leaving investors who traditionally preferred term deposits looking elsewhere for returns. Income funds aren't able to keep up with such a growth focused market and people are starting to look beyond maximising dividends to investments that can provide a higher total return while sacrificing dividends.

Some investors in our income funds are looking to our growth fund to provide that added growth, without a material increase in risk, and want an easy way to buy and sell their investments without suffering from big discounts that are hard to eliminate for structures such as listed investment companies. Additionally, there is heightened demand for share investing among new investors and issuing IIGF gives investors a chance to access a whole portfolio of all our best ideas with just one trade. Our analysts literally spend all day doing stock research so to have a portfolio of their best ideas is the best thing we can offer investors now.

What challenges did you face and how were they overcome?

Whilst not your typical fund launch challenge, COVID-19 brought restrictions we needed to adjust for and find different ways of doing things. Pre-COVID-19 we used to do live seminars as part of our marketing plan in the pre-fund launch stage, but we couldn't do live events under these circumstances. Instead, we held more online webinars and podcasts and embraced digital marketing as our main channel.

How did you decide on service providers - e.g. legal, responsible entity etc?

Usually we approach the major providers for custody or administration and see who has the best service for funds and management our size. With legal matters, we use specialists in the funds area we operate - for IIGF we used Baker McKenzie for listed managed funds. We are a Responsible Entity, so we do that ourselves.

Can you explain the fee structure?

The IIGF portfolio has a fee of 0.97 per cent.