WEBVTT - Why cash is king (with Chris Cuffe) 0:00:10.080 --> 0:00:13.080 Hello, and welcome to The Australian's Money Puzzle podcast. I'm 0:00:13.160 --> 0:00:17.200 James Kirkby. Welcome aboard everybody now today for your Easter 0:00:17.480 --> 0:00:20.880 break listening pleasure, I have a very special guest who 0:00:20.920 --> 0:00:25.599 is Chris Cuff, a legendary fund manager de facto legendary 0:00:25.640 --> 0:00:29.479 fund manager martiad who initially came to fame almost became 0:00:29.480 --> 0:00:32.239 a household name at one stage through his success as 0:00:32.280 --> 0:00:36.000 an investor and manager at what is still the Colonial Group, 0:00:36.560 --> 0:00:39.000 and since then he's had a portfolio of interest. You'll 0:00:39.040 --> 0:00:42.320 see him on a variety of boards. Some boards you 0:00:42.360 --> 0:00:44.640 won't see him on because they're family offices, but you 0:00:44.680 --> 0:00:47.320 would be familiar of course with UNI Super, which is 0:00:47.440 --> 0:00:50.760 I think the fourth biggest industry fund in the country, 0:00:51.120 --> 0:00:52.960 so that is a very big gig as you can imagine. 0:00:52.960 --> 0:00:56.920 He's also on the board of Argyll, the listed investment company, 0:00:57.000 --> 0:00:59.639 the original of the species. You have to mention Don 0:00:59.640 --> 0:01:02.160 Bradman when you mentioned al Go, because he was once 0:01:02.360 --> 0:01:06.640 involved with that. Do you know that his passion Chris's 0:01:06.680 --> 0:01:10.560 passion is philanthropy. I have talked to him before regularly. 0:01:11.120 --> 0:01:14.480 He's got involved in some terribly interesting projects of late 0:01:14.480 --> 0:01:16.639 we're going to talk about that too, and the extent 0:01:16.680 --> 0:01:19.120 to which you may be able to access some of 0:01:19.160 --> 0:01:21.520 this if you wish to. But first I want to 0:01:21.720 --> 0:01:24.600 hear what he has to say. Needless to say, I 0:01:24.640 --> 0:01:26.520 want to hear what he says. You want to hear 0:01:26.520 --> 0:01:29.760 what he says about the markets and the conditions of 0:01:29.800 --> 0:01:32.800 the markets that were currently investing in. How are you, Chris? 0:01:33.880 --> 0:01:36.720 Very well? Thank you, James, straight. 0:01:36.480 --> 0:01:41.360 Up question, Okay, there's always periods of great uncertainty. I'm 0:01:41.360 --> 0:01:44.840 always entertained when people talk about uncertainty and how there's 0:01:44.840 --> 0:01:47.800 never as if there was never uncertainty before. I mean, 0:01:47.840 --> 0:01:51.440 COVID was pretty uncertain, GFC was pretty uncertain. But this 0:01:51.520 --> 0:01:56.560 particular period, instinctively to you, is there reasons for the 0:01:57.400 --> 0:02:00.760 every day investor to change their approach to invest in 0:02:00.840 --> 0:02:05.400 looking at the global trade crisis that we have in 0:02:05.400 --> 0:02:06.200 front of us. 0:02:07.400 --> 0:02:10.560 I don't think there's great reasons to change. I mean, 0:02:10.600 --> 0:02:14.160 I hope for every investor, if they're a true investor, 0:02:14.200 --> 0:02:17.160 they should have a plan and they should have a 0:02:17.200 --> 0:02:20.720 diversified portfolio. People ask me all the time, what do 0:02:20.800 --> 0:02:23.200 you react? How are you reacting in this time? And 0:02:23.240 --> 0:02:25.440 I think I just check down the securities I have 0:02:25.560 --> 0:02:28.680 in my portfolio and make sure it's well diversified, because 0:02:28.720 --> 0:02:31.600 I can't pick day to day or months a month 0:02:31.680 --> 0:02:33.760 what's going to do well and what's not. And we're 0:02:33.760 --> 0:02:37.040 in a period now, you know, sometimes there's no one 0:02:37.280 --> 0:02:42.040 unknowns and now we've got unknown's unknowns, So we sort 0:02:42.040 --> 0:02:44.480 of wake up each day and just sort of work 0:02:44.520 --> 0:02:46.960 off the seat of your pants. But look, it also 0:02:47.080 --> 0:02:50.440 very much depends on whether you're running your portfolio with 0:02:50.520 --> 0:02:53.120 new money coming in, whether you're in draw down phase. 0:02:53.160 --> 0:02:56.120 There'll always be issues around that. But look, right now, 0:02:56.160 --> 0:02:59.000 I think it's a pretty good time to draw breath. 0:03:00.040 --> 0:03:03.280 Probably don't get too anxious about anything, particularly if you've 0:03:03.280 --> 0:03:08.960 got a well diversified portfolio, and really just you know, 0:03:09.280 --> 0:03:11.520 it's a strange time we're in, James. What else can 0:03:11.560 --> 0:03:11.880 we say. 0:03:12.440 --> 0:03:14.959 Would you have a hunch that the worst is over? 0:03:16.440 --> 0:03:19.280 I think the worst is over, as in the initial 0:03:19.400 --> 0:03:23.239 shock of what has happened in America at the leadership 0:03:23.280 --> 0:03:25.840 position and the fact that there are p and O 0:03:25.960 --> 0:03:29.080 guardrails on making those decisions. You know, I would have 0:03:29.080 --> 0:03:31.920 thought it's not legally possible when I first heard it 0:03:31.960 --> 0:03:35.600 that the American President can just you know, issue tariff's 0:03:35.640 --> 0:03:38.080 left right at the center without some type of emergency 0:03:38.120 --> 0:03:40.920 going on. But anyhow, they've done it, so we just 0:03:40.960 --> 0:03:42.600 have to live with that. So I think the shock 0:03:42.640 --> 0:03:45.480 of seeing the magnitude is the big thing. And now 0:03:45.520 --> 0:03:49.480 I think we'll grind for a probably a long period 0:03:49.560 --> 0:03:53.280 of time as we see the effects of maybe the 0:03:53.320 --> 0:03:56.160 base twer for ten percent. You know, it's probably going 0:03:56.240 --> 0:03:58.920 to cause inflation at least in the short term. That's 0:03:59.000 --> 0:04:01.839 probably going to put interest rates on hold at least 0:04:01.880 --> 0:04:04.400 for the short term. And then I think behind the 0:04:04.440 --> 0:04:09.720 scenes in Washington will be concession, slow concessions over time 0:04:10.440 --> 0:04:14.320 as the American people get very hurt by what's happening, 0:04:14.440 --> 0:04:18.640 and I think that will reverberate back to their members, 0:04:18.839 --> 0:04:22.320 their elected officials, and hopefully, you know, get to the 0:04:22.360 --> 0:04:26.040 President and his men. I don't think they anticipated anything 0:04:26.160 --> 0:04:28.400 like what's going on, and I don't think there was 0:04:28.440 --> 0:04:32.640 a grand plan. I think it was a complete mess. 0:04:32.960 --> 0:04:35.560 Can I ask you, when you say stable interest rates, 0:04:35.600 --> 0:04:40.200 you mean global rates right, correct? Australian rates could fall 0:04:40.760 --> 0:04:41.479 in the short term. 0:04:41.560 --> 0:04:44.000 You could definitely mount a case that if we get 0:04:44.040 --> 0:04:50.760 a global recession, growth really going downhill, people losing jobs, 0:04:51.400 --> 0:04:55.560 interest rates will drop, that's definitely on the cards. But 0:04:55.720 --> 0:04:58.440 I think none of this is going to happen immediately. 0:04:58.480 --> 0:05:00.760 There's a lot of time to play up yet to 0:05:00.880 --> 0:05:04.320 see where these things land. I think you'd be a 0:05:04.400 --> 0:05:09.440 brave person to think that the tariffs that America's put 0:05:09.480 --> 0:05:12.440 on China and China put on America again to sit 0:05:12.560 --> 0:05:16.520 as they are, it's just impractical. You just trade between 0:05:16.560 --> 0:05:21.040 the nations will stop, and that just doesn't seem likely 0:05:21.080 --> 0:05:23.440 to me at all. So this posturing going on, we've 0:05:23.440 --> 0:05:25.360 got to wait for that to stop. But we might 0:05:25.440 --> 0:05:30.200 get what they call imported inflation. If it costs Chinese 0:05:30.279 --> 0:05:33.440 the Chinese a lot more to make the goodies that 0:05:33.480 --> 0:05:36.240 we bring into Australia, it's going to cause some inflation. 0:05:36.640 --> 0:05:39.000 But I think these are short term things. To go 0:05:39.120 --> 0:05:41.720 back to your first question, I just wouldn't be in 0:05:41.800 --> 0:05:44.520 a hurry to do anything radical right now and just 0:05:44.640 --> 0:05:45.839 let the dust settle. 0:05:46.720 --> 0:05:50.160 You're on the board of family offices and investment vehicles 0:05:50.200 --> 0:05:54.520 of some very wealthy people and families in Australia, so 0:05:54.640 --> 0:05:58.279 anything that they are doing that would give our everyday 0:05:58.320 --> 0:06:02.480 listeners an insight to sort of the tactical response to this. 0:06:02.680 --> 0:06:05.720 Are they putting more money into gold? Are they lifting 0:06:05.760 --> 0:06:08.240 their cash? Are their bargain hunting? Is there anything you 0:06:08.279 --> 0:06:10.760 can insight you could give us as to how they're behaving. 0:06:11.880 --> 0:06:14.560 Well, certainly the groups I'm involved with, I think it's 0:06:14.720 --> 0:06:18.039 as a generalization, it's fair to say they're just letting 0:06:18.240 --> 0:06:21.440 cash build up right now. And unless you know, there's 0:06:21.480 --> 0:06:25.640 something peculiar about their liabilities or there some external factor, 0:06:25.680 --> 0:06:28.640 but it's really let it build up. Don't have a 0:06:28.720 --> 0:06:32.760 fear of missing out if anything, right now, the fear 0:06:32.880 --> 0:06:36.600 might be the other way around. The people. We are 0:06:36.680 --> 0:06:39.400 all talking about the Australian dollar. I mean it was 0:06:39.440 --> 0:06:42.600 a week ago it was at fifty nine cents. Today 0:06:42.720 --> 0:06:46.599 it's at sixty four cents. So I did see some 0:06:46.680 --> 0:06:51.080 groups put on hedges very quickly, which not everybody can do, 0:06:51.160 --> 0:06:55.240 although there are easily accessible instruments in the market that 0:06:55.640 --> 0:06:58.359 any investor can do for that. And we've seen the 0:06:58.400 --> 0:07:02.440 currency already firm from the US Australian dollar a firm 0:07:02.480 --> 0:07:06.000 from fifty nine to sixty four, and that's a very big, 0:07:06.520 --> 0:07:10.520 very big change. You know, the urgency to do perhaps 0:07:10.600 --> 0:07:14.440 do something about the currencies calm down a little, though. 0:07:14.560 --> 0:07:17.440 Sixty four cents in a long term sense is still 0:07:18.200 --> 0:07:22.200 well below the long term average, which is around seventy cents, 0:07:22.240 --> 0:07:24.800 which it always seems to head back to at some 0:07:24.920 --> 0:07:25.679 stage or another. 0:07:26.000 --> 0:07:28.880 We had people on the show saying, you're better off 0:07:28.920 --> 0:07:32.240 being unheaged because the US is the heart of the machine, 0:07:32.360 --> 0:07:36.240 heart of the markets. When the US markets fall, if 0:07:36.240 --> 0:07:38.640 we all have more exposure to the US than we 0:07:38.680 --> 0:07:40.640 ever had before, which is probably the case for both 0:07:40.680 --> 0:07:42.720 our listeners and a lot of the big super funds, 0:07:43.280 --> 0:07:45.680 that when the US markets fall, the US dollar, the 0:07:45.760 --> 0:07:50.040 currency works your way. It's in your favor because you're 0:07:50.080 --> 0:07:52.920 basically when the Australian dollar is falling as it has 0:07:52.960 --> 0:07:56.560 so far, you're cushioned. You think that might not be 0:07:56.600 --> 0:07:57.960 the case going forward. 0:07:58.680 --> 0:08:01.640 Well, look, I would say my position and those that 0:08:01.720 --> 0:08:06.120 I work with, it's generally when you're buying overseas securities 0:08:07.000 --> 0:08:09.720 that be they manage funds or direct shares or whatever 0:08:10.240 --> 0:08:13.880 is to have it unheitched. So that's default position. But 0:08:14.000 --> 0:08:17.880 we have seen in history where you get very large 0:08:18.560 --> 0:08:23.880 aberrations and look, I remember it's got I remember once 0:08:23.920 --> 0:08:26.760 when the Australian dollar got to forty five cents to 0:08:26.840 --> 0:08:30.240 the US dollar, and I remember, yeah, and I remember 0:08:30.360 --> 0:08:33.800 traveling when the Australian dollar got to one hundred and twenty. 0:08:34.360 --> 0:08:36.680 So you know what the out of bounds, you know, 0:08:36.720 --> 0:08:39.120 if it's got a five in front of it for sure, 0:08:39.720 --> 0:08:43.120 or a nine in front on the other end, they're 0:08:43.160 --> 0:08:48.360 probably times where you could opportunistically probably take advantage of 0:08:48.400 --> 0:08:52.520 that with great likelihood of success, as long as you 0:08:52.520 --> 0:08:53.880 don't pick your time frame. 0:08:55.040 --> 0:08:57.600 Okay, right, And just on the building up the cash, 0:08:57.760 --> 0:09:00.920 can you give people any idea? You know a lot 0:09:00.920 --> 0:09:03.560 of people have serf managed super funds. They're always been 0:09:03.679 --> 0:09:06.319 criticized for having too much cash. And then the big 0:09:06.360 --> 0:09:11.359 super funds have, compared to the smsfs, much lower cash levels. 0:09:11.760 --> 0:09:13.920 With these family companies you have, it's the extent you 0:09:13.920 --> 0:09:16.839 can answer this, what percentage would they generally have in cash? 0:09:16.840 --> 0:09:19.520 What would be a neutral level? And then what might 0:09:19.559 --> 0:09:21.080 they be building up to at the moment. 0:09:22.559 --> 0:09:24.160 Well, first all, to make it clear to the big 0:09:24.200 --> 0:09:27.400 super funds, they always have it. I serve with one 0:09:27.400 --> 0:09:29.040 of them for many years, as I still do. They 0:09:29.040 --> 0:09:33.080 always have let's use the term liquidity rather when they 0:09:33.160 --> 0:09:35.760 must have it. Of course they must have liquidity because 0:09:35.760 --> 0:09:38.440 they've got people coming and going all the time, but 0:09:38.600 --> 0:09:42.079 they have sort of modest cash levels actual cash probably 0:09:42.160 --> 0:09:46.640 compared to many individuals with their own self managed super fund. Look, 0:09:46.720 --> 0:09:49.440 I don't know if there's a common level, James. I 0:09:49.640 --> 0:09:52.720 like to think, in any event, if you had sort 0:09:52.760 --> 0:09:55.960 of ten to twenty percent of cash at most times, 0:09:56.280 --> 0:09:59.000 you know, maybe that's useful to jump on things. Other 0:09:59.040 --> 0:10:01.800 people like to be invested all the time. As long 0:10:01.840 --> 0:10:04.160 as it's liquid, you can get money out and rotate 0:10:04.280 --> 0:10:06.920 to something else. But I don't know if there's one 0:10:07.320 --> 0:10:10.640 one better way than not, but there's Look, there's an 0:10:10.679 --> 0:10:15.160 increasing number of securities that give you, i think, both 0:10:15.200 --> 0:10:20.800 great diversification and some liquidity, so you can take advantage 0:10:20.840 --> 0:10:22.760 of things. But it also, as I said before, it 0:10:22.800 --> 0:10:24.959 depends very much on what stage you're at. If you've 0:10:25.000 --> 0:10:27.120 got your own self managed super fund and you're a 0:10:27.160 --> 0:10:30.720 retiree and you're drawing money off it each year, now, 0:10:30.800 --> 0:10:33.240 so you know it's got to keep shrinking over time, 0:10:33.559 --> 0:10:35.880 you'll probably have a higher amount of cash so you 0:10:35.880 --> 0:10:41.000 don't have to sell down securities in volatile stressed times. 0:10:41.520 --> 0:10:46.360 And these listed securities that give you liquidity and versification. 0:10:46.520 --> 0:10:47.560 Are you thinking of ETFs. 0:10:49.440 --> 0:10:51.720 It could be an ETF so, but it could be 0:10:51.800 --> 0:10:56.120 there's plenty of ETFs. People often mix up a little 0:10:56.160 --> 0:11:00.400 bit many ETFs. Most ETFs are what they call pass 0:11:00.600 --> 0:11:03.480 as you've said many times on your show, they invest 0:11:03.520 --> 0:11:06.640 in the index of whatever they're exposed to. But there's 0:11:06.679 --> 0:11:11.679 also an increasing number of active ETFs. They're just happen 0:11:11.760 --> 0:11:15.560 to be managed funds, managed by an active manager who's 0:11:15.679 --> 0:11:18.439 trying to do better than the index, and they happen 0:11:18.520 --> 0:11:21.600 to be listed on the stock market. You can get 0:11:21.640 --> 0:11:26.160 in and out at nta net asset value, just like 0:11:26.320 --> 0:11:31.760 you can for normal shares. And I have a preference myself. 0:11:32.240 --> 0:11:36.559 Where a market is what I call thin, like Australia, 0:11:37.080 --> 0:11:40.240 I have a preference to be in actively managed funds 0:11:40.280 --> 0:11:46.200 because but in overseas, I'm very satisfied with ETFs as 0:11:46.200 --> 0:11:51.199 well as active funds, simply because those markets offshore are 0:11:51.320 --> 0:11:55.720 much wider, they're much bigger, they're well diversified. Whereas Australia, 0:11:55.920 --> 0:12:00.200 as most people know, you the heavyweights. You're exposed a 0:12:00.240 --> 0:12:02.760 handful of banks, a few miners, and a couple odds 0:12:02.760 --> 0:12:06.319 and ends on the outside. So I find Australian ETFs 0:12:06.320 --> 0:12:07.920 are a little bit risky for. 0:12:07.920 --> 0:12:12.280 Me, okay, because half the market is banks and miners. Yeah, okay, 0:12:12.640 --> 0:12:15.040 So we can't have you on without asking you the 0:12:15.360 --> 0:12:18.839 conventional thinking. And that may not be what you're thinking, 0:12:18.880 --> 0:12:21.640 of course, but convention I'm thinking is, you know, there's 0:12:21.640 --> 0:12:23.920 a swing, there's a lot of fear in the market. 0:12:24.040 --> 0:12:27.560 You know that's proven, and the vix is elevated, so 0:12:27.679 --> 0:12:31.480 people are going back into like supermarket stocks went up 0:12:31.520 --> 0:12:34.880 during those scary days a few days ago. The bank's 0:12:34.880 --> 0:12:37.920 coming with bank I mean, is just basically unmoved. In 0:12:37.920 --> 0:12:41.520 the middle of all this, gold is going steadily higher 0:12:41.800 --> 0:12:48.280 and people are looking at those conventional, traditional defensive stocks. 0:12:48.400 --> 0:12:50.840 Just now, what do you think of that approach? 0:12:52.000 --> 0:12:56.840 Well, it's an interesting conundrum again listening, I'm a regular 0:12:56.920 --> 0:13:00.240 listener to your show. There's always the issue that if 0:13:00.800 --> 0:13:03.559 you look at the Commonwealth Bank, everybody says it's very 0:13:03.640 --> 0:13:06.520 highly priced, has been for a long time. It's come 0:13:06.600 --> 0:13:09.520 down a bit, but it's still at a healthy price. 0:13:10.040 --> 0:13:12.720 And does that mean you should sell the thing and 0:13:12.800 --> 0:13:16.880 rotate into something else. That's the difficult thing because you've 0:13:16.920 --> 0:13:19.920 already been in the thing as opposed to if you've 0:13:19.960 --> 0:13:23.120 got fresh money. So as you've made the point I 0:13:23.160 --> 0:13:25.000 think last week or the week before, if you've been 0:13:25.000 --> 0:13:27.520 in the Commonwealth Bank since it was say twenty dollars, 0:13:27.840 --> 0:13:32.200 the dividend yield you're getting off that cost base is 0:13:32.240 --> 0:13:35.040 magnificent and you might find it very hard to see 0:13:35.080 --> 0:13:37.720 a reason why you'd want to sell it. And of 0:13:37.840 --> 0:13:41.480 course there's always tax when you sell things. But if 0:13:41.520 --> 0:13:44.280 you said if I was starting myself managed super fun 0:13:44.480 --> 0:13:49.920 today with a fresh pile of cash, what would I do. 0:13:50.320 --> 0:13:54.480 I certainly would be looking at the value of stocks. 0:13:54.800 --> 0:13:59.400 I probably would not be investing big time in the banks, 0:13:59.480 --> 0:14:02.120 just because they've gone up so much. But in my 0:14:02.200 --> 0:14:04.840 starting point, as I've said a few times, I'd be 0:14:04.880 --> 0:14:09.800 thinking of a diversified portfilo across local shares, international shares. 0:14:09.920 --> 0:14:12.959 I always like a bit of private equity. I always 0:14:12.960 --> 0:14:15.640 have plenty of private credit. I really do believe in 0:14:15.679 --> 0:14:19.960 that sector. And there are other weird and wonderful investments 0:14:19.960 --> 0:14:23.440 out there that I like to give me a great 0:14:23.480 --> 0:14:24.640 way to sleep at night. 0:14:25.640 --> 0:14:29.000 Okay, actually I have in front of me a pigraph 0:14:29.440 --> 0:14:34.440 of the accid allocation of your main of your flagship operation. 0:14:34.640 --> 0:14:37.760 Really the aps Foundation. We'll take a break, we'll come back, 0:14:37.800 --> 0:14:40.040 we'll pick up on this theme, but we'll also give 0:14:40.160 --> 0:14:42.320 Chris the opportunity to talk about what he wants to 0:14:42.360 --> 0:14:44.840 talk about more than anting as, which is this land 0:14:44.920 --> 0:14:59.800 to pick fund. Okay, back in a moment. Hello, Welcome 0:14:59.800 --> 0:15:03.000 back to The Australian's Money Puzzle podcast Easter a special 0:15:03.160 --> 0:15:05.920 James Kirby here with Chris Kuff. It's a great time 0:15:05.960 --> 0:15:08.480 to have Chris on, one of the best known fund 0:15:08.520 --> 0:15:12.200 managers in the land. Now, Chris, I've mentioned that the 0:15:12.280 --> 0:15:14.880 investors listening to the show will know UNI Super and 0:15:14.920 --> 0:15:18.600 they'll know Argo et cetera. They listed investment company and 0:15:18.680 --> 0:15:22.520 other operations you're involved in more recently and more recentimes, 0:15:22.520 --> 0:15:25.479 you got a lot of time to philanthropy, active philanthropy, 0:15:25.840 --> 0:15:28.880 and there's two we've talked about the Third Link Fund 0:15:29.040 --> 0:15:32.640 on the before, which is an unlisted fund that you're 0:15:32.680 --> 0:15:36.000 involved with that the retail investor can pay, maybe getting 0:15:36.040 --> 0:15:38.400 them for about twenty thousand I think is the minimum. 0:15:38.440 --> 0:15:42.320 And that's a fund where there is a strong philanthropic 0:15:42.400 --> 0:15:45.080 element to it. And then separately, tell me if this 0:15:45.120 --> 0:15:49.520 is wrong. You were involved with the Australian Philanthropic Services Group, 0:15:49.560 --> 0:15:52.320 and they have a very big fund which is pretty 0:15:52.320 --> 0:15:55.240 close to becoming the biggest fund charitable fund in the country. 0:15:55.800 --> 0:16:00.480 It's called the Australian the APS Fund. And how much 0:16:00.560 --> 0:16:01.560 is under management there? 0:16:01.640 --> 0:16:05.000 Chris Well, okay, if I just run through quickly how 0:16:05.040 --> 0:16:07.760 each works. A Third Link Growth fund, it's been going 0:16:07.840 --> 0:16:12.320 for about sixteen years. It's an Australian equity fund. All 0:16:12.360 --> 0:16:16.440 the fees go to charity. It is a what's called 0:16:16.480 --> 0:16:19.520 a fund of funds. So my job is to choose 0:16:19.680 --> 0:16:24.960 fund managers underneath the fund who are managing Australian equities 0:16:25.160 --> 0:16:28.800 who I think are best in breed. That's my opinion 0:16:28.880 --> 0:16:32.560 of best in breed, and they manage the money. We 0:16:32.640 --> 0:16:35.640 try to get our investors an excellent return. We do 0:16:35.680 --> 0:16:38.320 the best we can. I think the returns on the 0:16:38.400 --> 0:16:41.800 Third Link website it's been slightly better than the Australian 0:16:41.800 --> 0:16:46.040 share market since this inception, and so far we've given 0:16:46.480 --> 0:16:50.680 twenty three million dollars to charity over the sixteen years. 0:16:50.760 --> 0:16:53.280 It's been a lot of fun. And all those fund 0:16:53.280 --> 0:16:55.480 managers do it for free. I do it for free, 0:16:55.720 --> 0:16:58.280 and our investors I think like the fact that they're 0:16:58.320 --> 0:17:02.080 both making money and their fees they're paying. They've still 0:17:02.120 --> 0:17:04.920 got to pay a fee, but that fee is going 0:17:04.960 --> 0:17:08.840 to charity. So that's the third Link Growth Fund, which 0:17:08.920 --> 0:17:12.560 is a minimum of twenty thousand dollars Australian equity fun 0:17:12.800 --> 0:17:15.480 very specific and it's an active fund, so it's out 0:17:15.520 --> 0:17:19.680 there trying to beat the index. Okay. The second organization 0:17:19.840 --> 0:17:24.680 you mentioned is fairly unique, so it's called Australian Philanthropic Services. 0:17:25.400 --> 0:17:29.440 It's actually a charity I set up about fourteen years 0:17:29.440 --> 0:17:34.800 ago to help people do philanthropy better. And it's a 0:17:34.840 --> 0:17:38.399 big word, but philanthropy is an increasing part of the 0:17:38.400 --> 0:17:45.320 Australian wealth management landscape, particularly with the massive intergenerational wealth 0:17:45.400 --> 0:17:49.160 transfer that's going on in the trillions of dollars. Philanesbury 0:17:49.200 --> 0:17:53.040 is really growing. Anyhow, I decided fourteen years ago it's 0:17:53.040 --> 0:17:57.840 set up an organization where you could really do engage 0:17:57.840 --> 0:18:01.679 in philanthropy with the help of experts and do it 0:18:01.800 --> 0:18:05.480 hopefully in a much better way. So we run products. 0:18:05.520 --> 0:18:07.560 We have a couple of products, so we set up 0:18:07.960 --> 0:18:14.159 and administer what's called ancillary funds and they're just like superannuation. 0:18:14.480 --> 0:18:18.159 Your listeners will know in superannuation there's two types of 0:18:18.200 --> 0:18:21.240 superannuation funds in the market. You can have a self 0:18:21.280 --> 0:18:25.320 managed super fund that's a private super fund, or most 0:18:25.320 --> 0:18:28.119 of the population are in public offer fund whether it's 0:18:28.160 --> 0:18:31.679 an industry fund or whatever. It's exactly the same. In 0:18:31.720 --> 0:18:36.560 the philanthropy industry, we have these vehicles called ancillary funds, 0:18:36.880 --> 0:18:41.320 and you can set up a private ancillary fund just 0:18:41.440 --> 0:18:45.160 like self meaning super very similar structure, or you hit 0:18:45.280 --> 0:18:50.359 your car to an existing public ancillary fund and hold 0:18:50.400 --> 0:18:53.760 an account within that fund. And so we are the 0:18:53.880 --> 0:18:58.800 leading organization in Australia that helps people go into those 0:18:58.920 --> 0:19:02.000 vehicles and help them with their general giving. And between 0:19:02.200 --> 0:19:06.280 those things, those ancillary funds we ad minister about two 0:19:06.359 --> 0:19:10.560 and a half billion dollars and our clients give currently 0:19:10.600 --> 0:19:13.679 around one hundred and sixty million dollars per annum to 0:19:13.880 --> 0:19:18.440 charity out of those funds. So it's been an enormously 0:19:19.440 --> 0:19:23.159 beneficial business to set up again as a charity for 0:19:23.200 --> 0:19:24.480 the Australian public. 0:19:24.680 --> 0:19:27.440 So I'm an investor and I'd like to be involved 0:19:27.480 --> 0:19:31.159 in philanthropy, and I say there's two ways in here. 0:19:31.200 --> 0:19:33.159 There's a third link fund, which is just a straight 0:19:33.160 --> 0:19:37.360 fund that's a twenty grand minimum for the average retail investor. 0:19:37.400 --> 0:19:39.760 Anyone can do it, no strings attached, and that fund 0:19:39.760 --> 0:19:43.480 has done okay, it seems to me you're this bigger fund, 0:19:43.840 --> 0:19:46.840 which unfortunately is higher up the scale to get into 0:19:46.920 --> 0:19:51.600 as doing better. That is, its returns against its benchmarks 0:19:51.640 --> 0:19:53.040 has been better. And we'll talk about that in the 0:19:53.040 --> 0:19:55.560 moment as to why. But in any event, so if 0:19:55.600 --> 0:19:57.760 I wanted to, if I wanted to get involved in this, 0:19:58.359 --> 0:20:00.680 what is the rough bottom minimum in which I can 0:20:00.920 --> 0:20:04.760 part play here in this particular sandpit. How much would 0:20:04.760 --> 0:20:06.239 I need to put in? 0:20:06.400 --> 0:20:09.639 So let's just back off one slight bit here. With 0:20:09.840 --> 0:20:15.760 Australian Philanthropic Services Foundation, the big public ancillary fund I run. 0:20:17.080 --> 0:20:20.040 We don't necessarily call them investors that come in. It's 0:20:20.040 --> 0:20:23.400 more philanthropists. So if you would like to be involved 0:20:23.400 --> 0:20:27.320 with philanthropy, you can open an account in the APS 0:20:27.440 --> 0:20:31.600 Foundation for a minimum of forty thousand dollars. You get 0:20:31.640 --> 0:20:35.000 one hundred percent tax deduction for that forty thousand dollars 0:20:35.359 --> 0:20:37.240 in the year in which you put the money in, 0:20:37.760 --> 0:20:40.240 or indeed you could spread the tax deduction over five 0:20:40.320 --> 0:20:43.280 years if that's better for you. So you put your 0:20:43.320 --> 0:20:46.960 money in the foundation, and you are then attached to 0:20:47.040 --> 0:20:51.520 a big pool of assets and those assets are invested 0:20:51.920 --> 0:20:55.800 tax free. There's no tax payable by the foundation. And 0:20:55.840 --> 0:21:00.640 then each year we write out to our people clients 0:21:00.680 --> 0:21:04.240 in there and say you need to now here's your 0:21:04.320 --> 0:21:07.920 proportionate balance of this big pool. You need to give 0:21:07.920 --> 0:21:11.600 away four percent of that to charity. So you just 0:21:11.720 --> 0:21:14.520 tell us which charity you want to give the money 0:21:14.560 --> 0:21:18.119 to and the way it goes. So the magic that 0:21:18.160 --> 0:21:22.320 it's the very simply stated, it's quite a unique vehicle 0:21:22.359 --> 0:21:26.280 these it's broken the nexus between the timing of the 0:21:26.320 --> 0:21:30.399 tax deduction and the timing of giving to charity. You 0:21:30.480 --> 0:21:33.439 get the tax reduction all up front. The giving to 0:21:33.560 --> 0:21:36.639 charity happens over many years, or you can do it 0:21:36.720 --> 0:21:39.200 quicker if you want, but you can take your time. 0:21:39.520 --> 0:21:42.480 You can because often when you give to get a 0:21:42.560 --> 0:21:45.520 tax deduction for giving to charity. It'd be smart if 0:21:45.560 --> 0:21:48.720 you could time that with events which might cause you 0:21:48.800 --> 0:21:52.840 tax like selling your business or selling your CBA shares, 0:21:53.640 --> 0:21:56.119 or getting a bonus from your employer or something you 0:21:56.240 --> 0:21:58.880 get a taxable of anything. Chee, I wouldn't mind off 0:21:58.920 --> 0:22:01.520 setting that TAXI. You could perhaps put a lump sum 0:22:01.600 --> 0:22:05.080 over in the philanthropic vehicle, and then take your time 0:22:05.160 --> 0:22:07.640 to think about what charities you want to give too. 0:22:07.720 --> 0:22:11.399 Over time, we've seen wonderful growth in this area, and 0:22:11.480 --> 0:22:14.920 it's really changed the dynamics of a lot of families 0:22:14.960 --> 0:22:17.280 as well, because they involve their children in giving. 0:22:17.840 --> 0:22:20.080 Whereas once upon a time someone might have said, oh, 0:22:20.080 --> 0:22:22.040 we should really give something to charity, and they'd pick 0:22:22.080 --> 0:22:23.720 two or three they like and they'd hand it over 0:22:23.840 --> 0:22:26.560 and it would be tax deductible, but it would be 0:22:26.720 --> 0:22:29.399 unformed as such. What you've done is much more sophisticated 0:22:29.400 --> 0:22:31.879 thing where the person says, okay, let's think long term. 0:22:32.119 --> 0:22:37.320 We go into this fund aps and then the management 0:22:37.440 --> 0:22:41.879 of that fund is you and your colleagues, and it 0:22:42.000 --> 0:22:45.440 goes it has been doing very well, and you're able 0:22:45.480 --> 0:22:49.480 to donate then on an ongoing basis on what you're 0:22:49.520 --> 0:22:52.480 making on your initially depositive you like in that fund, 0:22:52.720 --> 0:22:55.639 and it must be four percent each year. This is 0:22:55.680 --> 0:22:58.520 probably why you need a minimum of forty thousand dicpresum 0:22:59.200 --> 0:23:01.080 because you need to have a four percent is going 0:23:01.119 --> 0:23:03.479 to go out to do it every year anyway, And 0:23:03.520 --> 0:23:06.159 you didn't say you want you stop me calling it 0:23:06.200 --> 0:23:08.760 investors for the simple reason that it's not it's it's 0:23:08.800 --> 0:23:12.560 philanthropic in nature. And that means, Chris, if I've got 0:23:12.600 --> 0:23:15.560 it right, that if listeners, you are interested in this 0:23:15.640 --> 0:23:18.040 and you have the capacity to do so. It's ideal 0:23:18.080 --> 0:23:20.679