Michmutters

Not since Tesla brought a Model 3 to Brisbane back in 2018 (prior to deliveries in 2019) have I seen such a crowd at the launch of an electric vehicle. BYD received 600 RSVPs to launch at Indooroopilly’s Auto Mall in Brisbane. I think all of them were there on August 2nd.

After the speeches by Tim Cahill (of Socceroo’s fame) and Luke Todd from EV Direct, the public were allowed to swarm all over and inside the gray BYD Atto 3 right-hand drive. It was a bit of a contrast to the 90 seconds we were allowed in the Model 3 until the attendant, stopwatch in hand, ushered us out of the vehicle.

I watched and listened for a while, then thought — “I’ll have lunch and come back. Shouldn’t be too many people here in an hour.” Boy was I wrong. There were still over 60 people lined up. The best shots were the ones I was able to get from the escalator, going up. BYD was very generous in allowing such access to their vehicle. The car is on display for a week — I wonder how many people are there today?

This event showed beyond a shadow of a doubt that Australia is thirsty for an affordable electric SUV.

Atto 3 mobbed by crowds. Photo by David Waterworth.

Australia and China have had some lovers’ quarrels recently. We have had spats over wine, barley, and even coal. Our outgoing government even got involved in some saber rattling. So, I thought there might be some reticence on the part of the Australian public in buying a Made in China vehicle. Not the slightest. All the people I met were as keen as mustard, were well aware of the car’s features. A particular positive was BYD’s VTL capacity. BYD is keen too and expectations are that we will soon see the launch of the Seal and the Dolphin EVs on Australian shores.

Hundreds queued to experience BYD’s Atto 3. Photo by Paul Milburn.

An unofficial Queensland government source said that they may be considering their options on Atto 3. They are awaiting the ANCAP rating before making a decision. They are also considering the Tesla Model Y after having just had a three-day trial. The ships are on the way and it won’t be long before we see a plethora of BYDs on Queensland and Australian roads. Rumor has it that over 4,000 have already been sold.

Had to use the escalator to see the car. Photo by Paul Milburn.

Featured photo by David Waterworth.

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Montgomery said he would remain the executive chair of the business, as well as the chief investment officer of the private fund.

Australian Eagle would keep its North Sydney offices for now, but would go into Montgomery’s Castlereagh Street offices on non-work-from-home-days.

Both funds were put on watch by rating houses Zenith Investment Partners and Lonsec, as they prepped for out-of-cycle reviews to weigh the manager changes.

Poor returns, high fees

The 10-year-old Montgomery Fund has posted 7.32 per cent annualized over the nine years to July 31 after fees, which was 0.67 percentage points a year lower than S&P/ASX 300 Accumulation Index over the period.

It’s ahead of the benchmark on a since-inception basis at 143.69 per cent cumulative return, versus 140 per cent from the index.

The private fund, which was and will be co-managed by Montgomery, fared worse. It has posted 133.29 per cent since it launched in December 2012, which was 13.4 per cent lower than the ASX 200 Industrials Accumulation Index.

Its performance has worsened in the past year, with the fund returning -12.95 per cent when the benchmark did 3.48 per cent.

Montgomery pointed out the two funds’ returns were better than the benchmark on a three-year annualized basis.

“The MIM team have improved their performance over the last few years, but not many managers can match the track record of Sean and Alan and the team at Australian Eagle,” he said in response to the funds’ under-benchmark returns.

The new manager, Australian Eagle Asset Management, has been around since 2004/2005 and currently manages about $250 million. Its long-only strategy has beaten the index by 4.1 per cent since inception and by 3.82 per cent on a one-year basis, according to the firm. (It also runs a long/short strategy).

Montgomery Investment Management only works with smaller-ticket investors and has stayed away from managing money for institutional funds.

It was called out for its high fees and high cash allocation by Lonsec in 2020. Montgomery said it hadn’t changed its fees since then, and there was no immediate plan for them to change under the Australian Eagle deal.

Over the last three years, the firm has increasingly looked to external fund managers to expand its business, instead of building internal investment capabilities. It’s now in global equities (via distributing Polen Capital’s strategies down under), Australian small caps (via a joint venture with Gary Rollo and Dominic Rose) and credit (via a distribution agreement with Aura Funds Management).

“We’d be flattered to be thought of in those circles,” Montgomery said, when asked if his business had transitioned from an investment firm to a funds distribution business like Pinnacle, Fidante or GSFM.

“Difference is those operators would have multiple managers in similar strategies,” he said adding his firm was much more focused.