STOCKS IN FOCUS

1st August, 2019

Equity Trustees

A 130yr old Melbourne based financial services company that is synonymous with corporate governance, entrusted with bestowing the wishes of many and often ‘wins’ customers as they leave this world is not your typical speculative microcap. But for us Equity Trustees (“EQT”) is a company that fits the mould of a micro-cap opportunity that looks attractive today, in a terrific industry structure with high recurring revenue streams and a clear path to global growth. 

We acknowledge the business of testamentary and charitable trusts may lack the sizzle of investment platforms (i.e HUB & Netwealth) but having a differentiated core skill set in the structuring of trusts and ultimate trusteeship, to ensure estates are planned and the intention of trusts adhered to, is a very lucrative business. 

Source: Equity Trustees 2018 Annual Report

The recent Royal Commission into Banking, Superannuation & Financial services has shone the light on the ineffectiveness of some inhouse trustees. Conflicts have emerged and ultimately the corporate affiliated with the fund is unwilling to the take the risk of non-compliance. EQT is very well equipped to take advantage of this opportunity with very few companies in a position to ensure a Super Fund is meeting the obligations set out in the trust structure.  

Concurrently corporate trustee services are critical for the effective administration of unit trusts the world over. Having a key market share position in Australia providing Responsible Entity services to leading fund managers and an emerging opportunity to provide similar services for global fund managers is a key growth leg of this story. With ~$80 trillion USD in the global funds management market, launching a capital light office in Europe to take advantage
of the quest for prolific retail distribution will ensure EQT is well positioned.