The Portfolio Manager, Tama Willis, sheds light on some areas of interest

  1. Can you explain your role at Devon and how long you’ve been with the company?

My name is Tama Willis and I am the Portfolio Manager of the Australian Fund which means I decide what stocks are included in the Fund. My background is as an equity analyst in London with UBS and Deutsche Bank for 10 years and 4 years with major global fund managers Fidelity and GIC, so I have considerable experience in analysing and assessing businesses. I spend most of my time researching stocks for the Funds. I have been with Devon since June 2012.

  1. How long have you been managing the Australian Fund?

The Devon Australian Fund was established in August 2010. I took over the portfolio management of the Fund from Slade Robertson when I joined Devon in June 2012.

  1. Can you explain a bit about the strategy behind the Australian Fund?

The Australian Fund is predominantly invested in companies listed on the Australian share market. The process and style of the Fund is bottom-up and valuation focused. There is a quality bias and typically this results in directing investment towards companies that have stable and predictable cash flows. In general these businesses tend to have lower earnings risk than the rest of the market, and therefore lower value risk. The Fund generally achieves a dividend yield at or above the ASX 200 average and evidence is clear that dividends make up a substantial part of investor total returns over the long-run. The Fund also takes positions in high conviction mid-cap stocks ($0.5-1bn market capitalisation) which, through careful selection, can deliver significant outperformance for clients. By selecting stocks that have better prospects than the average the Fund aims to beat the ASX200 index.

  1. How would you see this Fund fitting into an investor’s portfolio?

The Fund is appropriate for all equity investors, but particularly those who are looking for exposure to a broader range of stocks than are available in the NZ market. A key attraction of the Australian market for investors is the breath of sectors and individual company choice. There are over 2,000 names trading on the ASX and there is also a healthy small cap sector, an area where there are significant opportunities to make money for investors in the Fund. The Australian Fund is also usually unhedged so a NZ investor in Australia will benefit should the NZ dollar reverse against the Australian dollar.

  1. Although this Fund is an Australian equity fund, does Devon still pay close attention to what is happening globally?

Yes we do. In the short term factors that drive off shore markets can have a very significant impact on the Australian equity market. Over the longer term global economic factors may materially impact the

economic performance of Australia which will obviously affect local listed companies. While we only invest in companies based on detailed bottom-up analysis of the business we often travel further abroad to visit company operations and also get exposure to different economies. For example, we visit China regularly with a specific focus on mining and commodity related sectors.

  1. When someone invests in the Australian Fund, where is the money invested?

The money is invested in a pooled fund (a Portfolio Investment Entity) that collectively owns the stocks chosen by the Portfolio Manager. The Australian Fund owns between 25-35 Australian listed stocks at any one time. With regard to security of clients’ funds, the money is never held by Devon directly, it is held by a third party custodian (in this case BNP Paribas), who is appointed by the Trustee (Supervisor).

  1. How do you decide what the most suitable/appropriate investment options are for the Fund?

The companies that populate the portfolio are chosen using fundamental analysis. Potential companies are modelled using data from publically available sources (primarily company financial statements), meetings are held with management and an assessment made of valuation. A financial model is run on every company held in the portfolio. Work is peer reviewed within the investment team. Essentially the analytical process used to conduct detailed analysis of potential holdings is identical to that used across Devon’s other funds. The team regularly review valuation screens, meet with stock analysts, attend conferences and meet company management to review existing holdings in the Fund and screen for new investment opportunities.

  1. Could you explain your thoughts on the risk this Fund carries?

It is important investors understand that the Australian Fund is at all times primarily invested in listed equities. Consequently it has equity risk and in the event of overall share market declines the capital value of the Fund will also decline. The Fund can have up to 20% invested in cash but this level of cash would only be considered in a market that is significantly overvalued. There is a quality bias and valuation focus in the Fund so the aim is to outperform the market in both up and down markets but unforeseen events can impact individual company positions.

  1. Does this fund pay distributions? If so when?

The Australian market is one of the highest dividend yield markets globally. The Australian Fund pays a distribution in April and October for an annual dividend yield of 4% p.a. after tax, however this may be subject to change. Clients can elect to have this distribution paid to their bank account or to have it reinvested in additional units on their behalf. 

  1. What methods does the Fund use to minimise foreign exchange risk?

The Australian Fund is unhedged, but has the ability to use hedging.

  1. What specific performance objectives do you set for the Fund?

The specific objective of the Fund is to outperform the ASX 200 index in NZ dollars.

  1. Do you expect a level of cyclical fluctuation in the Fund’s price?

Yes. As discussed above the Fund is an equity investment and capital values will fluctuate.

  1. Why should someone invest in this Fund?

There are 3 key reasons. Firstly, the Australian market is circa 30x the size of the NZ market and is more diversified with over 2000 stocks listed on the exchange, so presents local investors in the Fund with a far greater number of investment opportunities. Secondly, the Australian Fund pays a dividend yield of 4% pa, broadly in line with the Australian market average, and over time dividend yields have been shown to be a very significant component of overall returns. Lastly, the Fund approach has delivered above benchmark returns and the management of the Fund is informed by the collective experience of the broader Devon Funds team who bring significant experience and expertise to portfolio management.

  1. For someone who is new to funds management, what are some important considerations to take into account before investing in the Devon Australian Fund?

The most important consideration is that investors understand they are taking a position in an equity fund and that all equity investments are subject to potentially material capital value fluctuations. As the Fund is not hedged, currency fluctuations will impact performance. The Investment Statement provides more information about the Fund and its risk characteristics. If you still have questions we recommend you talk to an Authorised Financial Adviser.

  1. Given there is a choice of Australian funds, why should an investor choose Devon’s Australian Fund?

The combination of a screen and detailed fundamental research means that the Fund follows a disciplined approach toward stock selection. This is entirely different than some more quantitative approaches. This approach has delivered good returns for investors relative to other NZ based Australian equity funds and also performance has exceeded the majority of Australian based equity funds over the past three years. While past performance is not a guide to future returns I will continue to employ the same strategy to manage the Fund with all efforts focused on finding the best risk adjusted company ideas for the Fund.


Should you have any further questions regarding the Devon Australian Fund, please download the combined Investment Statement found on our website,

OR contact us via

To sign up to our monthly update click here