Page 2 - SMA changes rationale_Professional Moderate

Restructuring Infrastructure Assets

Why we are making the change

The current property / infrastructure portfolio only carried an exposure to listed infrastructure, and
not listed property, given our greater conviction in infrastructure historically. However, our outlook
for the listed property sector has improved as cash rates have peaked and the economic backdrop has
not been as negative as originally expected. Most of the larger listed property companies have low
levels of leverage and/or do not have debt due for some time, which means they have locked in low
borrowing costs. We have reduced the listed infrastructure exposure in the portfolio to enable the
inclusion of listed property exposure, at equal weighting, while maintaining the overall allocation
here.

Currency Hedging

Why we are making the change

We currently have an unhedged position when it comes to currency on our global growth asset
portfolio. Over the last few years, and more so of late, there has been significant currency movement.
We believe the Australian dollar remains undervalued versus the US dollar and some other currencies
in comparison to long term historical averages. Given the relative strength of the Australian economy
and the likelihood foreign central banks will cut their cash rates before the RBA, there is likely to be
upward pressure on the Australian dollar moving forward. We felt it was prudent to include some
currency hedged exposure in the portfolio via global listed property and infrastructure, thus leaving
global equities unhedged for now.

Changes to Underlying Investments
Why we are making the change

We have reviewed the underlying holdings to ensure the portfolio continued to contain our highest
conviction picks and their associated blending (portfolio construction) remained appropriate
considering our expectations of the forward period. This review resulted in the following changes to
the investment lineup:

South32 (S32) – Sold – our patience here has worn too thin and the weak expected forward metrics of
the company mean the company now falls outside of our screened investable universe. Whilst we can
override this for an already held stock, we’re not confident enough in the outlook for the business to
do so.

James Hardie (JHX) – Sold – the company’s share price has moved well above our expectations and
our assessment of fair value, more importantly. As such, we’ve sold this stock to allocate to new ideas
with better upside opportunities. These are the stock sales we like.
Newmont (NEM) – Bought – US Newmont Goldcorp recently acquired Australia’s largest gold miner in
Newcrest, creating the world’s largest gold mining company. We liked the acquisition given the
strengths of both companies and their positions on the gold mining cost curve. Whilst we think the
gold price remains well supported, we’re attracted to the significant disconnect between the gold