Where Does Malcolm Turnbull Invest His Money?
Australia’s former prime minister is a wealthy man. Last night, much was made of the fact that he doesn’t need to be in public life to have power and financial reward. He’s already amassed quite a fortune. Even before he entered politics. Various sources estimate his net worth at between $180 million and $200 million.
Last month, the AFR’s Smart Investor did an interview with Mr Turnbull about how he grew his wealth. The focus was on OzEmail. In 1994, Turnbull invested $500,000 in the internet provider. By the time he closed his position, he’d made $60 million. Turnbull told interviewer James Frost that ‘When I was in business I did best out of start-ups. But OzEmail was a long time ago… I can’t live off my OzEmail laurels forever.’ ‘I don’t have private equity investments any longer because a) I’m in Parliament and b) I don’t have the time… Since I’ve been in Parliament my investments are rather limited. It’s all there on the record. It’s very boring and passive,’ added Mr Turnbull.
What exactly is on ‘the record’? How does Malcolm Turnbull invest? As the Parliamentary Register shows today, it’s far from boring. Sure, some of his investments are pretty passive. But many of them are far from average.
What’s on Malcolm Turnbull’s Register of Interests?
First, there are the listed companies and funds*. Among them is the SPDR S&P 500 ETF Trust [NYSEARCA:SPY]. Over the last two years, SPY is up by nearly 40%. This ETF is relatively popular because it offers exposure to big-name stocks, whilst being balanced and accessible. The Trust’s top ten holdings are Apple Inc., Microsoft Corporation, Exxon Mobil, Johnson & Johnson, GE, Wells Fargo, Berkshire Hathaway (Class B), JPMorgan, Amazon.com, and Pfizer Inc. Apple is the most substantial holding, at 3.8%. To put that in context, Microsoft comes next at 2.03%. So it’s very tech heavy. But perhaps not as tech heavy as Vanguard Information Technology ETF [NYSEARCA:VGT], which Turnbull bought in July last year. VGT’s top five holdings are Apple, Google, Microsoft, Facebook, and IBM.
Then there’s the iShares iBoxx $ High Yield Corporate Bond ETF [NYSEARCA:HYG]. This Fund pays dividends of around US$0.40 every month or so. It has bonds from a variety of big corporations. Interestingly, most are from the US communications services market.
There’s also the Deutsche X-trackers MSCI Japan Hedged Eq [NYSEARCA:DBJP]. This fund tracks the MSCI Japan US Dollar Hedged Index. It provides exposure to Japanese equities, plus a hedge for the yen/US dollar exchange rate. Its top holdings include Toyota, Mitsubishi and Honda.
The takeaway from this? Malcolm Turnbull likes ETFs. Which, like he said, can be kind of boring. But Turnbull has also bought in to a number of actively managed funds. For example, there’s the 3G Natural Resources Offshore Fund. This Fund is run by multi-billion dollar global firm 3G Capital. 3G is based in Brazil. The Fund’s nominated jurisdiction is the Cayman Islands, because…reasons. There’s no public information on what it holds.
There were a number of others on the list, which Turnbull got rid of after he was elected in 2013. Those included iShares JPMorgan USD Emer Mkt Bnd Fd ETF [NYSEARCA:EMB] and iShares MSCI Brazil Index (ETF) [NYSEARCA:EWZ]. In other words, a significant amount of exposure to emerging markets. In July this year, he added Morgan Stanley Emerging Markets Domestic Debt Fund, Inc. [NYSE: EDD]. But EDD isn’t looking for growth. It looks for government debt securities (bonds) in emerging countries. So really, it’s just another fixed income pick.
Of his wife Lucy Turnbull, he said ‘Lucy and I work very much as a team.’ His wife owns a few more interesting ones, including Prima Biomed Limited [ASX:PRR], of which she is the chair. As chair of Prima, Mrs Turnbull has had an interesting time. She’s seen the value of her interest in PRR fluctuate significantly.
Then, there’s the real estate. The Turnbulls own a commercial property in Potts Point, Sydney, which they run as an investment. And an apartment, also in Potts Point. They own a multi-million dollar terrace in Paddington.
Then, there’s the investment apartment in New York. They bought it in late 2012, for US$3.28 million. It’s a two bedroom apartment in The Century, a 1931 art deco building right near Central Park on the Upper West Side.
Source: City Realty
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It’s an interesting choice. They initially bought the apartment for themselves, as a pied-à-terre for New York visits. It is now held as an investment, under control of a holding company – Century Turnbull LLC. And it just happens to be in a strategically sound area. According to US real estate website Trulia, the median rental for that block is US$3,750. Significantly higher than surrounding blocks.
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According to City Realty, two bedroom apartments in The Century are US$19,000. Per month.
Turnbull also has interests in Wilcrow Pty Ltd, a private company. Wilcrow’s business name or trading name is East Rossgole Pastoral Company. East Rossgole Pastoral Company is a diversified farm in the Hunter Valley region. It does beef cattle, sheep for wool, lambs, and horses. Some of Wilcrow’s assets are also listed on Turnbull’s Register. For example, Wilcrow owns the farm land on which it operates. It also owns all the equipment, machinery and stock.
*NB: This is an abridged list. To download the full list, click here.
What you can learn from Malcolm Turnbull
There’s a common theme amongst the new Prime Minister’s various investments. That is, there are a lot of income generators. From real estate to high-yield global funds.
If this piques your interest, don’t miss Money Morning income specialist Matt Hibbard’s free report. It’s titled ‘How to Boost Your Income Using Dividends’. In this report, Matt reveals the ins and outs of dividend-paying stocks. Including how to find and assess the best ones for your portfolio. Matt calls it the ‘three golden keys to dividend stock selection’. Read this report and you’ll also learn how certain Aussie stocks can (legally) help slash your tax bill. It’s a must-read if you’re chasing yields. Find out how to download your free copy here.
It will be interesting to see how the PM’s investments change now that he’s got the top job. It’s likely he and his family will face even closer scrutiny of their investments. Perhaps some will call for him to invest more in Australia. While you wait for these developments to play out, don’t forget to download and read your free copy of ‘How to Boost Your Income Using Dividends’.
Contributor, Money Morning