Ann: Response to Media Speculation, page-43

I don't think that people actually realise how much risk there is in each of the products Blue Sky create. When the BEST performing superannuation funds in 2018 achieved 10% returns and on average they achieved 7% to 8%.

Blue Sky carrying on about consistent 15% annualized returns is about creating a yield narrative that is designed to say, hey trust me, I got this. The issue is, scanning the market looking for opportunities with $100Million, yeah, you can find 15% returns if you look hard enough. You can be super selective and find opportunities that you can add value to and achieve those returns. But you are skimming the top of the opportunities, balancing the risk against the reward.

What then happens is when you try to achieve the same returns with say $3 Billion you are faced with 2 options, you lower your return expectations or you take on riskier opportunities. Rather than take on lower yield opportunities, Blue Sky took the other path and is packaging up higher risk opportunities. Couple that with their narrative of 15% annual consistent returns, you create an environment where to keep the narrative you have to bend / push some of the performance of the assets.

Like I have said alternative assets has a place in the world and I think that somebody will pick this up and change it in due course, but the narrative has to be different otherwise you loose credibility. They just need to stop trying to polish turds and just call them turds. And then - learn from the turds and try to avoid them.

Take for example the Shoes of prey & Leonards fiasco, rather than call it a turd and cut their losses, they keep pouring in more money, hoping that it will come good. This is driven not by making the right call about the prospects of the opportunity, but they are locked into gamblers mindset - if i double down on the next had I can recover my losses.

If they just stop trying to hide the bad news, they will actually create more respect out there in the market.