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Performance Report: Bennelong Kardinia Absolute Return Fund
23 Apr 2020 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund outperformed the ASX200 Accumulation Index by +16.33% in March, returning -4.32%. Since inception in May 2006, the Fund has returned +8.58% p.a. with an annualised volatility of 7.22%. By...
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23 Apr 2020 - Performance Report: Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund's discretionary investment strategy commences with a macro view of the economy and direction to establish the portfolio's desired market exposure. Following this detailed sector and company research is gathered from knowledge of the individual stocks in the Fund's universe, with widespread use of broker research. Company visits, presentations and discussions with management at CEO and CFO level are used wherever possible to assess management quality across a range of criteria. Detailed analysis of company valuations using financial statements and forecasts, particularly focusing on free cash flow, is conducted. Technical analysis is used to validate the Manager's fundamental research and valuations and to manage market timing. A significant portion of the Fund's overall performance can be attributed to the attention and importance given to the macro economic outlook and the ability and willingness to adjust the Fund's market risk. |
| Manager Comments | In March, the Fund's short book and low net market exposure protected the portfolio from the significant coronavirus-induced market decline. The Short Book contributed +600 basis points to performance. Other positive contributors included Fisher & Paykel, Fortescue, Jumbo Interactive and Rio Tinto. Key detractors included Macquarie, CBA, Aristocrat Leisure, Charter Hall and CSL. Net equity market exposure was increased from -5.6% to +28.4% (36.1% long and 7.7% short) during the month. Key changes to the portfolio included the closure of most of the Fund's individual stock shorts and a significantly reduced short position in Share Price Index Futures, partially offset by the sale of a significant portion of the long book. Kardinia also added a number of new long positions including Fortescue Metals, Fisher & Paykel Healthcare and JB Hi-Fi. |
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Performance Report: Insync Global Capital Aware Fund
22 Apr 2020 - Australian Fund Monitors
The Insync Global Capital Aware Fund outperformed AFM's Global Equity Index by +3.69% in March, taking 12-month performance to +19.62% versus the Index's +2.72%. Since inception in October 2009, the Fund has returned +10.92% p.a. with an...
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22 Apr 2020 - Performance Report: Insync Global Capital Aware Fund
By: Australian Fund Monitors
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| Fund Overview | Insync employs four simple screens to narrow the universe of over 40,000 listed companies globally to a focus group of high quality companies that it believes have the potential to consistently grow their profits and dividends. These screens are size of the company, balance sheet performance, valuation and dividend quality. Companies that pass this due diligence process are then valued using dividend discount models, free cash flow yield and proprietary implied growth and expected return models. The end result is a high conviction portfolio of typically 15-30 stocks. The principal investments will be in shares of companies listed on international stock exchanges (including the US, Europe and Asia). The Fund may also hold cash, derivatives (for example futures, options and swaps), currency contracts, American Depository Receipts and Global Depository Receipts. The Fund may also invest in various types of international pooled investment vehicles. At times, Insync may consider holding higher levels of cash if valuations are full and it is difficult to find attractive investment opportunities. When Insync believes markets to be overvalued, it may hold part of its resources in cash, or use derivatives as a way of reducing its equity exposure. Insync may use options, futures and other derivatives to reduce risk or gain exposure to underlying physical investments. The Fund may purchase put options on market indices or specific stocks to hedge against losses caused by declines in the prices of stocks in its portfolio. |
| Manager Comments | In March, Insync sold down all remaining index put positions as volatility measured by the VIX index approached all-time highs mid-month, reflecting extreme fear and panic by investors. They also hedged a portion of the Fund's USD exposure back into Australian dollars as the Australian dollar fell significantly against the USD. Insync believe the portfolio is well positioned for the recovery in markets. Their view is that large-scale operations with the strongest balance sheets, a long runway for growth due to global megatrends and effective capital allocators are going to be the greatest beneficiaries as global economies start to recover. Insync noted the Fund's global megatrend companies are less sensitive to the economic cycle or crisis and have therefore not had to make significant changes to the portfolio. |
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Performance Report: DS Capital Growth Fund
21 Apr 2020 - Australian Fund Monitors
The DS Capital Growth Fund has outperformed the ASX200 Accumulation Index by +7.66% over the past 12 months. Since inception in December 2012, the Fund has returned +11.19% p.a. versus the Index's +6.15%.
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21 Apr 2020 - Performance Report: DS Capital Growth Fund
By: Australian Fund Monitors
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| Fund Overview | The investment team looks for industrial businesses that are simple to understand; they generally avoid large caps, pure mining, biotech and start-ups. They also look for: - Access to management; - Businesses with a competitive edge; - Profitable companies with good margins, organic growth prospects, strong market position and a track record of healthy dividend growth; - Sectors with structural advantage and barriers to entry; - 15% p.a. pre-tax compound return on each holding; and - A history of stable and predictable cash flows that DS Capital can understand and value. |
| Manager Comments | The Fund's capacity to protect investor capital in falling markets is highlighted by the following statistics (since inception): Sortino ratio of 1.15 versus the Index's 0.39, down-capture ratio of 45.22%, and an average negative monthly return of -2.06% versus the Index's -3.12%. DS Capital expect the current downturn to present many opportunities to the patient investor with a long-term view. They believe the evolution of the crisis will feature a total reset of earnings expectations and operating conditions along with many capital raisings. They noted every bear market lays the seeds for the next bull market and they are excited by the number of opportunities being worked on by the investment team. |
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Performance Report: Loftus Peak Global Disruption Fund
20 Apr 2020 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund outperformed AFM's Global Equity Index by +5.44% in March, returning -2.63%. Since inception in November 2016, the Fund has returned +20.93% p.a. versus the Index's +11.24%.
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20 Apr 2020 - Performance Report: Loftus Peak Global Disruption Fund
By: Australian Fund Monitors
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| Fund Overview | The investment process involves a combination of top-down analysis with fundamental bottom-up qualitative and quantitative research to derive a risk-adjusted discounted cash flow (DCF) valuation of companies in the target universe. The investment team will generally buy stocks from the pool of securities that are trading below Loftus Peaks' valuation and sell them when they are trading above Loftus Peak's valuation. The approach allows for both fundamental accounting information as well as market-oriented inputs to be factored into the portfolio construction process. Loftus Peak's model typically does not rely on leverage to deliver investment returns and specifically takes into account risk in the valuation process. Capital preservation can be managed by holding up to 50% cash. Index and currency options and futures may also be used to manage risk. |
| Manager Comments | Top contributors in March included Apple, Netflix, Amazon and Tencent. Key detractors were Google, Qualcomm and Roku. The Australian dollar depreciated -5.1% over the month against the US dollar, which meant the value of the Fund's US dollar positions increased. As at 31 March 2020, the Fund carried a foreign currency exposure of 93%, giving it the ability to participate in any Australian dollar rebound from its decade-low levels. At month end, the Fund was 89% invested in 24 holdings with the balance in cash. |
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Performance Report: NWQ Fiduciary Fund
16 Apr 2020 - Australian Fund Monitors
The NWQ Fiduciary Fund outperformed the ASX200 Accumulation Index by +13.62% in March, returning -7.03%. Since inception in May 2013, the Fund has returned +4.40% p.a. with an annualised volatility of 5.58%. By contrast, the Index has...
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16 Apr 2020 - Performance Report: NWQ Fiduciary Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund aims to produce returns after management fees and expenses of RBA Cash Rate + 4.0-5.0% p.a. over rolling five-year periods. Furthermore, the Fund aims to achieve these returns with volatility that is a fraction of the Australian equity market, in order to smooth returns for investors. |
| Manager Comments | The Fund's capacity to protect investors' capital in falling markets is highlighted by the following statistics (since inception): down-capture ratio of 13.93%, maximum drawdown of -8.77% versus the Index's -26.75% over the same period, and average negative monthly return of -1.14% versus the Index's -3.15%. The Fund has hedged out 70% of the fall in the Australian equity market for the calendar year (-7.04% for the Fund versus -23.10% for the Australian equity market). NWQ believe they are well positioned for a full recovery and a continuation of delivering superior risk-adjusted returns in all market conditions. They noted the recovery is well underway, with the Fund having recovered over 35% of the fall in the first two weeks of April. They expect the opportunity set for active long/short managers to be favourable moving forward. NWQ's investment committee is looking to selectively increase exposure to market neutral and variable net managers in the near term. |
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Performance Report: Surrey Australian Equities Fund
9 Apr 2020 - Australian Fund Monitors
The Surrey Australian Equities Fund outperformed the ASX200 Accumulation Index in March by +1.95%. During the month, Surrey continued to bolster the Fund's defensive positioning both through stock selection, reduced exposure to micro caps...
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9 Apr 2020 - Performance Report: Surrey Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Investment Manager follows a defined investment process which is underpinned by detailed bottom up fundamental analysis, overlayed with sectoral and macroeconomic research. This is combined with an extensive company visitation program where we endeavour to meet with company management and with other stakeholders such as suppliers, customers and industry bodies to improve our information set. Surrey Asset Management defines its investment process as Qualitative, Quantitative and Value Latencies (QQV). In essence, the Investment Manager thoroughly researches an investment's qualitative and quantitative characteristics in an attempt to find value latencies not yet reflected in the share price and then clearly defines a roadmap to realisation of those latencies. Developing this roadmap is a key step in the investment process. By articulating a clear pathway as to how and when an investment can realise what the Investment Manager sees as latent value, defines the investment proposition and lessens the impact of cognitive dissonance. This is undertaken with a philosophical underpinning of fact-based investing, transparency, authenticity and accountability. |
| Manager Comments | Despite the volatility, Surrey believe markets will manage through this challenging period. They noted that all of the Fund's companies have robust balance sheets and continue to generate revenue and cashflow. The Fund's top holdings at the end of March included Cooper Energy (COE), Fisher & Paykel Healthcare (FPH), IMF Group (IMF) now known as Omni Bridgeway (OMN), Saracen Minerals (SAR) and Xero Limited (XRO). |
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Performance Report: Bennelong Long Short Equity Fund
8 Apr 2020 - Australian Fund Monitors
The Bennelong Long Short Equity Fund outperformed the ASX200 Accumulation Index by +16.15%, returning -4.5% after fees. The Fund has returned +15.49% p.a. since inception in February 2002 versus the Index's annualised return of +6.68%.
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8 Apr 2020 - Performance Report: Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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| Fund Overview | In a typical environment the Fund will hold around 70 stocks comprising 35 pairs. Each pair contains one long and one short position each of which will have been thoroughly researched and are selected from the same market sector. Whilst in an ideal environment each stock's position will make a positive return, it is the relative performance of the pair that is important. As a result the Fund can make positive returns when each stock moves in the same direction provided the long position outperforms the short one in relative terms. However, if neither side of the trade is profitable, strict controls are required to ensure losses are limited. The Fund uses no derivatives and has no currency exposure. The Fund has no hard stop loss limits, instead relying on the small average position size per stock (1.5%) and per pair (3%) to limit exposure. Where practical pairs are always held within the same sector to limit cross sector risk, and positions can be held for months or years. The Bennelong Market Neutral Fund, with same strategy and liquidity is available for retail investors as a Listed Investment Company (LIC) on the ASX. |
| Manager Comments | The Fund's gearing declined to 3.9X, down from 4.3X at the end of February, to counter market volatility. In this environment Bennelong remain focused on enhancing the attributes they are looking for in both the long and short portfolios. The Fund's trading activity was elevated as a result of volatility and opportunity. Bennelong noted it remains unclear whether the flow-on effects of a health crisis becoming an economic crisis will extend to a full-blown credit crisis. They highlight that the risk of financial distress in the economy is material, with the prolonged backdrop of artificially depressed interest rates via central bank intervention continuing to distort creditworthiness and capital allocation. |
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Performance Report: Australian Eagle Trust Long-Short Fund
7 Apr 2020 - Australian Fund Monitors
The Australian Eagle Trust Long-Short Fund outperformed the ASX200 Accumulation Index by +4.41% in March. Since inception in July 2016, the Fund has returned +12.18% p.a. versus the Index's +3.55%. Australian Eagle noted they remain...
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7 Apr 2020 - Performance Report: Australian Eagle Trust Long-Short Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund returned -16.24% against the Index's -20.65% in March. The portfolio's largest positive contributions came from long positions in ASX Ltd, Fortescue Metals and Resmed Inc. Key detractors included long positions in Japara Healthcare, QBE Insurance Group Ltd, and a short position in Cimic Group. The Fund had 31 long positions and 24 short positions with largest exposure to medical devices & services and technology stocks. At month-end, the portfolio had relatively less exposure to banking and materials stocks. Australian Eagle noted they remain focused on taking long-term positions in high quality growth companies with strong balance sheets that will be able to take advantage of weaker competitors once this downturn passes. Consequently, outside of minor trades to take advantage of large falls in certain stock prices during the month, they do not intend to trade excessively during this volatile time nor change the net exposure, but allow the strong individual company attributes to produce the Fund's results. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
6 Apr 2020 - Australian Fund Monitors
The Gyrostat Absolute Return Income Fund rose +5.8% after fees in March, outperforming the ASX200 Accumulation Index by +26.45%. Since inception in December 2010, the Fund has returned +5.27% p.a. with an annualised volatility of 4.20%.
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6 Apr 2020 - Performance Report: Gyrostat Absolute Return Income Equity Fund
By: Australian Fund Monitors
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| Fund Overview | The investment objective is to deliver regular and stable income stream (from ASX20 dividends) in a low interest rate environment with capital security - a 'highly-defensive' asset class. Gyrostat has operated for 37 consecutive quarters within a 'hard' pre-defined risk parameter (no more than 3% capital at risk with the Fund's maximum draw-down 2.2% in any circumstances) always in place, delivering regular income by passing through ASX-20 dividends, and meeting returns guidance based upon market conditions (demonstrating increasing returns with market volatility). The Fund buys and holds ASX-20 and international assets with lowest cost protection always in place with upside. It is a conservative asset allocation. Note that Gyrostat have expanded their international assets within the Fund to include SP500, FANGS, Nikkei, Hang Seng, MSCI China, MSCI Developed and Developing markets. Advances in investment risk management enable cost-effective protection to always be in place for a 'hard' defined risk parameter (say no more than 3% capital at risk). Returns are designed to increase as volatility levels increase, as this provides more opportunities to lower protection costs. Investment Objectives: - Returns: 6% - 8% pa in trending markets, greater than 8% pa in volatile markets, BBSW90 + 3% in stable markets - Income: Minimum cash rate + 3% paid semi-annually (currently 4.0% p.a.) from dividends and franking credits - Protection: No quarterly NAV draw-downs exceeding 3% Also includes a 'tail hedge' for gains on large market falls. |
| Manager Comments | Gyrostat are focused on ensuring the Fund is highly defensive, protecting wealth whilst delivering regular income. The Fund has operated for 37 consecutive quarters with a 'hard' pre-defined risk parameter always in place (no more than 3% of capital at risk with a maximum drawdown of -2.2% in any quarter). Gyrostat have expanded the international assets within the Fund to include S&P500, Nasdaq, FANGS, Nikkei, Hand Send, MSCI China, MSCI Developed and developing markets, allowing Gyrostat to offer a broader range of non-correlated assets with significant scale potential. |
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Fund Review: Bennelong Kardinia Absolute Return Fund February 2020
3 Apr 2020 - Australian Fund Monitors
The latest Fund Review for the Bennelong Kardinia Absolute Return Fund is now available. The Fund, which has been in operation for more than 10 years, has a long-biased, research driven, active equity long/short strategy and invests in...
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3 Apr 2020 - Fund Review: Bennelong Kardinia Absolute Return Fund February 2020
By: Australian Fund Monitors
AFM Fund Review - February 2020 (pdf format)
BENNELONG KARDINIA ABSOLUTE RETURN FUND
Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile.
- The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies.
- The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in May 2006 and also has significantly lower risk KPIs. The Fund has an annualised return of 8.98% p.a. with a volatility of 7.12%, compared to the ASX200 Accumulation's return of 6.02% p.a. with a volatility of 13.22%.
- The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while Bennelong Funds Management provide infrastructure, operational, compliance and distribution capabilities.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - February 2020 (pdf format)
