NEWS
Performance Report: Surrey Australian Equities Fund
2 Apr 2020 - Australian Fund Monitors
The Surrey Australian Equities Fund has returned +4.07% over the past 12 months. Surrey noted they are conscious of the risks COVID-19 poses - both the health and economic impacts. They remain positive on equity markets in 2020 but are...
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2 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 | They believe the hysterical reaction to the virus has created share price dislocations which they have used to buy what they believe to be strong companies at very attractive valuations. These investments are not directly exposed to COVID-19 either on the supply or demand side. The fund's top holdings at the end of February included Centuria Capital Group (CNI), Fisher & Paykel Healthcare (FPH), IMF Group (IMF), Imricor Medical Systems (IMR) and Xero Limited (XRO). The fund doesn't hold any travel business or have any significant exposure to companies directly focused on the Chinese consumer market. |
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Performance Report: Ark Global Fund - Class B AUD Unhedged
1 Apr 2020 - Australian Fund Monitors
The Ark Global Fund (unhedged) returned -2.2% in February, outperforming AFM's Global Equity Index by +3.37% and taking annualised performance since inception in July 2017 to +14.33% with an annualised volatility of 10.77%.
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1 Apr 2020 - Performance Report: Ark Global Fund - Class B AUD Unhedged
By: Australian Fund Monitors
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| Fund Overview | The investment objective of the Fund is to achieve long-term capital appreciation with low correlation to global equity markets through investment in the Underlying Fund. Fund One is a global macro fund that utilises quantitative research including machine learning techniques and fully automated trading algorithms which will aim to generate positive uncorrelated returns relative to any significant equity benchmark. The traded instruments are either major FX pairs or the most liquid exchange traded stock index, bond, and commodity futures across North America, Europe and Asia Pacific. The algorithm backtests over 10 years of tick data and in order to do so effectively requires machine learning to filter noise and identify meaningful signals, which results in statistically significant prediction of price movements. In production this processing is done in real time and the portfolio reacts to asset movements by rebalancing automatically to the desired risk exposure through the market impact optimised execution logic. Risk management layers built into the algorithm have been developed using the experience the team has gained from their decades in highly liquid fast-moving markets in the proprietary High Frequency Trading world. This allows the system to trade autonomously but safely to all trading opportunities and potential system issues, and to alert the team to any behaviour outside of strictly controlled bounds. The Fund is a 'feeder fund' which indirectly gains exposure to the underlying assets by investing all or substantially all of its assets in the Underlying Fund. The Fund may retain a certain amount of cash from the investment in the Fund for the purpose of payment of costs, fees, hedging and expenses. |
| Manager Comments | The Fund's capacity to significantly outperform in falling markets is highlighted by the following statistics (since inception): Sortino ratio of 2.11 versus the Index's 1.67, down-capture ratio of -46.73% (indicating that, on average, the Fund has risen during the months the market has fallen), and maximum drawdown of -5.24% versus the Index's -10.57%. The best performing assets for the month were: Swiss Market Index future (+6.68% of NAV), Canada TSX 60 future (+3.36% of NAV), and FTSE100 future (+1.80% of NAV). The worst performing assets for the month were: Topix future (-4.60% of NAV), Gold future (-7.97% of NAV), and Euro Stoxx 50 future (-8.45% of NAV). |
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Performance Report: Harvest Lane Asset Management Absolute Return Fund
31 Mar 2020 - Australian Fund Monitors
The Harvest Lane Absolute Return Fund outperformed the ASX200 Accumulation Index by +5.27%, returning -2.42% after fees. Since inception in July 2013, the Fund has returned +7.45% p.a. with an annualised volatility of 6.77%.
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31 Mar 2020 - Performance Report: Harvest Lane Asset Management Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | Harvest Lane Asset Management employs a conservative, highly selective and opportunistic approach. Using their extensive knowledge in the area of corporate actions, the Fund's managers assess each opportunity based on a thoughtful, diligent and disciplined process and invest where they believe an opportunity exists to generate above average investment returns relative to the risk incurred. Investment decisions are made without speculating on market direction, with rigid risk controls enforced to minimise the risk of large losses of investor capital. The Fund invests in securities that are predominantly listed on the ASX and occasionally in those listed in other developed markets. Equity swaps and other derivatives may be used at times to reduce risk. The fund typically holds high levels of cash in the absence of sufficiently attractive opportunities to deploy investor capital in accordance with its objectives. |
| Manager Comments | The Fund's capacity to significantly outperform in falling markets is highlighted by the following statistics (since inception): Sortino ratio of 1.39 versus the Index's 0.96, down-capture ratio of -23.56% (indicating that, on average, the Fund has risen during the months the market has fallen), largest drawdown of -6.46% versus the Index's -13.73%, and an average negative monthly return of -1.37% versus the Index's -2.55%. Harvest Lane noted they saw a reversal in February of the tightening in deal spreads they had observed over the past 12 months as investors shifted their focus from risk-adjusted returns to outright capital preservation. They have minimised the Fund's exposure to a number of deals which are as yet non-binding. The non-binding nature presents inherent risk to the transaction completing and are typically the first transactions to see widening spreads given the lack of a legal framework compelling the bidder to complete the offer. At the time of writing their February 2020 report, close to 60% of the portfolio's assets were invested in companies subject to binding transactions with a further 21% in cash and cash equivalents. Harvest Lane remain vigilant and continue to act with capital preservation at the forefront of their decision making process, particularly in the current market conditions. |
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Performance Report: Wheelhouse Global Equity Income Fund
31 Mar 2020 - Australian Fund Monitors
The Wheelhouse Global Equity Income Fund returned -1.95% in February, outperforming AFM's Global Equity Benchmark by +3.62% and taking annualised performance since inception in May 2017 to +9.30% with an annualised volatility of 7.86%.
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31 Mar 2020 - Performance Report: Wheelhouse Global Equity Income Fund
By: Australian Fund Monitors
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| Fund Overview | To pursue this objective, the Investment Manager is responsible for actively managing, monitoring and tailoring the integration of derivative contracts alongside the Morningstar Portfolio, while taking into account changing market and stock specific conditions. The Investment Manager is responsible for maximising the structural benefits of short option positions (lowered Volatility, improved capital preservation, higher income generation), whilst mitigating, minimising and monitoring the structural negatives (variable market exposure, option expiries, collateral management and asymmetric return profiles). In addition, long derivatives positions are also used to enhance the capital preservation characteristics of the Fund in more extreme market movements. As a consequence of the integration of Derivatives, returns of the strategy, intra-cycle, are expected to vary from the underlying Morningstar Portfolio due to these characteristics. For example in weak markets, or in extended sideways markets, the Fund is expected to outperform relative to the Morningstar Portfolio. Conversely in strong positive markets the Fund is expected to underperform. |
| Manager Comments | The Fund's February return comprised -5.56% from the portfolio (in USD) and a positive return of +3.61% from the weakening of the Australian dollar versus the US dollar. Top contributors included Schneider Electric, Kerry Group, Tyler Technologies, Adobe and Sanofi. Key detractors included Western Union, Intel Corp, GlaxoSmithKline, Bank of America and United Technologies. |
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Performance Report: Datt Capital Absolute Return Fund
30 Mar 2020 - Australian Fund Monitors
The Datt Capital Absolute Return Fund returned -5.85% in February, outperforming the ASX200 Accumulation Index by +1.84%. Since inception in August 2018, the Fund has returned +5.89% p.a. with an annualised volatility of 10.97%.
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30 Mar 2020 - Performance Report: Datt Capital Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | Our investment objectives are: 1) To minimise the risk of permanent capital loss 2) Generate a net return of 10% through the economic cycle An unconstrained, concentrated approach focused on superior risk-adjusted returns. The investment strategy: - targets long-term capital growth in a prudent manner, with an emphasis on capital preservation and low volatility in returns - aims to outperform in markets where equities are down - diversifies investments across asset classes and duration to reduce risk while maintaining relatively concentrated exposure to attractive investment opportunities - is an application of the Manager's investment process, that has no institutional constraints and is completely benchmark unaware |
| Manager Comments | In February the Fund's equity performance was negative, driven by the fall in their two largest exposures - Adriatic Metals and Alkane Resources. Datt Capital exited their holding in Whitehaven and added to their position in Alkane Resources. The manager continues to monitor a number of fixed income instruments in the distressed and special situation space. The Fund has no current derivative exposure. Current equity exposures are Afterpay, Adriatic Metals, Alice Queen, Alkane Resources, Argonaut Resources, Valmec and Yandal Resources. |
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Performance Report: Bennelong Twenty20 Australian Equities Fund
27 Mar 2020 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund returned -5.92% in February, outperforming the ASX200 Accumulation Index by +1.77% and taking annualised performance since inception in November 2009 to +10.30% versus the Index's +7.83%.
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27 Mar 2020 - Performance Report: Bennelong Twenty20 Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund is managed as one portfolio but comprises and combines two separately managed exposures: 1. An investment in the top 20 stocks of the markets, which the Fund achieves by taking an indexed position in the S&P/ASX 20 Index; and 2. An investment in the stocks beyond the S&P/ASX 20 Index. This exposure is managed on an active basis using a fundamental core approach. The Fund may also invest in securities expected to be listed on the ASX, securities listed or expected to be listed on other exchanges where such securities relate to ASX-listed securities.Derivative instruments may be used to replicate underlying positions and hedge market and company specific risks. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Accumulation Index. The Fund typically holds between 40-55 stocks and thus is considered to be highly concentrated. This means that investors should expect to see high short-term volatility. The Fund seeks to achieve growth over the long-term, therefore the minimum suggested investment timeframe is 5 years. |
| Manager Comments | Bennelong's view is that the volatility currently plaguing markets is telling of markets' fear of uncertainty. At this stage, Bennelong believe the virus is a short-term disruption and that it could pass within the next few months. Once it has passed, they expect the outlook for equities to be favourable; markets will be looking ahead with the benefit of low interest rates, possible fiscal stimulus and some pent-up demand. Looking beyond the short-term view of the market, Bennelong have taken the opportunity to selectively up-weight their position in holdings that were heavily sold off but in which they continue to see long duration growth that will resume in time. They are also proactively managing risk by focusing on quality, and in particular, durable businesses with strong balance sheets. |
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Performance Report: DS Capital Growth Fund
27 Mar 2020 - Australian Fund Monitors
The DS Capital Growth Fund outperformed the ASX200 Accumulation Index by +1.88% in February, returning -5.81%. Since inception in December 2012, the Fund has returned +14.37% p.a. with an annualised volatility of 7.46%. By contrast, the...
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27 Mar 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 focus on protecting investors' capital in falling markets is highlighted by the following statistics (since inception): Sortino ratio of 2.96 versus the Index's 1.01, down-capture ratio of 26.05%, largest drawdown of -8.80% versus the Index's -13.73%, and average negative monthly return of -1.43% versus the Index's -2.59%. |
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Performance Report: Cyan C3G Fund
26 Mar 2020 - Australian Fund Monitors
The Cyan C3G Fund has returned +14.86% p.a. since inception in August 2014 with an annualised volatility of 12.62%. By contrast, the ASX200 Accumulation Index has returned +7.04% p.a. with an annualised volatility of 11.41% over the same...
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26 Mar 2020 - Performance Report: Cyan C3G Fund
By: Australian Fund Monitors
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| Fund Overview | Cyan C3G Fund is based on the investment philosophy which can be defined as a comprehensive, clear and considered process focused on delivering growth. These are identified through stringent filter criteria and a rigorous research process. The Manager uses a proprietary stock filter in order to eliminate a large proportion of investments due to both internal characteristics (such as gearing levels or cash flow) and external characteristics (such as exposure to commodity prices or customer concentration). Typically, the Fund looks for businesses that are one or more of: a) under researched, b) fundamentally undervalued, c) have a catalyst for re-rating. The Manager seeks to achieve this investment outcome by actively managing a portfolio of Australian listed securities. When the opportunity to invest in suitable securities cannot be found, the manager may reduce the level of equities exposure and accumulate a defensive cash position. Whilst it is the company's intention, there is no guarantee that any distributions or returns will be declared, or that if declared, the amount of any returns will remain constant or increase over time. The Fund does not invest in derivatives and does not use debt to leverage the Fund's performance. However, companies in which the Fund invests may be leveraged. |
| Manager Comments | The Fund returned -11.9% in February. Mid-month Cyan cut positions in three companies that they considered would be directly impacted by COVID-19: Atomos, McPhersons and Webjet. In the latter days of February and early March after further share price weakness they took the opportunity to add slightly to existing positions in Alcidion, Kelly Partners, Quickstep, Schrole and Vita Group. Cyan noted all of these businesses are well funded, enjoy growing revenue streams and in the case of Kelly Partners and Vita Group, enjoy dividend yields above 6%. Whilst the Fund is continuing to be impacted by the continued weakness in global markets, Cyan noted it has been holding reasonable amounts of cash for some time which is hugely beneficial in the current conditions. They are taking this opportunity to deploy some of this cash by increasing some existing positions and finding entry points for a number of new companies. They expect markets could see a swift and considerable upturn even before the current uncertainty clears. |
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Performance Report: Ark Global Fund - Class B AUD Hedged
25 Mar 2020 - Australian Fund Monitors
The Ark Global Fund (hedged) returned -4.81% in February, outperforming AFM's Global Equity benchmark by +0.76%. Since inception in July 2017, the Fund has returned +7.54% p.a. with an annualised volatility of 9.13%.
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25 Mar 2020 - Performance Report: Ark Global Fund - Class B AUD Hedged
By: Australian Fund Monitors
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| Fund Overview | The investment objective of the Fund is to achieve long-term capital appreciation with low correlation to global equity markets through investment in the Underlying Fund. Fund One is a global macro fund that utilises quantitative research including machine learning techniques and fully automated trading algorithms which will aim to generate positive uncorrelated returns relative to any significant equity benchmark. The traded instruments are either major FX pairs or the most liquid exchange traded stock index, bond, and commodity futures across North America, Europe and Asia Pacific. The algorithm backtests over 10 years of tick data and in order to do so effectively requires machine learning to filter noise and identify meaningful signals, which results in statistically significant prediction of price movements. In production this processing is done in real time and the portfolio reacts to asset movements by rebalancing automatically to the desired risk exposure through the market impact optimised execution logic. Risk management layers built into the algorithm have been developed using the experience the team has gained from their decades in highly liquid fast-moving markets in the proprietary High Frequency Trading world. This allows the system to trade autonomously but safely to all trading opportunities and potential system issues, and to alert the team to any behaviour outside of strictly controlled bounds. The Fund is a 'feeder fund' which indirectly gains exposure to the underlying assets by investing all or substantially all of its assets in the Underlying Fund. The Fund may retain a certain amount of cash from the investment in the Fund for the purpose of payment of costs, fees, hedging and expenses. |
| Manager Comments | The best performing assets for the month were: Swiss Market Index future (+6.68% of NAV), Canada TSX 60 future (+3.36 of NAV), and FTSE100 future (+1.80% of NAV). The worst performing assets for the month were: Topix future (-4.60% of NAV), Gold future (-7.97% of NAV), and Euro Stoxx 50 future (-8.45% of NAV). The Manager noted the sudden rise in volatility didn't suit the Fund's systematic model well and was the major reason for the poor February result. However, the model has since adjusted to the larger market gyrations. AI Funds Management expect profitable opportunities to persist and for the Fund to demonstrate its major utility in providing uncorrelated and positive returns in all market conditions. |
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Performance Report: Quay Global Real Estate Fund
25 Mar 2020 - Australian Fund Monitors
The Quay Global Real Estate Fund returned -3.90% in February. Since inception in January 2016, the Fund has returned +10.43% p.a. with an annualised volatility of 10.48%. The largest drags on performance were STAG Industrial (US...
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25 Mar 2020 - Performance Report: Quay Global Real Estate Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund will invest in a number of global listed real estate companies, groups or funds. The investment strategy is to make investments in real estate securities at a price that will deliver a real, after inflation, total return of 5% per annum (before costs and fees), inclusive of distributions over a longer-term period. The Investment Strategy is indifferent to the constraints of any index benchmarks and is relatively concentrated in its number of investments. The Fund is expected to own between 20 and 40 securities, and from time to time up to 20% of the portfolio maybe invested in cash. The Fund is $A un-hedged. |
| Manager Comments | Quay noted that, like many managers, they are trying to grapple with the implications of the virus on the investees of the portfolio and remain alert to any new opportunities that may emerge from general market volatility. They fear the worst is yet to come, particularly so for the US given that many US citizens remain uninsured or underinsured, anywhere between 58-70% of the US population has less than $1,000 in emergency savings, and nearly one in three private sector workers and 7 in 10 low-wage workers do not receive paid sick leave. In the face of these risks, the portfolio is generally weighted to less economically sensitive sectors (housing, storage, data storage, etc.), with low weights to more economically sensitive sectors (retail, office, industrial and tourism). Based on historic data, Quay expect the portfolio (along with a 12% cash weighting) to perform well in the event of a meaningful economic downturn. |
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