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Fund Review: ARCO Absolute Trust January 2018
15 Feb 2018 - Australian Fund Monitors
Read the latest Fund Review on ARCO Absolute Trust.
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15 Feb 2018 - Fund Review: ARCO Absolute Trust January 2018
By: Australian Fund Monitors
AFM Fund Review - January 2018 (pdf format)
ARCO ABSOLUTE TRUST (formerly Optimal Australia Absolute Trust)
AFM have released the most recently updated Fund Review on the ARCO Absolute Trust.
We would like to highlight the following aspects of the Fund;
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ARCO Investment Management is a specialist Australian equity investment manager and the Fund has a long/short equity strategy typically with a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200.
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The investment team comprising George Colman, Peter Whiting, and Stephen Nicholls bring 100 years combined experience in equity markets.
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The Fund has an annualised return since inception of +8.56%. The Fund's approach to risk is shown by the Sharpe ratio of 1.44 (Index 0.30), Sortino ratio of 3.07 (Index 0.33), both of which are well above the ASX 200 Accumulation Index and has recorded over 79% positive months.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - January 2018 (pdf format)
Performance Report: Cyan C3G Fund
14 Feb 2018 - Australian Fund Monitors
The Cyan C3G Fund fell -0.28% in January. Since inception in July 2014, the Fund has returned +28.15% per annum with an annualised volatility of 10.26%.
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14 Feb 2018 - 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 | Key positive contributors included Spirit Telecom (+33%), Afterpay Touch (+23%), Axsess Today (+18%). Key negative contributors included Longtable (-15%), Experience Co (-12%), Motorcycle Holdings (-11%). In light of the recent market correction, Cyan noted they don't pretend to know what the market will do in the coming weeks, however, they do know that the companies in which the Fund is invested are in strong positions and will be inherently more valuable in the coming 12 months. Throughout the rest of February, Cyan plan to focus on company fundamentals as the Fund's holdings report their earnings results and provide outlook statements. |
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Performance Report: MHOR Australian Small Cap Fund
13 Feb 2018 - Australian Fund Monitors
The MHOR Australian Small Cap Fund returned -0.28% in January, ending the Fund's run of 8 consecutive positive months. Since inception in August 2016, the Fund has returned +16.57% per annum.
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13 Feb 2018 - Performance Report: MHOR Australian Small Cap Fund
By: Australian Fund Monitors
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| Fund Overview | MHOR looks for investment that exhibit the following set of characteristics: -Opportunity - to take advantage of growth and positive alignment with industry themes and trends. -Quality business - competitively advantaged product or service offering. -Financial flexibility - appropriately resourced to capture its opportunity. -Management - with the vision and capability to bring it all together. -Fundamentally undervalued. MHOR also considers labour standards, environmental, social and ethical considerations when making investment decisions but only to the extent that these factors impact the assessment of risk or return. The minimum suggested investment timeframe is 3-5 years. |
| Manager Comments | Expecting market volatility, MHOR have been slowly increasing the Fund's cash levels over the last few months. Going into the market sell off earlier in the month, the Fund was carrying 16% cash and MHOR have been holding off purchasing a number of their new ideas. Additionally, MHOR have positioned the Fund to be materially underweight (in some cases zero) exposure to interest rate sensitive stocks such as REITs. MHOR noted they were able to utilise the broad base sell off to enter a number of positions. |
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Performance Report: Bennelong Long Short Equity Fund
12 Feb 2018 - Australian Fund Monitors
The Bennelong Long Short Fund returned +1.51% in January. Since inception in February 2002, the Fund has returned +16.51% per annum with a volatility of 12.09%.
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12 Feb 2018 - 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 majority of pairs were profitable in January despite the headwind of a very strong $A/$US. A strong quarterly profit update from Resmed contributed to the Fund's long Resmed / short Ansell pair being amongst the Fund's strongest pairs. Long JB Hi-Fi / short Super Retail was also amongst the strongest pairs on industry feedback that some retailers had experienced better Christmas sales than feared. Long BlueScope Steel / short Sims Metal was the Fund's weakest pair following recent months of strong positive contribution. Bennelong noted the Australian market was the exception in January, falling by -0.5% whilst the S&P 500 (+5.6%), Nasdaq Composite (+7.4%) and MSCI Asia ex Japan (+7.5%) experienced some of their strongest January gains seen in years. Bennelong believe this is in large part a reflection of the composition of our market. |
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Performance Report: Paragon Australian Long Short Fund
9 Feb 2018 - Australian Fund Monitors
The Paragon Australian Long Short Fund fell -1.3% in January. Since inception in March 2013, the Fund has returned +19.9% per annum.
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9 Feb 2018 - Performance Report: Paragon Australian Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Paragon's unique investment style, comprising thematic led idea generation followed with an in depth research effort, results in a concentrated portfolio of high conviction stocks. Conviction in bottom up analysis drives the investment case and ultimate position sizing: * Both quantitative analysis - probability weighted high/low/base case valuations - and qualitative analysis - company meetings, assessing management, the business model, balance sheet strength and likely direction of returns - collectively form Paragon's overall view for each investment case. * Paragon will then allocate weighting to each investment opportunity based on a risk/reward profile, capped to defined investment parameters by market cap, which are continually monitored as part of Paragon's overall risk management framework. The objective of the Paragon Fund is to produce absolute returns in excess of 10% p.a. over a 3-5 year time horizon with a low correlation to the Australian equities market. |
| Manager Comments | Positive contributions from long holdings in Kidman, Echo, Cann Group, Wattle Health, Link Financial and Audinate, as well as the Fund's Lithium shorts, were offset by declines in the Fund's Cobalt holdings, Updater and Cimic. The latest report discusses Paragon's views on the Lithium and Cobalt markets. They note that, overall, the fundamental investment cases for both Lithium and Cobalt over the medium term have not changed. They believe that the Cobalt market will need to more than double by 2025, and the Lithium market will need to quadruple. |
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Performance Report: Bennelong Concentrated Australian Equities Fund
9 Feb 2018 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund rose +4.27% in December, outperforming the ASX200 Accumulation Index by +2.46%.
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9 Feb 2018 - Performance Report: Bennelong Concentrated Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The overriding objective of the Concentrated Australian Equities Fund is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings, while satisfying our stringent quality criteria. Bennelong's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The portfolio typically consists of 20-35 high-conviction stocks from the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to ASX-listed securities. Derivative instruments are mainly used to replicate underlying positions and hedge market and company specific risks. |
| Manager Comments | Top contributors over the quarter included BWX Limited, Experience Co., Costa Group, Aristocrat Leisure, Treasury Wine Estates and Motorcycle Holdings. Some of the largest detractors were Reliance Worldwide and Flight Centre. In addition, the Fund's underweight position in the Resources and Energy sectors detracted from the Fund's relative performance. Bennelong noted portfolio positioning has remained unchanged since the Fund's last quarterly report. The Fund has a heavy concentration to 'all weather' businesses selling relatively defensive products or services and a heavy concentration in global businesses. The Manager remains wary of domestic cyclicals such as retailers, media companies, builders and industrials. The Fund has very little exposure to the banks, commodities companies and selective exposure to bond proxies. The Manager also noted they're unexcited by most blue chips due to their lack of growth. |
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Performance Report: Insync Global Titans Fund
9 Feb 2018 - Australian Fund Monitors
The Insync Global Titans Fund fell -1.55% in December. The Fund has returned +16.60% after the cost of protection over the past 12 months, outperforming the benchmark (MSCI ex Aus) by +1.74%.
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9 Feb 2018 - Performance Report: Insync Global Titans 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 | Performance in December was driven by positive contributions from holdings in eBay, Twenty-First Century Fox, Comcast Corp, Reckitt Benckiser and Diageo. The main negative contributors were Zoetis Inc, Stryker Corp, Cognizant Tech Solutions, Oracle Corp and PayPal. The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside. Over 50% of the Fund is currently protected using Insync's put protection strategy. |
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Performance Report: Qato Capital Market Neutral Fund
8 Feb 2018 - Australian Fund Monitors
The Qato Capital Market Neutral Fund returned -2.37% in December, with performance impacted by a long position in Qantas and short positions in Westfield and TPG Telecomm.
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8 Feb 2018 - Performance Report: Qato Capital Market Neutral Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund seeks to preserve capital and maximise absolute returns through active and constant risk management, targeting monthly a net market exposure of 0% to hedge broader market risks by generally holding up to 50 S&P/ASX-100 positions (up to 25 long positions & 25 short positions). Historically, the strategy has been uncorrelated to traditional asset classes with a negative beta to equity markets. Qato Capital's process is entirely systematic - stock selection and risk management are all employed in a rules based approach. Positions in Qato's long-portfolio and short-portfolio are rotated monthly dependent upon their Q-Score ranking. The strategy employs no financial leverage/gearing to purchase securities, no derivatives and no financial products to imitate leverage. |
| Manager Comments | Positive contributors in December included long positions in Alumina (+9.46%), Fortescue Metals (+6.09%), Iluka (+9.59%), Orica (+6.47%), Boral (+3.59%), Bluescope Steel (+12.93%), OzMinerals (+9.7%) and Origin (+5.49%). Negative contributors included long Caltex, short Oil Search, long Qantas, short Westfield and short TPG Telecomm. Qato's latest report briefly discusses risk appetite and the most likely catalyst for a correction. They noted institutions and investment banks abroad believe risk appetites have reached extreme levels, and that the 9-week RSI (a measure of how overbought the market is) reached its highest level in December 2017 since March 2009. Qato also noted that banks agree the most likely catalyst for a correction will be an increase in bond yields which, at the time of writing their December 2017 report, Qato believed wouldn't be far away should inflation continue to flow back into the economy. |
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Performance Report: 4D Global Infrastructure Fund
8 Feb 2018 - Australian Fund Monitors
The 4D Global Infrastructure Fund fell -1.56% in December, outperforming the FTSE 50/50 Infrastructure Index by +2.60%. The Fund has returned +22.03% over the past 12 months.
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8 Feb 2018 - Performance Report: 4D Global Infrastructure Fund
By: Australian Fund Monitors
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| Fund Overview | The fund will be managed as a single portfolio of listed global infrastructure securities including regulated utilities in gas, electricity and water, transport infrastructure such as airports, ports, road and rail as well as communication assets such as the towers and satellite sectors. The portfolio is intended to have exposure to both developed and emerging market opportunities, with country risk assessed internally before any investment is considered. The maximum absolute position of an individual stock is 7% of the fund. |
| Manager Comments | The strongest performer for the month was US LNG transporter Cheniere Energy (+12.2%), driven by a jump in spot commodity pricing which supports Cheniere's underlying contracts and growth potential. The weakest performer in December was US integrated utility Sempra Energy (-10.4%). This was due in part to Sempra holding assets in California, with utilities in the state affected by weather-driven wildfires and resulting liability concerns, and partly due to the US Fed hike early in the month and Trump's tax reforms. The Manager's outlook for global listed infrastructure over the medium term remains positive. They note there has been a significant underinvestment in infrastructure around the world over the past 30 years and that public sector fiscal and debt constraints will limit governments' ability to respond, resulting in an increasing need for private sector capital as part of the funding solution. |
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Performance Report: Touchstone Index Unaware Fund
8 Feb 2018 - Australian Fund Monitors
The Touchstone Index Unaware Fund rose +1.20% in December, taking 12-month performance to +13.06% and annualised return since inception in April 2016 to +15.74%.
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8 Feb 2018 - Performance Report: Touchstone Index Unaware Fund
By: Australian Fund Monitors
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| Fund Overview | The portfolio is constructed using Touchstone's Quality-At-a-Reasonable-Price ('QARP') investment process. QARP is a fundamental bottom-up process, however, it also incorporates a top-down risk management framework designed to successfully manage the portfolio during varying market conditions and economic cycles. The Touchstone Fund is concentrated, typically holding between 15-20 stocks. No individual stock will ever make up more than 10% of the portfolio at any one time. The Investment Manager may temporarily exceed the exposure limits of the Fund occasionally, particularly during periods of market volatility, to allow for holdings in excess of this 10% limit where the increase in value of the underlying security is due to market movement. The Fund may also hold between 0-50% of the portfolio in cash. The Fund has a high level of associated risk, therefore, the minimum suggested investment time-frame is 5 years. |
| Manager Comments | The Touchstone Index Unaware Fund primarily selects stocks from the S&P/ASX 300 Index and typically holds 10-30 stocks. It seeks to invest in reasonably priced, good quality companies with a significant share of expected returns coming from sustainable dividends. |
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