NEWS
Performance Report: Paragon Australian Long Short Fund
7 Dec 2017 - Australian Fund Monitors
The Paragon Australian Long Short Fund rose +11.89% in November, outperforming the ASX200 Accumulation Index by +10.25% and taking performance over the past 12 months to +38.71%.
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7 Dec 2017 - 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 | The Fund had another strong month in November driven by solid contributions from Long holdings in Paragon's electric vehicle theme, along with Cann Group, Origin, Agrimin, Cimic, Lynas, Dacian Gold and Global Energy. At the end of the month the Fund had 39 long and 15 short positions. Paragon's latest report discusses the increased global support for legalisation of medicinal cannabis and the subsequent investment opportunities. They note the cannabis market is likely to be $1b - $2b p.a. by 2025, however, they expect this will be dwarfed by the export market (cumulative $20b+ p.a. to $30b+ p.a.). Paragon initiated its position in Cann Group, Australia's leading medical cannabis producer, in August 2017 and remain long the stock. |
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Performance Report: Pengana PanAgora Absolute Return Global Equities Fund
7 Dec 2017 - Australian Fund Monitors
The Pengana PanAgora Absolute Return Global Equities Fund returned -0.70% in October. Since inception in September 2010, the Fund has returned +8.83% per annum.
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7 Dec 2017 - Performance Report: Pengana PanAgora Absolute Return Global Equities Fund
By: Australian Fund Monitors
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| Fund Overview | PanAgora believes the best way to find opportunities in the global markets is to combine fundamental analysis with robust quantitative techniques in order to filter the investment universe and select the investments. The Fund invests primarily in listed equity securities from a global universe of developed markets and a select group of emerging market countries. The Fund's objective is to seek absolute returns by identifying and exploiting multiple inefficiencies that may exist in global equity markets. These inefficiencies are primarily exploited through the use of a long/short equity strategy which aims to construct a portfolio that is generally neutral to market movements. As such the performance of the investment strategy is largely independent of the market's performance. The Fund seeks to achieve its objective by using a diversified set of strategies that have low correlation to one another. In addition, because many of these strategies are designed to generate profit under different market conditions, their combination is expected to result in more stable returns over time than any individual strategy in and of itself. |
| Manager Comments | Performance for the month was driven by the long-term portfolio which contributed -1.00% and struggled amongst developed international stocks. Pengana noted most of the underperformance was concentrated in Europe, particularly the United Kingdom and France. Long-term strategies detracted -1.47%, intermediate-term strategies detracted a marginal -0.02% and short-term strategies contributed +0.31%. In France and the UK, the largest detractors were Just Eat PLC and Remy Cointreau SA. Positive stock selection within Australia contributed +0.12%, specifically within the Industrials and IT sectors. Positions in the U.S. contributed +0.50% with Consumer Discretionary (+0.50%) the largest sector contributor. The Fund continues to be long Amazon due to its good alpha score. |
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Performance Report: Pengana Global Small Companies Fund
5 Dec 2017 - Australian Fund Monitors
The Pengana Global Small Companies Fund returned +1.83% in October, taking annualised performance since inception in April 2015 to +11.26%.
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5 Dec 2017 - Performance Report: Pengana Global Small Companies Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund is managed by Founder & CIO Leah Zell, and Portfolio Managers Jon Moog and David Li. The Lizard investment team have over 50 years combined investment experience in global small cap investing. Leah Zell has over 30 years of experience and is a recognized expert in international investing in the international small-cap category. The Fund's investment team uses a value-oriented investment approach to small and mid-cap global equities that seeks to identify and invest in quality businesses that create significant value but are mispriced, overlooked or out-of-favour. The investment manager believes that unique opportunities exist due to limited available research, corporate actions or unfavourable investor perception. The portfolio construction process aims to develop portfolios that incorporate the best investment ideas from the investment manager's research while allowing for liquidity constraints and perceived risk. The Fund's investment manager will not typically hedge currency exposures, however during periods of currency extremes, some currency hedging may be employed. Derivatives may be used to achieve long or short exposures, reduce risk and reduce transaction costs. Derivatives will not be used for the purposes of leverage and the Fund's net exposure will never be short. |
| Manager Comments | The Fund underperformed its benchmark (MSCI All Country World SMID Cap Index Unhedged in AUD) in October. Pengana noted being underweight US equities relative to the benchmark was a significant reason for the underperformance. However, Pengana emphasise that they make no effort to track the benchmark. Top 3 contributors were Softcat Plc, Wizz Air Holdings Plc and Motorpoint Group Plc. Top 3 detractors were IWG Plc, Peyto Exploration & Development Corp. and NetScout Systems Inc. IWG, a British provider of short-term office rentals, materially missed Pengana's revenue and profit expectations this month. This caused a meaningful sell-off in the stock which resulted in IWG being the portfolio's largest detractor in October. Pengana noted they are watching the company closely to ensure their long-term thesis is playing out as expected. |
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Performance Report: Bennelong Concentrated Australian Equities Fund
4 Dec 2017 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund returned +6.31% in October, taking annualised performance since inception in January 2009 to +18.39% with a volatility of 13.58%.
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4 Dec 2017 - 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 | At the end of October, the Fund's weightings were increased in the Discretionary, Consumer Staples and Materials sectors, whilst weightings were decreased in the Health Care, Industrials and Financials sectors. The Fund currently holds 21 stocks. The Fund's investment philosophy is to selectively invest in high quality companies with strong growth outlooks and underestimated earnings momentum prospects, this is highlighted by the Fund's portfolio characteristics as shown in the latest report. |
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Fund Review: Insync Global Titans Fund October 2017
1 Dec 2017 - Australian Fund Monitors
Latest Fund Review on Insync Global Titans Fund is now available.
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1 Dec 2017 - Fund Review: Insync Global Titans Fund October 2017
By: Australian Fund Monitors
AFM Fund Review - October 2017 (pdf format)
INSYNC GLOBAL TITANS FUND
Attached is our most recently updated Fund Review on the Insync Global Titans Fund.
We would like to highlight the following:
- The Global Titans Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.
- Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.
- Emphasis on limiting downside risk is through extensive company research, the ability to hold cash and long protective index put options.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - October 2017 (pdf format)
Performance Report: Quay Global Real Estate Fund
1 Dec 2017 - Australian Fund Monitors
The Quay Global Real Estate Fund rose +1.80% in October. The Fund has achieved an annualised return since inception in July 2014 of +14.19%.
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1 Dec 2017 - 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 | At the end of October, the Fund's weightings were increased in the Manufacture Housing, Retail and Data Centre sectors and decreased in the Multifamily/apartments, Student Accommodation, Health, Lodging and Industrial sectors. Geographically, the Fund remains heavily weighted towards the US (55.9% of the portfolio), followed by the UK (15.4%), Australia (10.7%), Canada (6.4%), Germany (4.4%), Spain (4.4%) and Hong Kong (4.1%). The Manager noted the recent decline in the Australian dollar has become a tailwind to the Fund's returns, after almost two years acting as a headwind. Quay believe the impact of currency on the Fund's reported total returns will have a diminished effect over time as currencies tend to be mean-reverting, and the compounding effect of stock returns overwhelm the one-off currency adjustments. |
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Performance Report: Pengana Absolute Return Asia Pacific Fund
30 Nov 2017 - Australian Fund Monitors
The Pengana Absolute Return Asia Pacific Fund returned +2.20% in October, taking annualised performance since inception in September 2010 to +8.47%.
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30 Nov 2017 - Performance Report: Pengana Absolute Return Asia Pacific Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund will usually hold 40 to 80 positions and will be well diversified across the various event strategies. In keeping with the absolute return focus the Manager will eliminate market risk where appropriate by hedging market and foreign currency risks. Since inception the Fund has averaged a net equity market exposure of ~10%. Sizing of an investment position will depend on the expected risk adjusted returns while taking account the liquidity and volatility of the stock. In addition, the maximum potential loss on any one position should be greater than 0.5% of the NAV and the position should not exceed 30% participation of stressed volume assuming a $200m NAV. Other criteria considered are ability to hedge and the availability of pair candidates as well as the average bid-ask size. For M&A strategies average long position is 3 to 5.5% and average short position 2 to 5%. |
| Manager Comments | The M&A sub-strategy rose +0.88%, with a year-to-date contribution of +5.2%. The largest contributor was a scrip merger in Alpine Electronics and Alps Electric in Japan. In Australia, Pengana added a new M&A position in Mantra Group. The French group Accor S.A. has offered to acquire all Mantra shares at A$3.96, via a scheme of arrangement. Pengana have also exited the position in Challenger Limited which contributed +0.15% to overall performance. In Hong Kong, Pengana added Tiangong International, offering an annualised IRR of >20% to the proposed take out price of HK$0.90. Pengana anticipates the share price could trade above the take out price due to the low premium offered. The Relative Value book contributed +0.53% during the month. A positive contributor was Pengana's long position in Qantas Airways vs short in Singapore Airlines contributing +0.14%. In Australia, Pengana's position in the Fairfax separation hedged against REA contributed +0.15%. In Japan, Pengana's HoldCo trade long Keisei Electric vs short Oriental Land contributed +0.12%. Pengana also added a new pair long Mitsui OSK vs short Kawasaki Kisen. The Directional Alpha book contributed +0.85%. Key successes during October included Shangri-La Asia (+7.2), 3sBio (+11.5%) and Softbank (+9.5%), whilst detractors included China Foods (-1%), and IHH Healthcare CB (-0.6%). Pengana note that they have locked in gains in HSBC and Capital Land and added Reliance Industries and Thai Beverage to their Directional Alpha book. For Reliance Industries, Pengana see supply side reforms in chemicals and consolidation in telecom as catalysts for outperformance. |
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Performance Report: 4D Global Infrastructure Fund
29 Nov 2017 - Australian Fund Monitors
The 4D Global Infrastructure Fund returned +3.51% in October, outperforming its benchmark (OECD G7 Inflation Index +5.5%) by +3.10%. Since inception in March 2016, the Fund has returned +15.96% per annum.
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29 Nov 2017 - 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 Indonesian toll road operator Jasa Marga (+16.1%) while the weakest performer was Brazilian contracted generator AES Tiete (-9.2%). AES Tiete fell on concerns over very poor national hydrology in September, however, the Manager noted Tiete remains a solid operator with a strong balance sheet and attractive yield. 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: Qato Capital Market Neutral Fund
28 Nov 2017 - Australian Fund Monitors
The Qato Capital Market Neutral Fund fell -1.45% during October with performance hampered given the aggressive rally in the ASX100, which finished October +3.78%.
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28 Nov 2017 - 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 for the month included REA Group (+7.88%), Brent Crude (+6.65), Treasury Wines (+14.32%), Fairfax (+16.40%) and Aristocrat (+12.14%). Detractors included Bluescope (+17.05%) and Healthscope (+17.37%), with short positions in both dragging on the gains of the long book considerably. Fortescue Metals performed strongly for Qato's short book (-9.73%) despite October's broad based rally. Qato noted the discounted spot price of poorer quality iron ore was key to the move, with reduced Chinese steel mill utilisation meaning higher quality ore was preferred. Qato's Market Neutral strategy invests in the S&P/ASX100 utilising the Q-Score process, a fundamentally based systematic model which captures improvements and deteriorations in fundamentals, price and risk metrics. The portfolio construction seeks dollar neutrality through targeting 25 long and 25 short positions, with gross exposure averaging 170% and net exposure averaging +5%. |
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Performance Report: Bennelong Twenty20 Australian Equities Fund
27 Nov 2017 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund rose +4.56% in October, taking performance over the past 12 months to +17.23%.
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27 Nov 2017 - 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 | At the end of October, the Fund's weightings were increased in the Consumer Staples, Health Care and Materials sectors whilst weightings in the Discretionary, Industrials, Telco's and Financials sectors. The Fund combines a passive investment in the S&P/ASX20 Index and an actively managed investment in Australian listed stocks outside this index. The passive position is achieved by investing individually in each of the S&P/ASX20 Index's individual stocks with approximately the same weightings they represent in the S&P/ASX300. Currently this weight is approximately 60% of the Fund's portfolio. The active position in ex-20 stocks has the goal of allowing the Fund to outperform the broader market. |
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