NEWS
The Paragon Fund
12 Sep 2014 - Australian Fund Monitors
The Paragon Fund returned -1.1% during August and 39.83% for the prior twelve months with a volatility of 13.91%.
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12 Sep 2014 - The Paragon Fund
By: Australian Fund Monitors
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| Fund Overview | Paragon accepts that markets are not always efficient in pricing information into securities and that no one investment style works in every stage of the investment cycle. Subsequently Paragon adopts a top down thematic led approach to identify companies exhibiting sustainable or improving returns on capital driven by volume growth, pricing power and competitive advantages. Paragon utilises both quantitative analysis to provide probability weighted high/low/base case valuations and qualitative analysis in assessing management, the business model and likely direction of returns. Paragon will allocate assets to each investment opportunity based on a risk/reward profile. Positions have defined investment parameters and risk limits, which are then monitored on an ongoing basis. |
| Manager Comments | The Fund has a 12 month Sharpe ratio of 2.33 (Index 1.40) and Sortino ratio of 7.01 (2.79) with Up and Down Capture ratios of 1.46 and -1.16 respectively. At month-end the Fund was 81.7% long, 10.1% short and held 28.4% cash. Key drivers of the Paragon Fund performance for August included strong returns from Orocobre, Orora, G8 Education and our short position in JB Hi-Fi, offset by falls in our resource holdings, and Xero. At the end of August the fund had 21 long positions and 7 short positions. |
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Optimal Australia Absolute Trust
11 Sep 2014 - Australian Fund Monitors
Optimal Australia Absolute Trust returned 0.06% during August and 6.29% for the prior 12 months with a very low volatility of 1.71%.
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11 Sep 2014 - Optimal Australia Absolute Trust
By: Australian Fund Monitors
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| Fund Overview | The Fund's bias is likely to be net long under normal market conditions, with the core strategy being to construct a portfolio of listed equity securities priced at levels that do not adequately reflect their underlying value. The Fund will seek to boost returns and limit potential market downside by selective short selling of individual stocks which are priced at levels that are viewed as materially above their underlying value. The Fund will also use certain trading strategies both within its core portfolio (through rebalancing stock weights and overall market exposure in response to price movements) and in certain other situations (typically of a shorter-duration and/or opportunistic nature) with the objective of further increasing returns. |
| Manager Comments | The Fund recorded a Sharpe ratio of 2.14 (Index 1.40) and Sortino ratio of 4.80 (Index 2.79) and had 92% positive months over the last 12 months. Up and Down Capture ratios are 0.26 and -0.12. The Fund increased its net short exposure to equities through the month, driven less by fear of an imminent market correction than a sense that the relative-value argument for equities is getting very long in the tooth; while at current prices, we continue to find more stocks we want to short than own. The key challenge remains the cost of hedge protection. Our stock shorts were a net detraction from our performance, as these included a fair representation from the defensive/yield category. One effect of financial repression and the corresponding over-reach for yield and coupon income been to shift many of these stocks even further away from defensible wider valuation metrics. Our short index futures position was similarly ineffective this month, as the discount to the cash market narrowed sharply due to the ex-dividend effect. |
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Bennelong Kardinia Absolute Return Fund
10 Sep 2014 - Australian Fund Monitors
Bennelong Kardinia Absolute Return Fund returned 0.56% during August bringing 12 month performance to 6.60% with a volatility of 4.27%.
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10 Sep 2014 - 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 | The domestic reporting season saw earnings generally in line with expectations. Dividend growth exceeded earnings growth as companies increased payout ratios. Net equity market exposure (including derivatives) averaged around 55% during the month, but was reduced to 36% at month end (65.2% long and 29.1% short) in anticipation of some seasonal weakness in September. |
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Microequities Deep Value Microcap Fund
9 Sep 2014 - Australian Fund Monitors
Microequities Deep Value Microcap Fund fell 1.13% during August with twelve month performance coming is at 25.92% with a volatility of 7.19%.
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9 Sep 2014 - Microequities Deep Value Microcap Fund
By: Australian Fund Monitors
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| Fund Overview | The objective of the Fund is to identify undervalued Microcap companies, invest in them and, through a medium to long term commitment, attempt to deliver superior investment returns. The Fund invests primarily in ASX listed Microcap companies, which at the time of initial investment are generally below a market capitalisation of A$250 million. The Fund may also invest in companies with a higher market capitalisation, but these will be limited to no more than 20% of the assets of the Fund. At times the Fund may invest in pre-IPO securities that are due to be listed on the ASX within 3-6 months, and have lodged a prospectus with ASIC. These investments will also be limited to no more than 10% of the assets of the Fund. The Fund will be limited to investing no more than 20% of the Fund's assets in any one security or company. The Fund will make investments with a medium to long term time horizon of between 3-5+ years. The Fund will not speculate in derivatives. It will be permitted to hold other securities that are directly associated with a particular investment such as options granted with a specific company issue etc. The Fund will not engage in short selling or stock lending. The Fund will not hold financial debt of any kind. |
| Manager Comments | The has recorded very high Sharpe and Sortino ratios of 2.93 (Index 1.40) and 13.88 (Index 2.79) respectively. The Up and Down Capture ratios are 0.83 and -1.20 with the Fund recording up months in all 3 months the market was negative over the preceding 12 months to August. Whilst the peak of the capex cycle in the resource sector is a structural change in the economy, the slowdown in retail activity is but a temporary one. Household consumption is in fact facing the preconditions for almost booming conditions; household debt has been growing at a very slow 2% rate per annum since the GFC. However thanks to a booming property market and a stronger equity market driving growth in household assets, Australian households' net debt position has been solidified. |
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Monash Absolute Investment Fund
8 Sep 2014 - Australian Fund Monitors
Monash Absolute Investment Fund returned 2.30% during August, above the Index return of 0.6%, with an annual return of 21.14% (Index 14.40%).
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8 Sep 2014 - Monash Absolute Investment Fund
By: Australian Fund Monitors
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| Fund Overview | The fund seeks to identify opportunities in the share market to make positive returns (long and short) irrespective of market conditions. It is style agnostic, as compelling investment opportunities exist across all investment styles from time to time. The Fund places a high priority on capital preservation, and has an absolute return focus in accepting market risk. The Manager's experience across value, growth and discounted cash flow styles allows them to use a comprehensive approach to investment decisions that applies all three. They also have the patience to seek out only compelling opportunities, rather than settling for relative value. The portfolio is somewhat concentrated, looking to diversify across industries and themes, rather than by trying to stay near an index. The portfolio may at times have a large amount of cash or other protection. However once investments are made turnover may be relatively high in order to lock in gains and avoid losses. |
| Manager Comments | The Sharpe and Sortino ratio since inception is 2.00 and 7.37 over the last 12 months. Fund exposures were net 88% and gross 99% at month-end. The Fund returned 2.3% after fees. August is a reporting month for the Australian market, so it is always interesting. We had a good reporting season and suffered no negative surprises. The portfolio also benefited from exposure to a placement and two IPOs. |
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Supervised High Yield Fund
5 Sep 2014 - Australian Fund Monitors
Supervised High Yield Fund returned 0.77% during July and 7.17% over the previous 12 months with a very low volatility of 0.72.
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5 Sep 2014 - Supervised High Yield Fund
By: Australian Fund Monitors
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| Fund Overview | The fund will invest in all forms of marketable floating and fixed income debt securities, such as asset backed debt securities, residential mortgage backed securities, corporate debt, regional and sovereign debt securities, debt/equity hybrid securities, equities and currencies. All these investments will be either listed or traded in a market where prices can be independently verified. The fund may also invest in interest rate swaps, options over authorised investments and exchange traded futures contracts. All these will be either listed or traded in a market where they can be independently valued. |
| Manager Comments | The Fund's Annual Report is on the AFM website under the Profile. |
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Nanuk Global Alpha Fund
4 Sep 2014 - Australian Fund Monitors
Nanuk Global Alpha Fund returned -1.26% in July and 17.01% for the prior 12 months with a volatility of 8.95%.
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4 Sep 2014 - Nanuk Global Alpha Fund
By: Australian Fund Monitors
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| Fund Overview | In 2013 Nanuk started to expand the focus of the fund away from just energy and include other industries related to the overarching theme of environmental sustainability, specifically water, waste, recycling, pollution control and agriculture. Nanuk is now investing across a universe in excess of 600 stocks and an aggregate market capitalisation over US$2 trillion. This was a logical move because, while the industries themselves are different, their characteristics and long term drivers are very similar. Nanuk has identified a large, diverse global universe of companies positively exposed to these shifts. Nanuk combines deep fundamental research into these companies with detailed analysis of technological development, policy direction and related economics within each of the relevant sectors to identify profitable trends and opportunities suitable for inclusion in the Fund. Nanuk's principal strategy is to invest, long and short, in securities that are mis-priced on an absolute or relative basis. The Fund aims to achieve long term capital appreciation while reducing volatility of returns and risk of capital loss through appropriate hedging and risk management strategies. |
| Manager Comments | At month-end the Fund was 54% long, 52% short for a gross exposure of 104% and net exposure of 2%. The Fund finished the month down 1.3%. Positive contributions from short positions in a number of expensive European and US stocks and long positions in fuel cell and solar inverter manufacturers were offset by losses on some of the Fund's LED solid state lighting and solar positions which continue to show high levels of volatility. Thus far 2014 has been a challenging year for the Fund, with a number of our key ideas failing to deliver positive returns despite our continued conviction in the underlying investment theses and evidence supporting them. |
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Fund Review: Aurora Fortitude Absolute Return Fund July 2014
3 Sep 2014 - Australian Fund Monitors
CPD Points are now available for all AFM Fund Reviews. Read the review and answer 5 questions to earn half a point toward your continuing professional development.
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3 Sep 2014 - Fund Review: Aurora Fortitude Absolute Return Fund July 2014
By: Australian Fund Monitors
AFARF Fund Review July 2014 (pdf format)
AURORA FORTITUDE ABSOLUTE RETURN FUND
CPD Points are now available for all AFM Fund Reviews. Read the review and answer 5 questions to earn half a point toward your continuing professional development.
We would like to highlight the following aspects of the Fund;
- The Aurora Fortitude Absolute Return Fund (AFARF) has a 8 year track record investing in ASX listed equities. A Market Neutral overlay is used across a multi strategy approach which allows for flexible asset allocation to maximise returns and minimise risk under a variety of market conditions and cycles.CIO John Corr has over 20 years financial market experience with a strong focus on risk.
- Significant use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. Risk statistics are impressive and shows the Funds risk philosophy; over 88% of monthly performances have been positive with no losing months in 2008, the Fund's largest drawdown is -2.09% and the Sharpe ratio 1.16.
- ASX listed Aurora Funds Limited was established on the merger of three existing fund management businesses, managing approx. $230m on behalf of more than 2,500 retail and wholesale investors.
Sean Webster
Research and Database Manager
Australian Fund Monitors
AFARF Fund Review July 2014 (pdf format)
Avenir Value Fund
2 Sep 2014 - Australian Fund Monitors
Avenir Value Fund returned -1.12% during July and 24.47% for the year ended July 2014 with a volatility of 7.16%.
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2 Sep 2014 - Avenir Value Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund will invest in securities where Avenir believes the company is simply mis-priced and deeply undervalued and offers significant potential for revaluation. The Fund will also invest in companies that are subject to specific corporate events such as mergers, acquisitions, restructurings, recapitalisations, spin-offs, demergers, management change, distressed situations, and other sharply delineated corporate events. The Fund will also selectively invest in short positions in companies where Avenir believes the company is significantly overvalued or where the company's business model is broken or structurally challenged. |
| Manager Comments | The Sharpe and Sortino ratios were above ASX 200 Accum Index at 2.78 (1.61) and 7.42 (3.27) respectively, over the last year. Up and Down Capture ratios were 0.57 and -1.69 respectively. |
| More Information | » View detailed profile of this fund |
Auscap Long Short Australian Equities Fund
2 Sep 2014 - Australian Fund Monitors
Auscap Long Short Australian Equities Fund returned 2.95% during July and 43.54% for the prior twelve months with a volatility of 6.30%
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2 Sep 2014 - Auscap Long Short Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund focuses on fundamental long and short investments. The Fund may utilise a multi-strategy approach if short term opportunities to increase returns, hedge the portfolio, protect capital or minimise volatility are found. The Fund is a high conviction fund and the combined portfolio will typically have 25-45 positions, investing primarily in stocks in the ASX200. The Fund may be net long, short or neutral depending on the strategies employed at the time. The Fund may hold cash so that it is in a position to take advantage of market volatility and compelling investment opportunities as and when they arise. The Fund may be geared up to 200% gross long or short and up to 150% net long or short. |
| Manager Comments | The had a Sharpe ratio of 5.46 (Index 1.61) and 100% positive months (Index 75%) over the last year with Up and Down Capture ratios of 1.51 and -1.00 over the same time. Average gross capital employed by the Fund was 149.8% long and 26.1% short. Average net exposure over the month was +123.7%. At the end of the month the Fund had 36 long positions and 5 short positions. The Manager's August Newsletter is entitled 'Is now a good time to buy equities?' and is available on the AFM website. |
| More Information | » View detailed profile of this fund |
