NEWS
Bennelong Kardinia Absolute Return Fund
11 Jul 2013 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund returned -0.46% during June with a net equity exposure at month end of 35.5%.
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11 Jul 2013 - Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund consists of a concentrated long/short portfolio typically comprising 30 to 40 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. There is a slight bias to large cap stocks in the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 10 to 15% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position. |
| Manager Comments | The Australian equity market remained under pressure in June, with the All Ordinaries Accumulation Index falling 2.62%. Potential near term QE3 withdrawal and concerns over liquidity conditions in China increased the volatility of financial markets. US economic data signaled a continued recovery with indicators of US business investment and manufacturing generally stronger. Despite disappointing domestic economic data and further falls in commodity prices, the Reserve Bank of Australia left the official cash rate unchanged at 2.75%. Defensive sectors continued to outperform cyclicals, whilst large caps (-1.9%) significantly outperformed small caps (-7.5%). Long positions in EBOS (New Zealand listed), JB Hi-Fi, CSL and a short position in Share Price Index Futures contracts (hedging long positions) were the largest positive contributors, whilst long positions in Henderson Group, NAB and Suncorp were the largest detractors. Net equity market exposure remained relatively steady at 35.5% including derivatives (46.7% long and 11.3% short). |
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Insync Global Titans Fund
10 Jul 2013 - Australian Fund Monitors
Insync's Global Titans Fund returns 0.91% in June as stocks driven by Consumer spending performed, a falling A$ and the SPI index hedge both assisted, offset by holdings in the IT sector.
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10 Jul 2013 - Insync Global Titans Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund's return was assisted by holdings in companies driven by consumer spending such as BSkyB, Macdonald's, Reckitt Benckiser, Nestlé and Roche performing, partly offset by the IT sector holdings such as IBM, Accenture and Oracle. The falling A$ and the Fund's SPI index hedge both also contributed positively. |
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Optimal Australia Absolute Trust
8 Jul 2013 - Australian Fund Monitors
Optimal Australia's long/short trust returns -0.18% in June vs. the ASX200 Accumulation's loss of -2.32% whilst keeping net risk exposure at just 3%.
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8 Jul 2013 - 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 Manager particularly noted the increasing equity market volatility, with recent daily trading ranges of over 2% significantly higher than the typical range since 2000 of around 0.9%, and the distortion on valuations created by QE policies which they believe may persist for years. The Fund's exposure at month end was 34% long and 31% short (including derivatives) for a net exposure of just 3%, and gross of 65%, indicating the manager's favouring a low net exposure and hedged approach to managing risk. On past performance this has served the Fund's investors well, as shown by a Sharpe Ratio since inception of 1.82, a maximum drawdown of just 1.38%, and a record of 80% positive monthly performances (Average +0.73%) when the market (average -3.88%) has fallen. |
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Bennelong Long Short Equity Fund
4 Jul 2013 - Australian Fund Monitors
The Bennelong Long Short Equity Fund returned 1.1% during May bringing it's since inception return to 21.03%.
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4 Jul 2013 - Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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| Manager Comments | The local market fell 2.5% in June with a noticeable pickup in volatility across the globe as various macro events took their toll on investor sentiment across all asset classes. As a result, the AUD continued its' recent slide finishing the month down over 4% against the USD ($0.914) while the Materials sector finished down over 10% for the month. Other under-performing sectors included IT (-6%) and Energy (-5.8%). The Fund consolidated the gains made recently with a profit warning from one of the short holdings as well as a general risk-off attitude towards domestically focused businesses contributing to performance. Detracting from performance was a profit warning from one of the Fund's long holdings. The Manager expects recent volatility to persist as markets and investors grapple with a potential change in ultra-loose monetary policy which has been in place for so long now. |
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AFM Prism Active Equity Fund
3 Jul 2013 - Australian Fund Monitors
The AFM Prism Active Equity Fund returned 1.66% during May.
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3 Jul 2013 - AFM Prism Active Equity Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund will invest in a portfolio consisting of a group of underlying managed funds which focus on investing in ASX listed companies. The Fund will not directly invest in equity markets or derivatives, but the underlying funds may use short selling or invest in derivatives to improve performance or reduce risk. The underlying managers and funds will be selected from Absolute Return Funds managed in Australia. This reduces the risk of currency fluctuations, facilitates due diligence and ensures that each underlying fund manager is licensed by the Australian Securities Investments Commission (ASIC). A combination of quantitative performance analysis and qualitative operational due diligence is used to create a portfolio of five to ten 'best of breed' funds. AFM's research has shown that selecting a relatively small group of funds results in better risk adjusted performance than that of a larger, more diversified group. Significant research from Australia and overseas shows that the performance of boutique funds, (particularly those where the principals remain actively involved in the day to day investment decisions) and smaller managers can provide more attractive returns than larger or more established managers. As a result the Fund may invest in funds managed by boutique fund managers where the principals invest alongside outside investors, creating an attractive alignment of interests. In addition the Fund may also invest in funds managed by early stage managers with less than three years history, but only where the principals concerned have a demonstrated track record of prior performance in a similar role, and where AFM has been able to conduct thorough due diligence on the management company and its operations. The underlying funds are monitored each month by AFM Prism Asset Management and AFM to ensure each fund's strategy and risk limits remain appropriate for current market conditions. The returns of each underlying fund are also analysed to ensure the original basis for inclusion in the portfolio remains relevant, and to allow new or additional funds to be added to enhance overall performance. |
| Manager Comments | May was the month that the search for yield came to an end as investors rotated away from the stocks that had enjoyed strong performances over the last twelve months. Banks fell 11.3% and Telco's 4.9% as did consumer staples, -9.0% and discretionary retail, -10.1%. Of the five underlying funds, three had a positive month in May, and two had negative returns. One of the funds delivered a remarkable performance of 9.49% and this was the major contributor to Prism's performance. On the flip side one of the managers had a weak month losing 2.37%. However with this fund's allocation in the portfolio at 2%, the loss had a minimal impact on Prism's May performance. The Manager continues to conduct research on new managers for investment, but balancing caution remains an important factor given the market's recent activity. |
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BlackRock Multi Opportunity Fund
2 Jul 2013 - Australian Fund Monitors
The BlackRock Multi Opportunity Fund returned -0.16% during May and 8.98% since inception.
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2 Jul 2013 - BlackRock Multi Opportunity Fund
By: Australian Fund Monitors
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| Fund Overview | - Australian and International Equity Long/Short - Global Fixed Income Long/Short - Global Macro - Commodity Alpha - Alpha Transport The Fund's goal is to provide investors with a source of consistent, risk-controlled, absolute returns that are over time, expected to have low correlations with the returns of major asset classes. The Fund aims to achieve a return of 8% p.a. before fees, above the RBA Cash Rate Target over rolling 3 year periods. In order to achieve its expected return objective, the Fund will target a total expected risk of between 4-6% p.a. over the same rolling 3 year period. |
| Manager Comments | The Multi Opportunity Fund delivered a small negative performance in May with Global Equity Market Neutral, European equity long/short, and International Alpha Transport strategies adding value. Australian Equity Market Neutral, Global Macro, and Fixed Income Global Alpha strategies detracted. The Australian equity market fell -5.1% in May as investors rotated out of yield stocks and into resources. The leading sector for the month was Information Technology, led by Computershare, which benefited from its USD exposure. Materials and Energy also enjoyed positive returns, led by some smaller energy stocks, and companies in base metals and coal. Performance of the Australian equity long/short strategy was hurt by the rebound in small/mid cap resources which had been sold down heavily in April, by the out-performance of USD exposed stocks, and by several significant stock specific profit warnings. Our short positions accounted for most of the under-performance with mineral sands miner Iluka Resources and uranium miner Paladin Energy among the biggest detractors. |
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8IP Asia Pacific Partners Fund
1 Jul 2013 - Australian Fund Monitors
The 8IP Asia Pacific Partners Fund returned -1.36% during May and 18.58% for the last twelve months.
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1 Jul 2013 - 8IP Asia Pacific Partners Fund
By: Australian Fund Monitors
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| Fund Overview | There is a relatively low number of individual securities in the Fund which may result in periods of high volatility. Ideally, investments should be made for a minimum of five years so that short term volatility may be offset by high capital growth over time. Companies are chosen using an active, bottom-up approach with particular attention paid to valuation and the sustainability of return on equity. The Fund takes a long term view when investing. Companies of all sizes are considered for inclusion in the Fund. The Fund invests in a mix of both developed and emerging markets. Investments in emerging markets may carry risk associated with delivery difficulties, failed or late settlement of market transactions and the registration and custody of securities is more complex. The lack of liquidity and efficiency in these markets may mean that from time to time the Fund may experience more difficulty in purchasing or selling securities than it would in a more developed market. |
| Manager Comments | In US dollar terms, Asia Pacific share-markets fell nearly 5% but this was more than offset by a sharp fall in the Australian dollar. We decided to remove the AUD/USD hedge during the month at an average rate of 97.6c. Having initiated the hedge at around 90c in February 2010 and received a positive interest rate carry ever since, the decision to hedge has been a benefit to the Fund. Going forward, the Fund will benefit from any further decline in the Australian dollar. The Fund's exposure in Australia and Japan detracted from performance as the small resource stock exposure continued to suffer and the Japanese financials experienced profit-taking. |
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AUI Wingate Global Equity Fund
28 Jun 2013 - Australian Fund Monitors
The AUI Wingate Global Equity Fund returned 8.95% over May and 23.81% over the preceding twelve months.
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28 Jun 2013 - AUI Wingate Global Equity Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund primarily invests in global equities, either directly or via derivatives, to generate income from dividends and option premiums, and capital growth. Preservation of investors' capital is an overriding priority. The Fund typically has between 15 and 40 holdings (stock and options) and can invest 98% of its assets in international equities, including direct holdings in shares and option positions over shares, which are fully cash backed. The Fund restricts exposure to any individual company to a maximum of 10% of the net assets of the Fund. Cash that is not used to back option positions is restricted to a maximum of 20% of net assets of the Fund. The Fund's derivatives strategy primarily involves the selling of cash-backed put options to purchase stocks at a price in Wingate's fair price range but below current market price. The sale of the put option can result in either purchase of the stock at an acceptable price to Wingate, or the Fund receiving income in the form of the option premium. Importantly all option positions are fully backed by cash holdings and the Fund does not borrow to make investments. In addition, covered call options may be used to sell stocks that are held in the portfolio. |
| Manager Comments | Performance was supported by the weaker Australian dollar as the portfolio's assets are unhedged. Successful stock selection contributed to relative outperformance notwithstanding the Fund's lower than average equity weight. Wingate continues to position the Fund in out-of-favour companies where the combination of quality and value still resides. As a consequence of the market's prolonged upward trend, Wingate's equity weightings remain at the lower end of its long term expected range. The resultant increased cash weighting leaves the Fund well positioned for any market pullback. |
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Pengana Australian Equities Market Neutral Fund
27 Jun 2013 - Australian Fund Monitors
The Pengana Australian Equities Market Neutral Fund returned -1.7% during May as compared to the S&P/ASX 300 Accumulation Index which lost -4.5%.
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27 Jun 2013 - Pengana Australian Equities Market Neutral Fund
By: Australian Fund Monitors
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| Manager Comments | Earnings Revisions was the best performing investment theme in the Fund's model followed by Momentum and Value, while Quality detracted from performance for the month. Earnings revisions captures the trend in analyst earnings forecasts over the short and medium term where stocks with upward revisions tend to outperform stocks with downward revisions. While Momentum has been the dominant investment theme for the most of this year, the Manager is now starting to see this wane as the market begins to shift its focus to the underlying fundamentals of companies with changes to earnings forecasts. |
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BlackRock Australian Equity Market Neutral Fund
26 Jun 2013 - Australian Fund Monitors
The BlackRock Australian Equity Market Neutral Fund returned -2.12% during May and 6.09% for the preceding twelve months.
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26 Jun 2013 - BlackRock Australian Equity Market Neutral Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund's portfolio primarily consists of long and short Australian equity positions. The Fund may also invest in other funds managed by BlackRock. Derivative securities, such as futures, forwards, swaps and options, can be used to manage risk and return Key insights into the investment process include: Analyst Expectations, Relative Valuation, Earnings Quality, Market Signals and Timing. Short-Term return enhancing opportunities including: Dividend reinvestment plans, Manging index changes, Managing cash flows and Arbitrage, Initial public offerings and Seasoned Equity Offerings and Off Market Buybacks. |
| Manager Comments | The S&P/ASX 200 fell 4.5% (5.1% accumulation) in May as investors rotated out of yield stocks and into resources. This followed a 25bp rate cut by the RBA, comments from Federal Reserve officials suggesting that its quantitative easing program of bond purchases could soon be tapered, and a resulting AUD depreciation that saw the AUD/USD cross rate fall below parity to a 20-month low. The leading sector for the month was Information Technology (+4.6%),led by Computershare (+12.7%) which benefited from its USD exposure. Materials (+2.2%) and Energy (+2.1%) also enjoyed positive returns, led by some smaller energy stocks, and companies in base metals and coal. Profit warnings during the month tended to be concentrated in domestic cyclicals and mining service sectors. |
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