BENNELONG TWENTY20 AUSTRALIAN EQUITIES FUND

Attached is our most recently updated Fund Review on the Bennelong Twenty20 Australian Equities Fund.

• The Bennelong Twenty20 Australian Equities Fund invests in ASX listed stocks, combining an indexed position in the Top 20 stocks with an actively managed portfolio of stocks outside the Top 20. Construction of the ex-top 20 portfolio is fundamental, bottom-up, core investment style, biased to quality stocks, with a structured risk management approach.

• Mark East, the Fund's Chief Investment Officer, and Keith Kwang, Director of Quantitative Research have over 50 years combined market experience. Bennelong Funds Management (BFM) provides the investment manager, Bennelong Australian Equity Partners (BAEP) with infrastructure, operational, compliance and distribution services.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - October 2017 (pdf format)

A road to nowhere…?

A recent article on the nab asset management website entitled "The Grumpy Australian Consumer" concluded that given the rapid rise in the cost of electricity and health, coupled with subdued income growth and high household debt, Australian consumers are entitled to feel grumpy, and that these pressures can account for the recent retail spending figures as well as the modest performance of the Australian sharemarket in 2017.

The article had a series of excellent charts and tables, the most worrying of which was this one provided by the RBA, and dated March 2017. With household debt having climbed dramatically, and interest payments as a percentage of disposable income having fallen courtesy of low interest rates since 2012, it is not difficult to see the Reserve Bank's dilemma - It won't take much in the way of an increase in interest rates to dramatically increase the percentage of disposable income consumed by mortgage repayments, creating even more grumpy Australians, particularly if consumer confidence remains low.

At least investor confidence has been given a boost recently with the ASX finally touching the 6000 level, albeit still 10% below its all-time high in 2007. TheAustralian market is frequently negatively compared to the S&P500, but it is worth remembering that the ASX delivers Australian shareholders a dividend income of 4%, much of it also having the benefit of franking, whilst US companies distribute just 2.5% to shareholders as dividends.

The NAB article above referred to Leonard Cohen's song Anthem,

"You can add up the parts,

You won't have the sum"

Which is perhaps why we have economists to help us.

In Hedge Clipping's opinion a further reason for Australians to be grumpy, and thus the low levels of consumer confidence, is the lack of direction coming from Canberra, which might be equally summed up by the title of Talking Heads' 1985 hit song "A Road to Nowhere". The title is where the similarity ends, as the words to the song run:

"Well, we know where we're goin'

But we don't know where we've been

And we're not little children, and we know what we want

And the future is certain, give us time to work it out"

Unfortunately, if all the reported talk in Flemington's Birdcage on Derby Day was anything to go by, the words could be changed to:

"Hey, do you know where you're goin'

Do you know where you've been?

And you're not little children, and you should know what we want

And the future's uncertain, you've had time to work it out"

Meanwhile some managers certainly knew where they were going in October, in a strongly rising market.

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;

• 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. 

• The investment team comprising George Colman, Peter Whiting, and Stephen Nicholls bring 100 years combined experience in equity markets.

• The Fund has an annualised return since inception of +8.30%. The Fund's approach to risk is shown by the Sharpe ratio of 1.36 (Index 0.29), Sortino ratio of 2.87 (Index 0.30), 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.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - October 2017 (pdf format)

BENNELONG KARDINIA ABSOLUTE RETURN FUND

Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile.

• The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with over ten-year track record. 

• The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in May 2006 and also has significantly lower risk KPIs. The Fund has an annualised return of 10.89% p.a. with a volatility of 7.01%, compared to the ASX200 Accumulation's return of 5.58% p.a. with a volatility of 13.68%.

• The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while Bennelong Funds Management provide infrastructure, operational, compliance and distribution capabilities.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - October 2017 (pdf format)