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 Fund's unit price increased by 0.2% in July. The performance was driven by positive contributions from our holdings in eBay, Microsoft, S&P Global and Zimmer. The main negative contributors were Roche, McDonald's Corp, BAT and Reckitt Benckiser. 

• 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.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - July 2016 (pdf format)

SUPERVISED GLOBAL INCOME FUND

Attached is AFM's updated Fund Review on the Supervised Global Income Fund (SGIF).

We would like to highlight the following aspects of the Fund:

• The Supervised Global Income Fund (previously Supervised High Yield Fund) has a 6-year track record investing in fixed interest investments. The Investment strategy aims to deliver returns with zero correlation to equity markets by investing in debt securities with minimal default probability and offering a premium return above the risk-free rate.
• The Fund is managed by Philip Carden whose experience in debt and capital markets spans over 33 years, including time with JB Were's Capel Court Securities and Macquarie Bank, where he was the Executive Director responsible for the Debt Markets Division.
• SHYF is an Alternative Income fund which invests in Global and Australian debt markets, with all foreign currency receivables hedged back to Australian dollars.
• The Fund utilises a top-down analysis of the economic environment and market to screen and identifies debt market opportunities which it believes offer low risk with high yield. The next stage is the development of a risk matrix and investment strategy, following which detailed research is undertaken on specific investment opportunities which meet the pre-defined criteria established in the investment strategy.
• Prior to approving an investment for the Fund, each potential investment is subject to two stress tests. The first of these is of credit and default risk, in which the investment is stress-tested to ensure that in a worst case economic environment it can repay 100% of its principal and interest obligations case scenario for the asset by examining the highest margin over the risk rate that the investment has previously experienced in a crisis situation. Any decline in value under the stress test that exceeds 10% of the Fund's value is avoided The second test examines market risk.  In this case, Carden looks at the worst case scenario for the asset by examining the highest margin over the risk rate that the investment has previously experienced in a crisis situation.  Any decline in value under the stress test that exceeds 10% of the Fund's value is avoided.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - July 2016 (pdf format)

Jamieson Coote Bonds Active Fund

Attached is our most recently updated Fund Review on the Jamieson Coote Bonds Active Fund

We would like to highlight the following aspects of the Fund;

• Jamieson Coote Bonds is a Melbourne-based Boutique Manager launched in December 2014.
• The Founders, Charles Jamieson and Angus Coote bring over 30 years of international experience dealing with central banks, hedge funds and real money managers.
• The Jamieson Coote Active Bond Fund is a long-only macroeconomic investment fund, investing in Australian Dollar denominated bonds backed by AAA and AA+ rated Government, Semi (State) Government and Supranational agencies.
• The Fund Objective is to out-perform the Bloomberg Australian Government Bond Index through active management in a sound risk-managed framework and usually holds around 20 bond securities of varying maturities.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - July 2016 (pdf format)

Dear [FirstName],

Who won the election?

I noticed a comment in today's media by Graham Richardson, surely one of the more interesting and surprisingly non-partisan political minds around. To paraphrase "Richo", his view is that the government is sounding as if they won the recent election by a significant margin, rather than by one lower house seat and failing to control the Senate, while Bill Shorten is acting as if he won the election, rather than losing it.

Meanwhile, the Treasurer has suddenly worked out that the budget has both an income and an expenditure problem. Amazing that no one had worked that out before. It could be a long three years until the next election - or alternatively not long at all.

But that's not what Hedge Clippings should be all about - so back to fund performances which, again as reported in the media earlier in the week, have been pretty average.

Average. Who wants average?

Courtesy of the stellar post BREXIT bounce giving the ASX 200 a return of 6.29% in July, the local equity market has just managed to keep its nose above water since January, and has now returned 7.45%  -  although on a rolling 12-month basis the Index is only up 2.37% on an accumulation basis.

Without taking dividends and distributions into account the figures are even less impressive, with the ASX200 falling -2.4% over 12 months to the end of July. In other words dividend yields and distributions are running at over 4.5%, in large part explaining the resilience of the market in a low-interest rate environment, even if the overall performance is flat or negative.

Meanwhile, on the face of it's the average performance of equity-based absolute return funds has also been disappointing, with a January to July year-to-date performance of just 1.63%, and a 12-month rolling performance of 4.43%.

However, averages can be deceiving, particularly in a sector as diversified as actively managed, absolute returns, and hedge funds. While almost 60% of all funds have outperformed the ASX 200 accumulation index over the past 12 months (which based on the ASX200 returns noted above is not all that difficult), individual fund returns have ranged between -29% and +121%.

Importantly out of the 240 funds which have reported their July numbers so far, 74 have returned 10% or more over the past 12 months, and 31 have returned over 20%. The opportunities to gain excellent returns are alive and well, frequently with lower risk than the ASX and individual stocks, provided you do your research correctly. Some examples are shown below.

PERFORMANCE NEWS

Bennelong Kardinia Absolute Return Fund rose 2.95% in July to take annualised return since inception to 11.92% p.a.

Cyan C3G Fund returned a positive 5.80% in July to take latest 12-months return to 42.41%.

The Paragon Fund returned a positive 2.90% after fees for the month of July. Since inception, the Fund has an annualised return of 24.45% p.a.

Optimal Australia Absolute Trust returned -2.3% in July to take annualised return since inception to 8.71% p.a.

APN Asian REIT Fund rose 2.07% in July, outperforming the Bloomberg Asia REIT Index which returned 0.77%, by 1.30%.

Pengana PanAgora Absolute Return Global Equities Fund rose 1.08% in July.

QATO Capital Market Neutral Long/Short Fund returned 3.71% for the month of July.

APN AREIT Fund  rose 4.94% in July, to take annualised return since inception to 19.38% p.a.

Bennelong Twenty20 Australian Equities Fund returned +6.43% against the ASX 200 Accumulation Index's return of 6.29%.

KIS Asia Long Short Fund rose 2.99% in July to take latest 24-months return to 25.09%.

Pengana Absolute Return Asia Pacific Fund returned -0.97% after fees for the month of July. Since inception, the Fund has an annualised return of 8.70% p.a.

Signature Quantitative Fund recorded a flat return (0.003%) in July. Since inception, the Fund has an annualised return of 6.41%.

Affluence Investment Fund returned +2.98% in July to take the latest 12-months return to 12.28%.

Totus Alpha Fund rose 8.82% for the month of July, outperforming the ASX 200 Accumulation Index which returned 6.29%, by 2.53%

NWQ Fiduciary Fund returned 1.88% in July and returned +6.54% over the last 12 months.

Touchstone Index Unaware Fund returned +5.82% in July. Since inception in April 2016, the Fund has returned +7.4%, net of fees and expenses. 

King Tide NZ/Australian Long/Short Equity Fund returned +4.29% to take latest 12-months return to 11.29%.

Pengana Global Small Companies Fund rose 2.80% in July 2016, compared to a +3.3% return for the MSCI AC World SMID Cap Index.

FUND REVIEWS released this week: Meme Australian Share Fund; Bennelong Long Short Equity Fund; Optimal Australia Absolute Trust; Bennelong Kardinia Absolute Return Fund; APN Asian REIT Fund; QATO Capital Market Neutral Long/Short Fund; Pengana Absolute Return Asia Pacific Fund; Bennelong Twenty20 Australian Equities Fund;

And on that note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.