PENGANA ABSOLUTE RETURN ASIA PACIFIC FUND

Attached is our most recently updated Fund Review on the Pengana Absolute Return Asia Pacific Fund.

• The Pengana Absolute Return Asia Pacific Fund ("PARAP") was established in 2008 by portfolio managers Antonio Meroni and Vikas Kumra. The Fund is a feeder fund into a Cayman Islands AUD share class fund.
• The Fund invests both long and short in Asia Pacific equities, including in Australian and New Zealand, after a stock specific "event" has either occurred or been announced and the portfolio aims to be uncorrelated to the underlying equity markets. A combination of the Manager's experience, thorough research and continuous back- testing identify the most attractive of these events.
• Risk controls include limits on individual positions as well as gross and net exposure. Limits are in place for option exposure and cash borrowing, with stop loss limits on individual positions. Overall the manager is looking to derive returns from the event strategies as opposed to any currency or market exposures.
• Since inception, the Fund has an annualised return of 9.95% p.a., compared to the AFM's Asia Pacific Index of 4.49%. The Fund has achieved this with lower volatility of 6.09% (Index 11.89%).

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

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - April 2016 (pdf format)

Low inflation and low returns - Peter Costello weighs in.

For some time Hedge Clippings has been flagging that investors will need to lower their return expectations in the current low interest rate, low inflation environment.

Peter Costello, the architect of Australia's Future Fund, and now its chairman, made much the same call this week, warning that the fund's double digit returns of the past few years were unlikely to be repeated, and that the "inflation +5%" target will be a big ask in the current environment.

Given that Australia's inflation rate is negligible, and looking forward a few years is likely to be no more than 1 to 2 percent, this means investors are unlikely to achieve returns of 5% at best. With government bonds returning little more than 2%, and the local equity market seemingly up against a hard ceiling around the 5500 level, and many key areas of the property market looking soft, (which in turn will impact the banks) achieving the 10 to 15% returns many investors have become used to will not be easy.

To reinforce that unpleasant truth, in the 12 months to the end of April the ASX 200 accumulation index fell 4.93%, compared with an average of the active equity funds in AFM's database which gained 2% and providing an outperformance of 7%. 

73% of funds in AFM's database outperformed the ASX 200, although individual 12 month returns ranged widely from -35% through to +44%. Within those extremes smart and well informed investors still picked up the elusive 10 to 15% per annum return with limited risk by investing in the better managers.

While some may accuse Hedge Clippings of bias, the facts prove that actively managed and absolute return funds provide significant benefits provided investors have the ability to sort the wheat from the chaff.

If Peter Costello's right, and we believe he is, most investors in Australia's $1.8 trillion superannuation sector, plus those relying on the Future Fund's $117 billion, are going to have to tighten their belts over the next 3 to 5 years.

The ASX200 Accumulation Index returned+3.37% in April, with a range of fund returns as follows:

The Paragon Fund returned a +10.80% after fees for the month of April, outperforming the Index by 7.43%.

Alexander Credit Opportunities Fund increased 0.57% to take annualised return since inception to 17.18% p.a.

Cyan C3G Fund rose 7.90% in April 2016, outperforming the ASX 200 Accumulation Index by 4.53%.

Optimal Australia Absolute Trust returned -0.69% to take annualised return since inception to  9.00% p.a.

Bennelong Twenty20 Australian Equities Fund returned 2.31% for the month of April.

Jamieson Coote Bonds Active Fund rose 0.33%, outperforming the Bloomberg Australian Government Bond Index by 0.21%.

Bennelong Kardinia Absolute Return Fund returned 0.52% in April. Since inception, the Fund has an annualised performance of 11.79% p.a.

Totus Alpha Fund returned -1.37% in April to take the latest 12 months return to 20.66%. 

Pengana Absolute Return Asia Pacific Fund rose 1.32% for the month of April, compared to the HFR Event Driven Index, which returned 0.43%. 

NWQ Fiduciary Fund returned 0.27% bringing the net performance for the trailing 12 months to 6.25%.

Pengana Global Small Companies Fund returned 1.01% for the month of April.

Affluence Investment Fund returned 1.92%, to take annualised return since inception to 8.78% p.a.

FUND REVIEWS released this week: Meme Australian Share Fund; Bennelong Long Short Equity Fund; Bennelong Kardinia Absolute Return Fund; Optimal Australia Absolute Trust; Jamieson Coote Bonds Active 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.

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 FILESJCBAF AFM Fund Review April 2016 (pdf format)

OPTIMAL AUSTRALIA ABSOLUTE TRUST

AFM have released the most recently updated Fund Review on the Optimal Australia Absolute Trust.

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

• Optimal Australia 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 supported by Stephen Nicholls and Justin Hay have over 100 years combined experience in equity markets.

• In March, the Fund returned -0.69%. The Fund's approach to risk is shown by the Sharpe ratio of 1.49 (Index 0.17), Sortino ratio of 3.37 (Index 0.14), both of which are well above the ASX 200 Accumulation Index and has recorded 79% positive months.

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

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - April 2016 (pdf format)