NEWS
22 May 2015 - Allard Investment Fund
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| Manager Comments | The Fund portfolio was invested 75% in equities and 25% in cash and fixed income. There has been little change since the prior month, in terms of the industry and geographic breakdown of the portfolio. The Fund continues to be most exposed to Financial Services at 18.30%, Conglomerates at 10.90% and Telco's at 11.10%. The geographic breakdown was Hong Kong / China at 43.00%, Singapore 10.90% and Korea 9.70%. The top 5 holdings had 42.00% concentration of the portfolio and 16.50% in the next 5 holdings. Click below to review the latest Fund Manager's Report. |
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21 May 2015 - Fund Review: Bennelong Kardinia Absolute Return Fund April 2015
- The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with an nine year track record.
- The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in April 2006 and also has significantly lower risk KPI's. The Bennelong Kardinia Absolute Return Fund fell 0.59% in April and has volatility of 7.33% pa, compared to the ASX200 Accumulation's 14.19%.
- 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 the Bennelong Group provide infrastructure, operational, compliance and distribution capabilities.
20 May 2015 - Fund Review: Optimal Australia Absolute Trust April 2015
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.
- The Fund's approach to risk is shown by the Sharpe ratio of 1.41, Sortino ratio of 3.17, both of which are well above the ASX 200 Accumulation Index and has recorded 80% positive months.
For further details on the Fund, please do not hesitate to contact us.
Sean Webster
Research and Database Manager
Australian Fund Monitors
19 May 2015 - Fund Review: Monash Absolute Investment Fund April 2015
MONASH ABSOLUTE INVESTMENT FUND
- The Fund is a research driven, active equity long/short strategy investing in listed ASX companies.
- 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.
Sean Webster
Research and Database Manager
Australian Fund Monitors
Monash Absolute Investment Fund Review April 2015 (pdf format)
18 May 2015 - Bennelong Long Short Equity Fund
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| Fund Overview | In a typical environment the Fund will hold around 70 stocks comprising 35 pairs. Each pair contains one long and one short position each of which will have been thoroughly researched and are selected from the same market sector. Whilst in an ideal environment each stock's position will make a positive return, it is the relative performance of the pair that is important. As a result the Fund can make positive returns when each stock moves in the same direction provided the long position outperforms the short one in relative terms. However, if neither side of the trade is profitable, strict controls are required to ensure losses are limited. The Fund uses no derivatives and has no currency exposure. The Fund has no hard stop loss limits, instead relying on the small average position size per stock (1.5%) and per pair (3%) to limit exposure. Where practical pairs are always held within the same sector to limit cross sector risk, and positions can be held for months or years. |
| Manager Comments | The number of profitable pairs exceeded the number of losing pairs; 17 positive, 14 negative. Long Caltex / Short Metcash was a top 3 pair. Both sides of the trade contributed positively despite Caltex absorbing the impact of the majority shareholder, Chevron, selling its 50% shareholding. Notwithstanding weakness in the Financials sector, key positive contributors to the portfolio were Long QBE / Short Suncorp benefiting from weakness in domestically focussed general insurers and Long Challenger / Short ANZ benefitting from weakness in banks. Within the negative pairs, our Long Resmed / Short Ansell position was key following a quarterly result from Resmed which the market took negatively. The Fund Manager continues to be apprehensive about the equity market valuation. Click below to read the complete Fund Monthly commentary. |
| More Information |
15 May 2015 - Hedge Clippings
Hedge Funds show their mettle
Every cloud has a silver lining, or so they say, so the volatility in Australia's equity market in the last couple of weeks, and which saw the ASX 200 drop 1.7% in April following a negative (albeit small) fall of 0.06% in March has probably played into the hands of hedge fund managers. Local equity-based hedge funds have gained around 1.2% over the past two months, and have now outperformed the index by 2.5% percent over a rolling 12 month period.
Globally it is no different. Industry newsletter Hedgeweek reported this week that hedge fund managers may be showing their mettle as global financial and geopolitical volatility continues, with the hedge fund industry beginning to beat popular indexes, according to eVestment's just-released April 2015 Hedge Fund Performance Report.
There has been a very long and very active debate over the value of hedge funds, but the popular opinion of hedge funds as being highly risky is simply not borne out by the facts. In a strongly rising market the protection taken by hedge fund managers on the short side frequently sees them underperforming, but when volatility increases and markets fall, their short positions come into their own.
This is not always the case, and there are someexceptions to the rule with a handful of fund managers behaving or performing according to the myth. Thankfully there are others, and many more of them, who outperformed the market in both positive and negative markets. By definition this is difficult to do as they have to actively short stocks or the market to drive performance, rather than just to reduce risk. Part of the skill when selecting the best manager to suit the end investor's objective therefore is to analyse both their up and down capture ratios.
Talking of risk, it seems that twenty years after bringing down major British bank Barings (which listed amongst its historical credits funding the Napoleonic wars), the SMH reports that rogue trader Nick Leeson is sounding alarm bells about China. Unless the country reforms its stock markets, he warns, it's only a matter of time until his earlier disaster repeats itself on a larger scale. So it is not only rogue traders that create risk, but underlying government controls or lack thereof. The level of speculative trading in China driven by retail investors (or should that be punters?) funded by margin trading is, unless they are very, very careful, going to lead to inevitable volatility, and a repeat of the damage witnessed in 2008.
Finally Hedge Clippings can't resist mentioning something about this week's budget. It was certainly better than last year's, but we can't help feeling that it's really all about job protection - those of Treasurer Joe Hockey, and the Prime Minister, Tony Abbott. The real issue we see with the budget, was its lack of commitment to tackle major issues for the future. For example, consider the estimate that in 10 year's time the tax concessions on superannuation will cost the nation double that of the age pension - which the superannuation system was orginally designed to reduce.
Specific results received this week include the following LATEST PERFORMANCE UPDATES:
Optimal Australia Absolute Trust Fund reported a net positive return in April of 1.96%, compared to the ASX200 Accumulation Index of -1.70%
The Bennelong Kardinia Absolute Return Fund fell 0.59% in April to bring the Fund's annual performance since inception to 13.08% compared to the ASX200 Accumulation benchmark's 5.61%.
Monash Absolute Investment Fund had a flat April (0.0%), while the Australian equity market had its second consecutive negative month (-1.70%).
FUND REVIEWS released this week: Supervised High Yield Fund; and Alpha Beta Asian Fund which recorded its best ever return since inception.
25-27 May 2015 - Digital Marketing for Banking and Financial Services Summit
15 September 2015 - AIMA Australia Hedge Fund Forum 2015
This week for something completely different an email joke Hedge Clippings received from a reader:
This is something to think about when negative people are doing their best to rain on your parade.
A woman was at her hairdresser's getting her hair styled for a trip to Rome with her husband.
She mentioned the trip to the hairdresser, who responded: "Rome? Why would anyone want to go there? It's crowded and dirty. You're crazy to go to Rome. So, how are you getting there?"
"We're taking Continental," was the reply. "We got a great rate!"
"Continental?" exclaimed the hairdresser. "That's a terrible airline. Their planes are old, their flight attendants are ugly, and they're always late. So, where are you staying in Rome?"
"We'll be at this exclusive little place over on Rome's Tiber River called Teste."
"Don't go any further. I know that place. Everybody thinks it's going to be something special and exclusive, but it's really a dump."
"We're going to go to see the Vatican and maybe get to see the Pope."
"That's rich," laughed the hairdresser. "You and a million other people trying to see him. He'll look the size of an ant. Boy, good luck on this lousy trip of yours. You're going to need it."
A month later, the woman again came in for a hairdo. The hairdresser asked her about her trip to Rome.
"It was wonderful," explained the woman, "not only were we on time in one of Continental's brand new planes, but it was overbooked, and they bumped us up to first class. The food and wine were wonderful, and I had a handsome 28-year-old steward who waited on me hand and foot. And the hotel was great! They'd just finished a $5 million remodeling job, and now it's a jewel, the finest hotel in the city. They, too, were overbooked, so they apologized and gave us their owner's suite at no extra charge!"
"Well," muttered the hairdresser, "that's all well and good, but I know you didn't get to see the Pope."
"Actually, we were quite lucky, because as we toured the Vatican, a Swiss Guard tapped me on the shoulder and explained that the Pope likes to meet some of the visitors, and if I'd be so kind as to step into his private room and wait, the Pope would personally greet me. Sure enough, five minutes later, the Pope walked through the door and shook my hand! I knelt down and he spoke a few words to me."
"Oh, really! What'd he say?"
He said: "Who @#$%^& up your hair?"
And on that note, enjoy the week-end.
Kind regards,
Chris
CEO
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14 May 2015 - Bennelong Kardinia Absolute Return Fund
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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 net equity market exposure of the Fund (including derivatives) was reduced during the month to 39.80% (70.40% long and 30.60% short). ResMed's poorly received quarterly results were a major detractor from the Fund's performance, along with Ramsay Health Care and Westpac. Share Price Index Futures contracts (hedging market exposure), Surfstitch and Transurban were the largest positive contributors. Click below to read the latest Fund Manager's Report. |
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13 May 2015 - Optimal Australia Absolute Trust
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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 had a gross exposure of 100.30% and net exposure of -0.1%. The Fund's stock selection performed strongly in April, with positive attribution on both the fund's long (+0.5%) and short (+1.5%) positions, in an appreciably weaker and more volatile equity market. Their long position in Fairfax and shorts in the banks both did well. The Fund's stock returns were otherwise quite diversified, with no single theme or sector dominating overall performance. Click below to read the latest Fund Manager's review of the Fund and the Market. |
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12 May 2015 - Monash Absolute Investment Fund
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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 Manager's month-end exposure was net 71%, gross 95%,VAR 1.0%, with a beta of 0.49 for the portfolio. The Fund's short positions generally assisted in April, which was offset by larger portfolio positions that fell despite no news. Some of the highs for the month came from strong gains in VMoto (VMT) and from Energy Action (EAX). However Next DC (NXT) and Netcomm Wireless (NTC) were negative contributors to the Fund's performance. Click the link below to the rest of the Fund Manager's Report. |
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11 May 2015 - Fund Review: Supervised High Yield Fund March 2015
We would like to highlight the following aspects of the Fund:
- The Supervised High Yield Fund (SHYF) has a 5 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 32 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 identify 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 for 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.
Research and Database Manager
Australian Fund Monitors
