• The Aurora Fortitude Absolute Return Fund  (AFARF) has a 8 year track record investing in ASX listed equities. A Market Neutral overlay is used across a multi strategy approach which allows for flexible asset allocation to maximise returns and minimise risk under a variety of market conditions and cycles.CIO John Corr has over 20 years financial market experience with a strong focus on risk.
• Significant use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. Annualised return since inception is 8.16% with a very low standardised standard deviation of 2.75%. Over 87% of monthly performances have been positive, with no losing months in 2008 and a largest drawdown of -2.09%.
• ASX listed Aurora Funds Limited was established on the merger of three existing fund management businesses, managing approx. $480m on behalf  of more than 2,500 retail and wholesale investors.

Australian Fund Monitors

ATTACHED FILESAurora Fortitude Absolute Return Fund AFM Fund Review December 2013 (pdf format)

OPTIMAL AUSTRALIA ABSOLUTE TRUST

Attached is our most recently updated Fund Review on the Optimal Australia Absolute Trust.  

We would like to highlight the following:

• 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 ASX2
• The Fund has recorded out-performance of the market since inception in September 2008 with approximately 84% of monthly performances having positive returns and the largest drawdown -1.38% 
• The investment team comprising George Colman, Peter Whiting and Stephen Nicholls have close to 90 years combined experience in equity markets.

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

Sean Webster

Research and Database Manager
Australian Fund Monitors

ATTACHED FILESFund Review: Optimal Australia Absolute Trust (pdf format)

AIMA Australia Hedge Fund Regulatory Update

Presented by: AIMA Australia

Friday, 21 February 2014 from 12:30 PM to 2:00 PM, Sydney, NSW

Speaker and Topic

Nikki Bentley, Partner, Henry Davis York, will be providing a free hedge fund regulatory update, including updates on the following items, with additional topics as requested if time allows:

• Update on the Investment Manager Regime and what it will mean for Australian managers wanting to raise offshore capital
• Overview of the new financial requirements in ASIC Regulatory Guide 166 including what it means for managers and custodians including incidental custody providers and responsible entities holding assets of the fund
• Overview of the new compliance requirements in ASIC Regulatory Guide RG133 when engaging custodians (including prime brokers) and associated changes to custody agreements and manager monitoring
• ASIC's current focus including a RG240 surveillance

RSVP

If you would like to attend this education event, please click here to register. If you have any specific regulatory issues you would like Nikki to cover if time allows, please include them in the box provided on the registration form.

A new report released by Moody's Investor Services suggests that an increased shift towards higher allocations to Alternative Investments, including absolute return driven strategies, is a result of investors'search for higher returns.

Moody's report indicates that the increased allocations to alternatives are likely to continue and that skilled asset managers will benefit accordingly as FUM increases. As such some traditional fund managers have been acquiring alternative asset-management expertise, noting that building such expertise organically takes a long time.

Moody's notes that the higher investment management fees, coupled with the ability to charge performance fees, is a significant attraction to fund managers adding alternative products to their existing offerings.

The Moody's report is based on their global research but is likely to be reflected in Australia as investors become increasingly aware of the quality of Australia's pool of fund managers, and are attracted by the risk adjusted returns available from thier absolute return funds. At the same time offshore asset managers continue to target the ever increasing superannuation asset pool.

For more information see Moody's media release.

BLACKROCK AUSTRALIAN EQUITY MARKET NEUTRAL FUND

ATTACHED FILESBlackRock Australian Equity Market Neutral Fund (pdf format)

MORPHIC GLOBAL OPPORTUNITIES FUND

ATTACHED FILESMorphic Global Opportunities Fund AFM Review - Dec 2013 (pdf format)

One month into 2014, and one day into the Chinese Year of the Horse, and volatility is back with a vengeance. Not being an expert in such things as lunar cycles, and not believing too much in tea leaves or horoscopes to determine our futures I won't try to draw any conclusions between the two. What is clearly apparent is that markets and investors knew US tapering would have to start eventually, and with the first round occurring in December the next one would be sooner rather than later.

One old market adage is that they (markets) don't repeat themselves, but they do tend to rhyme. When readily foreseen or well telegraphed events finally occur, how come the markets react after, rather than leading up to the tipping point? A primary cause of this must be the psychology of many participants not changing over the decades, or down the centuries. For all the advanced technology available to investors, or maybe in part because of it, markets continue to rhyme.

So volatility has spiked, with emerging markets and currencies being particularly hard hit. No reasonable investor should be surprised given a number of well-known managers and market commentators have been saying for the last few months that the 20% returns from the ASX for each of the past two years would be a hard act to follow in 2014.

Risk will becoming a driving force once more, and with some exceptions, absolute return and hedge fund managers will once again prove their worth as being more adept at avoiding unpleasant surprises. For the record the average equity based fund in AFM's database has matched or bettered the annualised performance of the ASX200 accumulation index over the past one (20%), five (12.5%) and 10 years (9.6%) but with half or less the market's volatility.

The challenge, as always is knowing which are the exceptions, and which are exceptional.

Specific results received this week include the following PERFORMANCE and NEWS UPDATES:

Auscap's Long Short Australian Equities Fund delivered 2.57% during December and, taking full advantage of buoyant equity markets, returned 51.86% for the year.

The Pengana Australian Equities Market Neutral Fund returned 3.6% during December and 19.11% for the year to December 2013, a sound performance given it's correlation of -0.03 and neutral market exposure.

Allard's Investment Fund had a flat December and returned 11.64% for the previous twelve months with a low standard deviation of 6.99%, in line with its conservative investment philosophy.

FUND REVIEWS RELEASED THIS WEEK:

AFM's updated Fund Review for Insync Global Titans Fund for December 2013 shows the Fund delivering an annualised return of 11.41% and annualised standard deviation of 8.50% (since inception in October 2009) with sound risk-reward statistics.

Bennelong's Long Short Equity Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large cap stocks from the ASX/S&P100 Index, with a ten year track record and annualised net returns of over 20%.

FUTURE EVENTS

Last days to register for the HFA Sydney Institutional Investor Roundtable  on 5 February 2014: This event is a roundtable discussion with refreshments provided. It is the second of the HFSB 2014 series of global institutional investor roundtables where investors and managers present practical case studies on topical issues. Held at the KPMG offices in Sydney, this is a FREE event, all welcome.

12 February 2014: Investment Administration Conference - Efficiency in a Regulated World. Doltone House, Hyde Park, Sydney.

27-29 March 2014: Superannuation Fund Back Office: 2014 Forum in Sydney convenes those responsible for superannuation member administration and investment operation services. It has been designed to explore emerging efficiencies and best practice in a number of key areas.

If you know of any upcoming hedge fund industry Events, or would like your Event listed in our calendar, please contact us.

And now for something completely different to celebrate the Super Bowl this weekend, here is one of the cute commercials newly released for the occasion, and another that's just plain funny (and gross).

On that note, I hope you have a happy and safe weekend and Happy Chinese New Year (Kung Hei Fat Choi) as we move forward into the year of the Horse.

Best wishes,

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.