NEWS
2 Sep 2013 - Intelligent Investor Value Fund
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| Manager Comments | Notably over the last 12 months the Fund's up-capture ratio has been 0.85 with the down-capture ratio -0.74, while the Sharpe ratio has been 2.65 as compared to 1.64 for the ASX 200 Acc. The Manager notes that gains were wide spread across a number of stocks and that given commodity prices have fallen substantially over the past six months, they had been scouring the market for opportunities in mining and mining services companies. As expected there were a lot of companies with serious problems in this area but amongst the wreckage the Fund had found a few interesting opportunities. Unfortunately the panic was short-lived and some of the stocks the Fund had been trying to buy had already risen significantly off their lows. |
| More Information | » View detailed profile of this fund |
30 Aug 2013 - Hedge Clippings
Hey! Big spenders.
Thankfully we only have one more week (well eight days if you want to be pedantic) of this election campaign to endure. I have to say it's been pretty colourless given the leadership events of the past three years. Even (or maybe particularly) the leadership debates between PM Rudd and PM in waiting Abbott have been tedious, save perhaps for one brief "won't this guy ever shut up" moment.
Most people think the outcome's a foregone conclusion, and today's AFR reported that one bookie has already paid out on a bet that the coalition will win. I'm presuming that no-one, not even the man himself, backed Clive Palmer to win his seat, but who knows, stranger things have happened.
What is a certainty is that there'll be a big black budget hole whoever wins, and at the risk of carrying on where we left off last week, sooner or later governments either need to spend less, or increase income (aka tax), to prevent it becoming larger.
Expenditure on health, education and welfare runs at around 60% of federal government's total payments. This has remained reasonably constant since 2007/8, and is forecast to remain so out to 2017. However, in dollar terms these three areas have increased by 38% since 2008, and are forecast to increase by a further 20% by 2017.
That's a compound increase of 66% in ten years, assuming the forecasts are correct, which I doubt.
The difficulty the politicians face, and indirectly the country faces, is that outlining the inevitable solution as part of an election manifesto is likely to see you spend the next three years in opposition, and probably the three beyond that as well.
Anyway, roll on next week's election. After that I promise not to mention it again. By the way, that's likely to be as good as a politician's promise.
In other news, the AIMA Hedge Fund Forum will be held on Tuesday 10th September at Hilton Hotel, Sydney. For further details visit AIMA Australia's website or register here.
Some specific results received this week include the following Performance and News Updates
Pengana Asia Special Events (Onshore) Fund returned 1.09% over July 2013 and 11.35% for the previous 12 months with the Fund maintaining average net and gross exposure of 11% and 179% respectively over the month. Capital Management trades contributed over half of the Fund's absolute performance during July and in terms of country positions Japan and Hong Kong / China proved the most fruitful, while Australian positions detracted slightly.
The Auscap Long Short Australian Equities Fund had a strong July returning 4.70% with an average net exposure of 53.1%. Average gross capital employed by the Fund was 107.1% long and 54.0% short. The Fund's performance since inception is now 25.35%.
BlackRock's Multi Opportunity Fund returned 0.40% for July and 7.18% for the last 12 months and notably this was achieved with a remarkably low risk profile and very strong risk-adjusted statistics. The annualised volatility is 1.59% vs 10.99% for the ASX 200 Accumulation Index over the last 12 months and a Sharpe Ratio of 2.50 as compared to 1.74 for the Index over the same time frame.
Updated AFM Fund Reviews were also completed on the following funds this week:
The Insync Global Titans Fund invests in a concentrated portfolio of 15-25 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection with portfolio selection 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... more..
BlackRock's Australian Equity Market Neutral Fund is managed by a 12 person Sydney based investment team following a systematic global research process investing in ASX listed stocks. The Fund's portfolio generally consists of approx. 180 stocks in equally weighted long and short portfolios to maximise potential returns while minimising market volatility... more..
The Aurora Fortitude Absolute Return Fund has an 8 year track record investing in ASX listed equities with a strong focus on risk. The 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. Strong use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. The success of this strategy is shown by the fact that over 87% of monthly performances have been positive and most notably the Fund did not record any negative months in 2008, with the largest drawdown since inception in March 2005 of -2.09%.
For something completely different - following on last week from the photo of a nesting Falcon, we feature this clip featuring a different type of Falcon.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
30 Aug 2013 - BlackRock Multi Opportunity Fund
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| Fund Overview | - Australian and International Equity Long/Short - Global Fixed Income Long/Short - Global Macro - Commodity Alpha - Alpha Transport The Fund's goal is to provide investors with a source of consistent, risk-controlled, absolute returns that are over time, expected to have low correlations with the returns of major asset classes. The Fund aims to achieve a return of 8% p.a. before fees, above the RBA Cash Rate Target over rolling 3 year periods. In order to achieve its expected return objective, the Fund will target a total expected risk of between 4-6% p.a. over the same rolling 3 year period. |
| Manager Comments | The Fund has a remarkably low risk profile and very strong risk-adjusted statistics. The annualised volatility is 1.59% vs 10.99% for the ASX 200 Accumulation Index over the last 12 months and a Sharpe Ratio of 2.50 as compared to 1.74 for the Index over the same time frame. The Fund had only one negative month over the last year with a maximum draw-down of 0.16% as compared to 6.72% for the Index. The Multi Opportunity Fund delivered positive performance in July with Fixed Income Global Alpha, Global Equity Market Neutral, and Australian Equity Market Neutral strategies performing strongly. Detractions from the Global Macro strategy partially offset the positive performance. |
| More Information | » View detailed profile of this fund |
29 Aug 2013 - Auscap Long Short Australian Equities Fund
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| Fund Overview | The Fund focuses on fundamental long and short investments. The Fund may utilise a multi-strategy approach if short term opportunities to increase returns, hedge the portfolio, protect capital or minimise volatility are found. The Fund is a high conviction fund and the combined portfolio will typically have 25-45 positions, investing primarily in stocks in the ASX200. The Fund may be net long, short or neutral depending on the strategies employed at the time. The Fund may hold cash so that it is in a position to take advantage of market volatility and compelling investment opportunities as and when they arise. The Fund may be geared up to 200% gross long or short and up to 150% net long or short. |
| Manager Comments | In terms of fund characteristics the average gross capital employed by the Fund was 107.1% long and 54.0% short. Average net exposure over the month was +53.1%. At the end of the month the Fund had 22 long positions and 11 short positions. The Fund's largest exposures were spread across the consumer discretionary, telecommunications, healthcare and industrials sectors. |
| More Information | » View detailed profile of this fund |
28 Aug 2013 - Fund Review: Insync Global Titans Fund
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 aspects of the Fund:
- The Global Titans Fund invests in a concentrated portfolio of 15-25 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 through extensive company research, the ability to hold cash and long protective index put options.
- Strong track record of above MSCI ($A) benchmark performance with limited drawdowns and excellent risk statistics.The Sharpe and Sortino ratio are well above those of the ASX with downside deviation approximately one-half of the same Index since inception. The Fund has a record of 63% positive months and a downside capture ratio of -0.42 over the same time frame.
Research and Database Manager
Australian Fund Monitors
Fund Review: Insync Global Titans Fund (pdf format)
27 Aug 2013 - AIMA Hedge Fund Forum
There has been a significant pickup in activity in the hedge fund sector over the past year, with a range of new funds being launched, and increased inflows from investors across the spectrum both locally and overseas. This has also been matched by increased activity from industry bodies, particularly AIMA under new Chairman Paul Chadwick and General Manager Brett Ireland. One significant initiative from AIMA is the upcoming Annual Hedge Fund Forum to be held on Tuesday 10th September at Sydney's Hilton Hotel.
The AIMA Australia Hedge Fund Forum is Australia's leading hedge fund conference, and is being organised by the industry to cover a range of local and global topics. The conference will feature a number of leading Australian and international speakers, including one of Australia's greatest hedge fund success stories, Sir Michael Hintze who will provide insights and a global perspective on the industry, and Gerard Minack, former strategist with Morgan Stanley.
Other speakers include ASIC's Greg Tanzer, APRA's Craig Roodt and Martin Codina from the Financial Services Council, and a wide range of Fund Managers including George Colman (Optimal Australia), David Hobart (Blue Sky Apeiron), Adam Phillips (Blue Fin Capital), Adrian Redlich (Merricks) and Gerard Satur (MST Capital).
Investors and Advisors will also be well represented, and include Simon Ford from ANZ Wealth, Michael Winchester from State Super Financial Services, Dr Alistair Rew from AMP Capital, David George from the Super Fund, and Miles Collins from the Myer Family Office.
Unlike many conferences which are outsourced to external organisers, this year's event has been organised by AIMA Australia and as a result pricing has been set to accommodate and encourage a wide range of industry attendees: Qualified investors will be admitted at no charge, and AIMA members will pay only $100.
For full details and registration visit AIMA Australia's website.
27 Aug 2013 - Fund Review: Blackrock Australian Equity Market Neutral Fund
BLACKROCK AUSTRALIAN EQUITY MARKET NEUTRAL FUND
Attached is our most recently updated Fund Review on the BlackRock Australian Equity Market Neutral Fund.
We would like to highlight the following aspects of the Fund:
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BlackRock is the world's largest fund management group. Since being established in 1988 it has grown organically and by acquisition to manage US$3.93 trillion as of March 2013.
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Operations cover 27 countries including Australia (where BlackRock has A$48.6 billion in FUM - March 2013) managing a broad range of strategies across a variety of asset classes.
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The BlackRock Australian Equity Market Neutral Fund is managed by a 12 person Sydney based investment team following a systematic global research process investing in ASX listed stocks.
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The Fund's portfolio generally consists of approx. 180 stocks in equally weighted long and short portfolios to maximise potential returns while minimising market volatility.
Research and Database Manager
Australian Fund Monitors
Fund Review:Blackrock Equity Market Neutral Fund (pdf format)
26 Aug 2013 - Pengana Asia Special Events (Onshore) Fund
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| Fund Overview | The Fund seeks to profit from trading securities which are primarily subject to corporate events or from trading-related securities which the Investment Manager believes are mispriced by the market. The Fund invests in securities that are listed on Asian stock markets and other markets where related securities may be listed and in securities which are listed on markets outside of Asia where more than 70% (by assets or earnings) of the underlying business originates from an Asian country. The Fund aims to generate consistently positive returns which have a low correlation to the Asian stock markets. The objective is to generate 10-20% pa with a standard deviation of 6-10% |
| Manager Comments | The Fund finished +1.1% for the month of July 2013, compared to the FTSE Asia Pacific Index which closed +1.4%. Capital Management trades contributed over half of the Fund's absolute performance during July. In terms of countries, positions in Japan and Hong Kong / China proved the most fruitful, while Australian positions detracted slightly. The Fund maintained average net and gross exposure of 11% and 179% respectively. |
| More Information | » View detailed profile of this fund |
26 Aug 2013 - Fund Review: Aurora Fortitude Absolute Return Fund
- ASX listed Aurora Funds Limited established on the merger of three existing fund management businesses, managing approx. $480m on behalf of more than 2,500 retail and wholesale investors.
- The Aurora Fortitude Absolute Return Fund (AFARF) has a 8 year track record investing in ASX listed equities. CIO John Corr has over 20 years financial market experience with a strong focus on risk.
- 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.
- Strong use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation.
- Over 87% of monthly performances have been positive, with no losing months in 2008 and a largest drawdown of -2.09%.
Research and Database Manager
Australian Fund Monitors
Aurora Fortitude Absolute Return Fund (pdf format)
23 Aug 2013 - Hedge Clippings
A report in the latest Australian Banking & Finance this week quoting the Australian Bureau of Statistics report on household wealth and distribution in 2012 showed that just over 20% of Australian families can now claim to have household net worth of over $1 million. This was up from 14.6% eight years ago, while those worth less than $50,000 have fallen from 14.6% to 12.7% over the same period.
Based on my simple logic this should equate to there now being more people with more wealth, and less people with less. However I have no doubt there are plenty of details within the overall numbers to hold true to the adage of lies, damn lies and statistics. The headline numbers also seem to contradict the general anecdotal evidence in the community, given that eight years ago there was a raging bull market, the resources boom was building a head of steam, and the GFC in 2008 was yet to hit.
Household net worth averaged $728,139 in FY2012, down 4.1% over the previous 2 years on an inflation adjusted basis, while gross household assets averaged $858,200 with the average value of the home accounting for 43% of this, and investment property a further 15% for a total of 58%.
These numbers tally with the results of a report by consultants WealthInsight reported in Alan Kohler's Eureka Report showing that those Australians with $1 million or more of investable funds (as opposed to the total value of household assets in the ABS numbers) have a total of just 28.8% in property of one sort or another.
Superannuation was the second largest household asset in the ABS figures at 15.4%. Also released this week were figures showing the average contribution to superannuation had fallen significantly in 2013, presumably as a result in a reduction to $25,000 in the maximum permissible contribution.
Given the increasing proportion of the population at or approaching retirement age, when their taxation contribution reduces at the same time as the cost of their medical and aged care increases, I can't fathom why all politicians wouldn't want to increase retirees' financial self reliance through superannuation savings.
Sooner or later one treasurer or the other is going to have to bite the budget bullet: The government either needs to spend less (i.e. reduce handouts where not justified) or increase income (otherwise known as taxation) whether the electorate like it or not.
Most households have worked it out. Why can't the politicians?
Some specific results received this week include the following Performance and News Updates:
The Pengana Australian Equities Market Neutral Fund is notable for its low volatility relative to the ASX 300 and negative correlation with the same Index. Annualised standard deviation since inception in September 2008 is 8.1% p.a. compared to 15.58 for the Index while correlation is -0.04. The Fund returned -0.5% during July and has returned 8.94% since inception with the risk and return data indicating the Fund is meeting its strategy goals.
Insync Global Titans Fund returned 3.87% during July and 23.60% over the last 12 months. The Fund has an annualised standard deviation of 8.71% pa as compared to the ASX 200 Accumulation number of 11.74% pa over the last 36 months. Returns over the same period were 14.16% pa with the Index at 8.79% showing that the Fund is continuing to deliver a return and risk profile in line with its strategy.
Updated Fund Reviews were also completed on the following funds this week:
The Bennelong 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% pa. This very high rate of return has seen $100 compound up to $764 since inception in January 2003.
Optimal Australia Absolute Trust has a long/short equity strategy, typically has a low but variable net market exposure comprising 40 to 65 stock broadly selected from within the ASX200. The Fund is very risk aware and this is borne out in the risk data - approximately 84% of monthly performances have been positive with the largest drawdown only -1.38%. Annualised volatility is 3.66% as compared to 15.58% for the ASX 200 Acc since the Fund's inception in September 2008.
The Aurora Fortitude Absolute Return Fund has an 8 year track record investing in ASX listed equities with a strong focus on risk. The 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. Strong use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. The success of this strategy is shown by the fact that over 87% of monthly performances have been positive and most notably, the Fund did not record any negative months in 2008, with the largest drawdown since inception in March 2005 of -2.09%.
For something completely different - I've received many remarkable nature photographs over the years but this photo of a nesting Falcon is perhaps the most remarkable Nature shot that I've ever seen. I hope you enjoy it as much as I did. Nature is truly breathtaking!
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
