Last year we hosted a series of lunch presentations  entitled "Understanding Hedge Funds" which provided investors with a more balanced view on the sector than is sometimes portrayed in the media.  Following feedback from a number of our guests we also organised briefings and presentations for a small group of investors to "meet the manager" and hear from individual fund managers in person.

Our next "Meet the Manager" briefing is with Monik Kotecha from Insync Funds Management on Wednesday 10 April 2013.  

Monik's fund, the Insync Global Titans Fund, invests in a concentrated portfolio of large cap global stocks with a focus on those companies that can consistently grow dividends and earn high returns on invested capital. The latest copy of our Research Review of the Fund is here.

Monik will share his views of the market and the opportunities and risks which lie ahead. Having just returned from the UK and meeting many leading multinational companies he will also be able to provide an update on the global trends and observations they provided.

If you are interested in attending this Meet the Manager briefing, please reply by email and we will send you confirmation of your registration and inform you of the Sydney city venue.

Wednesday 10 April 2013 at midday

Sydney city venue to be advised

RSVP by Thursday 4 April 2013

ATTACHED FILESAFM Fund Review (pdf format)

Superannuation Update

Treasurer Swan and Superannuation Minister Shorten must have been well aware of the potential electoral backlash from major changes to superannuation judging by their announcement today, a month out from the budget. Although the changes will affect those on the top tax bracket, they are not nearly as ferocious as many, yours truly included, were expecting.

Few comments seen so far have been negative. A 15% tax rate on retirement incomes over $100,000 remains attractive, even if not as generous as zero % on everything. Generally speaking the changes seem to pass the "fair and reasonable" test, although they won't do much to fill Swan's budget problems, nor the government's electoral chances if it comes to that. Maybe it was the realisation that if they tinkered too much with everyone else's retirement incomes it might put too much focus on their own overly generous pension arrangements.

And so back to markets and fund performance. March was only the second negative month for the ASX200 since December 2011, ending a significant rally since last July of almost 25% during which risk averse absolute return funds underperformed, and the more concentrated long biased funds made up some of the ground lost in the previous three or four years. Early indications from funds that have reported March results indicate they have performed well, with positive returns confirming their value in negative markets.

Meanwhile the Japanese market continues to rally, now at a four and a half year high and 57% above the low hit in late July, while the Yen continues to weaken, as intended by their version of QE1, 2 and 3. Other Asian economies and markets may not be so happy about that, but may have to grin and bear it.

On that happy note, I wish you a happy, healthy and carefree week end.

Regards,

Chris

CEO, AUSTRALIAN FUND MONITORS

Meet the Manager

Due to an overwhelming response, our Wednesday 10 April Meet the Manager briefing with Insync Fund Managers is fully booked. We will be holding a second briefing for Insync and will release our next Fund Manager lunch briefing soon. Stay tuned for updates. 

Is Self Managed Super at risk of its own success?

With the countdown to the Federal budget (and by all accounts likely to be Wayne Swan's last, at least for a while) replacing the recent leadership shambles as the focus of attention for Canberra watchers, there's a strong feeling that Australia's much vaunted superannuation system is in the current treasurer's sights.

Originally introduced twenty years ago in 1992 by Labor's then Prime Minister Paul Keating as a 3% levy on employers, superannuation was intended to ensure that Australian's future retirement incomes were properly funded, and retirees were not, or at least less, dependent on a government pension. Since then the levy has risen to 9%, is scheduled to rise to 12%, and according to Keating should be 15%.

In most respects "Super" been a phenomenal success, as the funds management industry (which is now estimated to manage around $1.4 trillion of Super) will no doubt attest. So successful that successive treasurers haven't been able to keep their hands out of the cookie jar, although to be fair Peter Costello's lump sum contribution concessions greatly added to it. Which brings us to the looming budget, and the strong potential for more changes to the regulations in an attempt to increase the take on Super's concessional tax rates.

The Treasurer will of course want to keep the faith with his party's few remaining faithful and target the top end of the Super chain. This will put the Self Managed Super Fund sector firmly in his sights. SMSF now accounts for an estimated 35% of the total Superannuation pool with approaching 500,000 individual funds. This is likely to grow as the compounding effect of 20 years of contributions take effect.

Originally the administrative and compliance cost of operating a SMSF made it prohibitive for all but those with the largest balances to manage their own retirement nest egg. The combination of technology and scale has reduced this barrier, which coupled with rising contributions and balances will only increase the SMSF sector further.

What's this got to do with absolute return funds? According to Wikipedia, Australians now have more money invested in managed funds per capita than any other economy. While absolute return and alternative funds are not supported in Australia by institutions and pension funds to the same extent as they are overseas, SMSF investors seem to understand the benefits of active and discretionary management of their savings.

So come early May when Mr. Swan rises to announce his final budget with an expected attack on the industry's tax arrangements, SMSF beneficiaries are likely to be hardest hit. What started as a great idea for reducing the government's obligation to provide an aging population their pensions will have turned the full circle to be a source of filling the expanding hole of the budget deficit.

On that happy note, I wish you a happy, healthy and carefree long week end.

And for something completely different - "Ou est le papier?"

Regards,

Chris

CEO, AUSTRALIAN FUND MONITORS