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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. The Bennelong Market Neutral Fund, with same strategy and liquidity is available for retail investors as a Listed Investment Company (LIC) on the ASX. |
| Manager Comments | The Fund returned -3.08% in December as the Australian equity market experienced a rally in cyclicals and laggards. The outperformance of the Fund's long portfolio by some of the cyclicals and laggards in the short portfolio contributed to the Fund's weaker finish for the year. Top pairs for the month included long Xero / short TechnologyOne, and long Mineral Resources / short BHP. Bottom pairs included long BlueScope Steel / short Sims (SGM), and long Woolworths / short Metcash/Treasury Wine. |
| More Information |
