NEWS
24 Jan 2023 - Performance Report: Collins St Value Fund
[Current Manager Report if available]
24 Jan 2023 - Performance Report: ASCF High Yield Fund
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| Fund Overview | ASCF High Yield Fund provides short term 1st and/or 2nd mortgage loans to a maximum Loan to Valuation Ratio (LVR) of 80% for a maximum term of 12 months on residential and commercial property. Does not require full valuations on loans <65% LVR. Borrowing rates are from 12% per annum on 1st mortgage loans and 16% per annum on 2nd mortgage/caveat loans. Pays investors between 5.00% - 6.55% per annum depending on their investment term. |
| Manager Comments | The ASCF High Yield Fund has a track record of 5 years and 10 months and has outperformed the Bloomberg AusBond Composite 0+ Yr benchmark since inception in March 2017, providing investors with an annualised return of 8.41% compared with the benchmark's return of 0.95% over the same period. On a calendar year basis, the fund hasn't experienced any negative annual returns in the 5 years and 10 months since its inception. Since inception in March 2017, the fund hasn't had any negative monthly returns and therefore hasn't experienced a drawdown. Over the same period, the index's largest drawdown was -12.97%. The Manager has delivered these returns with 4.12% less volatility than the benchmark, contributing to a Sharpe ratio which has consistently remained above 1 over the past five years and which currently sits at 17.08 since inception. The fund has provided positive monthly returns 100% of the time in rising markets and 100% of the time during periods of market decline, contributing to an up-capture ratio since inception of 76% and a down-capture ratio of -72%. |
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24 Jan 2023 - 10k Words
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10k Words Equitable Investors December 2022 December's chart are largely lifted from an Equitable Investors slide deck. We can't really avoid taking a look at inflation and interest rates - so that is where we start with charts from Bloomberg showing the expectation for a sharp inflation correction in the US in 2023 (and a view on why based on Academy Securities' view of inflation drivers). Central bank policy rates remain, in the main, below inflation rates, as @charliebilello tabulates. CY2022 is almost gone and we can look back at capital markets and see sharp declines in the availability of funding - global equity capital raising volumes down 65% and Australasian down 54% year-on-year, using dealogic data. High yield debt issuance plunged even further. Crunchbase reckons that in global venture capital markets, seed funding dropped by a third, early stage halved and late stage is down by 80% compared to November 2021. Finally, Cliffwater shows us how private equity has outperformed since 2000 (in a period that coincides with historically low interest rates) and Refinitiv's Venture Capital Index gives us an idea of how alternative assets may have faired in 2022 if they were priced daily. Implied inflation (starts Dec 9) Source: Bloomberg Inflation Drivers (estimated) Source: Bloomberg, Academy Securities Global Central Bank Policy Rates (as of Dec 8, 2022) Source: Compound/@charliebilello Global Equity Capital Market Volumes ($USb)
Source: WSJ, Dealogic Australian Equity Capital Market Volumes ($USb) Source: WSJ, Dealogic High Yield Debt Capital Markets Source: WSJ, Dealogic Global Venture Capital Funding Source: Crunchbase Composite Private Equity Performance (US State Pensions) Source: Cliffwater Refinitiv Venture Capital Index Over 5 Years Source: FT December Edition Funds operated by this manager: Equitable Investors Dragonfly Fund Disclaimer Nothing in this blog constitutes investment advice - or advice in any other field. Neither the information, commentary or any opinion contained in this blog constitutes a solicitation or offer by Equitable Investors Pty Ltd (Equitable Investors) or its affiliates to buy or sell any securities or other financial instruments. Nor shall any such security be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. The content of this blog should not be relied upon in making investment decisions. Any decisions based on information contained on this blog are the sole responsibility of the visitor. In exchange for using this blog, the visitor agree to indemnify Equitable Investors and hold Equitable Investors, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to legal fees) arising from your use of this blog, from your violation of these Terms or from any decisions that the visitor makes based on such information. This blog is for information purposes only and is not intended to be relied upon as a forecast, research or investment advice. The information on this blog does not constitute a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Although this material is based upon information that Equitable Investors considers reliable and endeavours to keep current, Equitable Investors does not assure that this material is accurate, current or complete, and it should not be relied upon as such. Any opinions expressed on this blog may change as subsequent conditions vary. Equitable Investors does not warrant, either expressly or implied, the accuracy or completeness of the information, text, graphics, links or other items contained on this blog and does not warrant that the functions contained in this blog will be uninterrupted or error-free, that defects will be corrected, or that the blog will be free of viruses or other harmful components. Equitable Investors expressly disclaims all liability for errors and omissions in the materials on this blog and for the use or interpretation by others of information contained on the blog |
23 Jan 2023 - Performance Report: Airlie Australian Share Fund
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| Fund Overview | The Fund is long-only with a bottom-up focus. It has a concentrated portfolio of 15-35 stocks (target 25). The fund has a maximum cash holding of 10% with an aim to be fully invested. Airlie employs a prudent investment approach that identifies companies based on their financial strength, attractive durable business characteristics and the quality of their management teams. Airlie invests in these companies when their view of their fair value exceeds the prevailing market price. It is jointly managed by Matt Williams and Emma Fisher. Matt has over 25 years' investment experience and formerly held the role of Head of Equities and Portfolio Manager at Perpetual Investments. Emma has over 8 years' investment experience and has previously worked as an investment analyst within the Australian equities team at Fidelity International and, prior to that, at Nomura Securities. |
| Manager Comments | The Airlie Australian Share Fund has a track record of 4 years and 7 months and therefore comparison over all market conditions and against its peers is limited. However, the fund has outperformed the ASX 200 Total Return benchmark since inception in June 2018, providing investors with an annualised return of 9.88% compared with the benchmark's return of 7.55% over the same period. On a calendar year basis, the fund has only experienced a negative annual return once in the 4 years and 7 months since its inception. Over the past 12 months, the fund's largest drawdown was -14.49% vs the index's -11.9%, and since inception in June 2018 the fund's largest drawdown was -23.8% vs the index's maximum drawdown over the same period of -26.75%. The fund's maximum drawdown began in February 2020 and lasted 9 months, reaching its lowest point during March 2020. The fund had completely recovered its losses by November 2020. The Manager has delivered these returns with 0.05% less volatility than the benchmark, contributing to a Sharpe ratio which has fallen below 1 four times over the past four years and which currently sits at 0.61 since inception. The fund has provided positive monthly returns 97% of the time in rising markets and 11% of the time during periods of market decline, contributing to an up-capture ratio since inception of 110% and a down-capture ratio of 97%. |
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23 Jan 2023 - Performance Report: Bennelong Kardinia Absolute Return Fund
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| Fund Overview | There is a slight bias to large cap stocks on the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 5% to 10% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position. 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. |
| Manager Comments | The Bennelong Kardinia Absolute Return Fund has a track record of 16 years and 8 months and has outperformed the ASX 200 Total Return benchmark since inception in May 2006, providing investors with an annualised return of 7.65% compared with the benchmark's return of 6.2% over the same period. On a calendar year basis, the fund has experienced a negative annual return on 3 occasions in the 16 years and 8 months since its inception. Over the past 12 months, the fund's largest drawdown was -5.38% vs the index's -11.9%, and since inception in May 2006 the fund's largest drawdown was -11.71% vs the index's maximum drawdown over the same period of -47.19%. The fund's maximum drawdown began in June 2018 and lasted 2 years and 6 months, reaching its lowest point during December 2018. The fund had completely recovered its losses by December 2020. During this period, the index's maximum drawdown was -26.75%. The Manager has delivered these returns with 6.72% less volatility than the benchmark, contributing to a Sharpe ratio which has fallen below 1 five times over the past five years and which currently sits at 0.64 since inception. The fund has provided positive monthly returns 87% of the time in rising markets and 32% of the time during periods of market decline, contributing to an up-capture ratio since inception of 14% and a down-capture ratio of 55%. |
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23 Jan 2023 - Performance Report: Bennelong Concentrated Australian Equities Fund
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| Manager Comments | The Bennelong Concentrated Australian Equities Fund has a track record of 13 years and 11 months and has outperformed the ASX 200 Total Return benchmark since inception in February 2009, providing investors with an annualised return of 13.04% compared with the benchmark's return of 9.66% over the same period. On a calendar year basis, the fund has experienced a negative annual return on 3 occasions in the 13 years and 11 months since its inception. Over the past 12 months, the fund's largest drawdown was -22.65% vs the index's -11.9%, and since inception in February 2009 the fund's largest drawdown was -32.24% vs the index's maximum drawdown over the same period of -26.75%. The fund's maximum drawdown began in December 2021 and has so far lasted 1 year, reaching its lowest point during December 2022. During this period, the index's maximum drawdown was -11.9%. The Manager has delivered these returns with 1.99% more volatility than the benchmark, contributing to a Sharpe ratio which has fallen below 1 five times over the past five years and which currently sits at 0.72 since inception. The fund has provided positive monthly returns 90% of the time in rising markets and 18% of the time during periods of market decline, contributing to an up-capture ratio since inception of 131% and a down-capture ratio of 97%. |
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23 Jan 2023 - Outlook Snapshot
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Outlook Snapshot Cyan Investment Management December 2022 |
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As a broad statement, it feels as if the market is in somewhat of a holding pattern. Even the central banks seem uncertain about the economic outlook. For example, in June last year, the governor of the US Fed, Jerome Powell, explained ''I think we now understand better how little we understand about inflation''. Further, RBA stated that interest rates would stay low until 2024. It has subsequently increased rates by 300 basis points (bp) with the most recent rise of 25bp taking the cash rate to 3.1%. The tightening of monetary policy has been swift and aggressive, which has thrown equities markets into a spin. As stated in our September monthly report: "We believe the most-likely first positive catalyst for a stock market recovery will be a line of sight as to when the interest rate hike cycle will end. Most central banks in developed economies are rapidly and aggressively raising rates. Stock markets hate this. We don't know if this monetary policy strategy will curb inflation as hoped, but an end to this cycle could provide a clear positive catalyst for a shift in sentiment for equities." The market is currently consumed by this issue and economists seem to be at the centre of every discussion. Gareth Aird, Commonwealth Bank's head of Australian economics, had previously forecast the RBA's rate hike in early December would be the last but he has updated his predictions after the RBA signalled more rate rises. He stated, "The tweak in forward guidance was not as material as we anticipated and as a result, we shift our risk case to our base case....We now expect one further 25 basis point rate hike in February 2023 for a peak in the cash rate of 3.35 per cent". Chief Economist at AMP Shane Oliver believes the cash rate has now "peaked" -- with a high risk of one final 0.25 per cent hike to 3.35 per cent in February. By end 2023 or early 2024 he expects the RBA to start cutting rates. However, that value doesn't get released in a straight line, and we are in the middle of one of those frustrating periods at the moment. But the market is forward looking, so investors waiting for genuine clarity around the economy may well find that the market has already moved ahead of them this year. |
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Funds operated by this manager: Cyan C3G Fund |
Firstly, good riddance to 2022, which for most investors and the majority of fund managers was a year they'd happily forget.
20 Jan 2023 - Hedge Clippings |20 January 2023
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Hedge Clippings | Friday, 20 January 2023 Welcome to the first edition of Hedge Clippings for 2023. Firstly, good riddance to 2022, which for most investors and the majority of fund managers was a year they'd happily forget. The cause of most of the damage was the sharp increase in interest rates, triggered in turn by an outbreak of inflation, as noted by L1 Capital in their December performance report:
The last sentence reveals why so many funds struggled in 2022. No one expected an inflationary break out, thus market expectations - including those of central banks - for rates rises were subdued, to say the least. Throw in the unexpected invasion of Ukraine in February, plus turmoil in China, and it's easy to see why only 29% of the 700+ funds in the FundMonitors database, (including the above mentioned L1 Capital's Global Long Short Fund which returned 9.8%) provided positive returns for the year, and less than a quarter of all equity funds managed to outperform the ASX 200 Accumulation Index. Put bluntly, central banks, including our own RBA, and economists were caught looking in the wrong direction, and thus fund managers had to readjust to the new environment, which by the last quarter of the year many had managed to do. The ASX fared better than most global markets, falling 1.08% on an accumulation basis, while the S&P500 was down 18%, and the NASDAQ fell 33%. Unusually in times of equity market turmoil, bond markets didn't provide a safe haven. Looking forward, it seems inflation, while still a major issue, may have peaked in the last quarter of 2022, particularly in the US where it dropped to 6.45% in December, down from 9.06% in June. Meanwhile, in the UK the December annual inflation figure was 10.5%, down slightly from 10.7% the previous month. That may allow central banks to ease off on further rate rises, but we are unlikely to see rates fall until much later in the year, by which time the looming recession will have been confirmed. So while the path ahead is not going to be easy, and is still uncertain, hopefully, there are less unknowns: The war in Ukraine will drag on, and hopefully not escalate further. China remains a 50/50 bet, although a far cry from the economic and political juggernaut it seemed to be a couple of years ago. COVID, whilst remaining a threat thankfully seems to be receding or at least becoming more manageable. Of course, thinking that the bad news is already out there is dangerous - the unexpected is always just around the corner. But compared to this time last year, surely markets are more prepared for what might lie ahead? |
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News & Insights Market Commentary | Glenmore Asset Management Market Update | Australian Secure Capital Fund December 2022 Performance News Glenmore Australian Equities Fund Argonaut Natural Resources Fund 4D Global Infrastructure Fund (Unhedged) Insync Global Quality Equity Fund Bennelong Long Short Equity Fund Quay Global Real Estate Fund (Unhedged) |
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20 Jan 2023 - Performance Report: Digital Asset Fund (Digital Opportunities Class)
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| Fund Overview | The Fund offers a choice of three investment classes, each of which adopts a different investment strategy: - The Digital Opportunities Class identifies and trades low risk arbitrage opportunities between different exchanges and a number of digital assets; - The Digital Index Class tracks the performance of a basket of digital assets; - The Bitcoin Index Class tracks the performance of Bitcoin. Digital Opportunities Class: This class appeals to investors seeking an active exposure to the digital asset markets with no directional bias. The Digital Opportunities Class employs a high frequency inspired Market Neutral strategy trading 24/7 which uses a systematic approach designed to offer uncorrelated returns to the underlying highly volatile cryptocurrency markets. The strategy systematically exploits low-risk arbitrage opportunities across the most liquid and active digital asset markets on the most respected exchanges. When appropriate the Fund may obtain leverage, including through borrowing cash, securities and other instruments, and entering into derivative transactions and repurchase agreements. DAFM has a currency hedging policy in place for the Units in the Fund. Units in the Fund will be hedged against exposure to assets denominated in US dollars through a trading account with spot, forwards and options as directed by DAFM. |
| Manager Comments | The Digital Asset Fund (Digital Opportunities Class) has a track record of 1 year and 8 months and therefore comparison over all market conditions and against its peers is limited. However, the fund has outperformed the S&P Cryptocurrency Broad Digital Market benchmark since inception in May 2021, providing investors with an annualised return of 31.5% compared with the benchmark's return of -50.31% over the same period. Over the past 12 months, the fund's largest drawdown was -1.96% vs the index's -63.76%, and since inception in May 2021 the fund's largest drawdown was -1.96% vs the index's maximum drawdown over the same period of -74.1%. The fund's maximum drawdown began in November 2022 and has so far only lasted 1 month. The Manager has delivered these returns with 49.21% less volatility than the benchmark, contributing to a Sharpe ratio for performance over the past 12 months of 0.55 and for performance since inception of 1.36. The fund has provided positive monthly returns 100% of the time in rising markets and 92% of the time during periods of market decline, contributing to an up-capture ratio since inception of 5% and a down-capture ratio of -45%. |
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20 Jan 2023 - Performance Report: Quay Global Real Estate Fund (Unhedged)
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| Fund Overview | The Fund will invest in a number of global listed real estate companies, groups or funds. The investment strategy is to make investments in real estate securities at a price that will deliver a real, after inflation, total return of 5% per annum (before costs and fees), inclusive of distributions over a longer-term period. The Investment Strategy is indifferent to the constraints of any index benchmarks and is relatively concentrated in its number of investments. The Fund is expected to own between 20 and 40 securities, and from time to time up to 20% of the portfolio maybe invested in cash. The Fund is $A un-hedged. |
| Manager Comments | The Quay Global Real Estate Fund (Unhedged) has a track record of 7 years and has outperformed the FTSE EPRA/ NAREIT Developed NET TR benchmark since inception in January 2016, providing investors with an annualised return of 5.46% compared with the benchmark's return of 2.85% over the same period. On a calendar year basis, the fund has experienced a negative annual return on 2 occasions in the 7 years since its inception. Over the past 12 months, the fund's largest drawdown was -19.65% vs the index's -18.49%, and since inception in January 2016 the fund's largest drawdown was -22.45% vs the index's maximum drawdown over the same period of -26.61%. The fund's maximum drawdown began in January 2022 and has so far lasted 11 months, reaching its lowest point during September 2022. During this period, the index's maximum drawdown was -20.72%. The Manager has delivered these returns with 0.54% less volatility than the benchmark, contributing to a Sharpe ratio which has fallen below 1 five times over the past five years and which currently sits at 0.4 since inception. The fund has provided positive monthly returns 92% of the time in rising markets and 11% of the time during periods of market decline, contributing to an up-capture ratio since inception of 106% and a down-capture ratio of 93%. |
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