NEWS
Performance Report: 4D Global Infrastructure Fund
14 Feb 2020 - Australian Fund Monitors
The 4D Global Infrastructure Fund rose +5.11% in January, outperforming its benchmark (OECD G7 Inflation Index +5.5%) by +4.48%. Since inception in March 2016, the Fund has returned +15.47% p.a. with an annualised volatility of 8.91%.
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14 Feb 2020 - Performance Report: 4D Global Infrastructure Fund
By: Australian Fund Monitors
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| Fund Overview | The fund will be managed as a single portfolio of listed global infrastructure securities including regulated utilities in gas, electricity and water, transport infrastructure such as airports, ports, road and rail as well as communication assets such as the towers and satellite sectors. The portfolio is intended to have exposure to both developed and emerging market opportunities, with country risk assessed internally before any investment is considered. The maximum absolute position of an individual stock is 7% of the fund. |
| Manager Comments | The strongest portfolio performer for January was European tower operator Cellnex (+17.1%) as the market recognises management's strong execution of its growth strategy. The weakest performer was US midstream operator Williams (-12.8%) as the market becomes increasingly concerned about the financial viability of some of its counter parties in the Marcellus/Utica region in a low commodity price environment. 4D Infrastructure think the sell-off has been overdone. 4D Infrastructure remain positive about the market outlook for 2020. With some of the big macro issues having progressed, 4D expect to see a lift in market confidence and global economic activity. |
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Performance Report: Surrey Australian Equities Fund
14 Feb 2020 - Australian Fund Monitors
The Surrey Australian Equities Fund increased by +4.8% in January, taking the 12-month return to +20.01%. Since inception in June 2018, the Fund has returned +6.70% p.a. with an annualised volatility of 13.47%.
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14 Feb 2020 - Performance Report: Surrey Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Investment Manager follows a defined investment process which is underpinned by detailed bottom up fundamental analysis, overlayed with sectoral and macroeconomic research. This is combined with an extensive company visitation program where we endeavour to meet with company management and with other stakeholders such as suppliers, customers and industry bodies to improve our information set. Surrey Asset Management defines its investment process as Qualitative, Quantitative and Value Latencies (QQV). In essence, the Investment Manager thoroughly researches an investment's qualitative and quantitative characteristics in an attempt to find value latencies not yet reflected in the share price and then clearly defines a roadmap to realisation of those latencies. Developing this roadmap is a key step in the investment process. By articulating a clear pathway as to how and when an investment can realise what the Investment Manager sees as latent value, defines the investment proposition and lessens the impact of cognitive dissonance. This is undertaken with a philosophical underpinning of fact-based investing, transparency, authenticity and accountability. |
| Manager Comments | While they remain upbeat on the outlook for equity markets in 2020, after a very strong 2019 Surrey's stance is more cautious than at the beginning of last year. They are wary of the potential for the coronavirus outbreak to impact markets, however, they remain focused on the facts rather than the dramatic headlines. In their latest report they take a closer look at the impacts of past epidemics on global markets and point out that, despite the negative impacts in the short-term, the markets have often rebounded strongly. In February during reporting season the manager will be meeting with a large number of company management teams which they expect will allow them to reassess each of the Fund's positions according to Surrey's valuation roadmaps while also scouring for new investment ideas. |
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Performance Report: Australian Eagle Trust Long-Short Fund
14 Feb 2020 - Australian Fund Monitors
The Australian Eagle Long Short Fund rose +5.45% in January, outperforming the ASX200 Accumulation Index by +0.47%. Since inception in July 2016, the Fund has returned +20.74% p.a. versus the Index's +13.14%.
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14 Feb 2020 - Performance Report: Australian Eagle Trust Long-Short Fund
By: Australian Fund Monitors
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| Manager Comments | The portfolio's largest positive contributions for the month came from long positions in ResMed, CSL and Altium. The largest detractors included long positions in Treasury Wine Estates and Nearmap and a short position in Link Administration Holdings. The Fund had 30 long positions and 21 short positions with largest exposure to medical devices & services and technology stocks. As at the end of January, the portfolio had relatively less exposure to banking and materials stocks. |
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Performance Report: NWQ Global Markets Fund
13 Feb 2020 - Australian Fund Monitors
The NWQ Global Markets Fund returned +7.32% in January, outperforming AFM's Global Equity Index by +3.59% and taking annualised performance since inception in September 2018 to +6.93% with an annualised volatility of 10.87%.
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13 Feb 2020 - Performance Report: NWQ Global Markets Fund
By: Australian Fund Monitors
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| Fund Overview | This is achieved through active allocations to a select number of liquid alternative managers that employ a variety of strategies. The Fund places emphasis on managers who demonstrate a rigorous and repeatable investment process that has delivered a strong track record. |
| Manager Comments | The Fund is a highly diversifying return source that is designed to outperform in periods of elevated market volatility. It is a blended portfolio of managers trading any combination of FX, equity, bond, and commodity markets. NWQ noted the market environment in January was favourable for managers adopting a systematic trading approach (+10.30% contribution to performance) while those managers adopting a discretionary approach found it more challenging (-2.51% contribution to performance). The Fund's currency and commodity positions were profitable in January. The profits in the commodity space were largely derived from the oil and natural gas markets. There were modest losses from the Fund's equity and fixed income positions. |
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Performance Report: Paragon Australian Long Short Fund
12 Feb 2020 - Australian Fund Monitors
The Paragon Australian Long Short Fund rose +2.0% in January, taking 12-month performance to +26.17% versus the ASX200 Accumulation Index's +24.72%. Since inception in March 2013, the Fund has returned +10.09% per annum.
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12 Feb 2020 - Performance Report: Paragon Australian Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Paragon's unique investment style, comprising thematic led idea generation followed with an in depth research effort, results in a concentrated portfolio of high conviction stocks. Conviction in bottom up analysis drives the investment case and ultimate position sizing: * Both quantitative analysis - probability weighted high/low/base case valuations - and qualitative analysis - company meetings, assessing management, the business model, balance sheet strength and likely direction of returns - collectively form Paragon's overall view for each investment case. * Paragon will then allocate weighting to each investment opportunity based on a risk/reward profile, capped to defined investment parameters by market cap, which are continually monitored as part of Paragon's overall risk management framework. The objective of the Paragon Fund is to produce absolute returns in excess of 10% p.a. over a 3-5 year time horizon with a low correlation to the Australian equities market. |
| Manager Comments | The Paragon Australian Long Short Fund rose +2.0% in January, taking 12-month performance to +26.17% versus the ASX200 Accumulation Index's +24.72%. Since inception in March 2013, the Fund has returned +10.09% per annum. The Fund's capacity to significantly outperform in falling markets is highlighted by its down-capture ratio of 41% for performance since inception. Positive contributors during the month included PointsBet, Alkane and Xero. These were partially offset by declines in Alacer Gold and Atrum. Paragon noted January was a volatile month, with global markets initially hitting new highs and then selling off on the coronavirus outbreak. Looking at 40 years of viral outbreaks including the 2003 SARS epidemic, Paragon point out markets generally went through 1 - 2 months of weakness followed by 6 - 12 months of solid recovery. January's volatility also saw the market bring forward expectations for a 4th Fed rate cut in July 2020 (from December 2020), which Paragon believe bodes well for gold. The Fund's latest report includes Paragon's latest views on Tesla. They believe Tesla's bull-case is strengthening. They also point out that they don't like to bet against a company with such a significant short interest as, in their view, typically when so many are positioned one way the opposite will happen (e.g. Fortescue in 2015). Click here to view the full report. |
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Performance Report: Bennelong Long Short Equity Fund
11 Feb 2020 - Australian Fund Monitors
The Bennelong Long Short Equity Fund rose +6.52% in January, outperforming the ASX200 Accumulation Index by +1.54% and taking annualised performance since inception in February 2002 to +15.88% versus the Index's +8.60%.
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11 Feb 2020 - Performance Report: Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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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 | Bennelong noted there was little fundamental news in January. Two thirds of the Fund's pairs were positive and there were no material negative pairs. The Consumer, Health Care and Financials sectors were the larger contributors with no sector making a negative contribution. Of the top three pairs, the only news was a downgrade from Super Retail due to softer trading conditions (long JB Hi-Fi / short Super Retail). |
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Performance Report: Ark Global Fund - Class B AUD Unhedged
7 Feb 2020 - Australian Fund Monitors
The Ark Global Fund (unhedged) has returned +12.36% over the past 12 months and +13.56% p.a. since inception in July 2017 with an annualised volatility of 10.42%. The Fund's down-capture ratio of -70.46% highlights the Fund's capacity to...
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7 Feb 2020 - Performance Report: Ark Global Fund - Class B AUD Unhedged
By: Australian Fund Monitors
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| Fund Overview | The investment objective of the Fund is to achieve long-term capital appreciation with low correlation to global equity markets through investment in the Underlying Fund. Fund One is a global macro fund that utilises quantitative research including machine learning techniques and fully automated trading algorithms which will aim to generate positive uncorrelated returns relative to any significant equity benchmark. The traded instruments are either major FX pairs or the most liquid exchange traded stock index, bond, and commodity futures across North America, Europe and Asia Pacific. The algorithm backtests over 10 years of tick data and in order to do so effectively requires machine learning to filter noise and identify meaningful signals, which results in statistically significant prediction of price movements. In production this processing is done in real time and the portfolio reacts to asset movements by rebalancing automatically to the desired risk exposure through the market impact optimised execution logic. Risk management layers built into the algorithm have been developed using the experience the team has gained from their decades in highly liquid fast-moving markets in the proprietary High Frequency Trading world. This allows the system to trade autonomously but safely to all trading opportunities and potential system issues, and to alert the team to any behaviour outside of strictly controlled bounds. The Fund is a 'feeder fund' which indirectly gains exposure to the underlying assets by investing all or substantially all of its assets in the Underlying Fund. The Fund may retain a certain amount of cash from the investment in the Fund for the purpose of payment of costs, fees, hedging and expenses. |
| Manager Comments | The Fund's top performing assets for the month were: S&P/TSX 60 Index (+2.57% of NAV), 10 Year T-Bond (+1.72% of NAV), and AUD/USD (+1.60% of NAV). The worst performing assets were: Platinum (-1.84% of NAV), E-mini S&P 500 (-1.12% of NAV), and 10 Year Government of Canada Bond (-0.96% of NAV). Ark noted the following popular predictions for what 2020 holds in store for investors: no global recession, no rate rises, some rate cuts, steady stock markets (thanks to the rate cuts) and another good year for tech stocks. |
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Performance Report: Delft Partners Global High Conviction
7 Feb 2020 - Australian Fund Monitors
The Delft Global High Conviction Strategy returned +6.69% over the December quarter and ended 2019 up +26.73%. Since inception in August 2011, the Strategy has returned +16.82% p.a. versus AFM's Global Equity Benchmark's +14.80%.
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7 Feb 2020 - Performance Report: Delft Partners Global High Conviction
By: Australian Fund Monitors
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| Fund Overview | The quantitative model is proprietary and designed in-house. The critical elements are Valuation, Momentum, and Quality (VMQ) and every stock in the global universe is scored and ranked. Verification of the quant model scores is then cross checked by fundamental analysis in which a company's Accounting policies, Governance, and Strategic positioning is evaluated. The manager believes strategy is suited to investors seeking returns from investing in global companies, diversification away from Australia and a risk aware approach to global investing. It should be noted that this is a strategy in an IMA format and is not offered as a fund. An IMA solution can be a more cost and tax effective solution, for clients who wish to own fewer stocks in a long only strategy. |
| Manager Comments | The Strategy's quarterly unhedged returns were impacted slightly by the rise in the Australian dollar. They suspect the departure of the UK, a sizeable net contributor, from the EU may be a catalyst for a re-appraisal of EU economic policy and noted they remain underweight the region and the Euro while the politicians continue to impair economic wellbeing. Notable contributors over the quarter were Hitachi High Tech (+21%), Sony (+16%), Legal & General (+25%) and AES (+23%). Delft remain unhedged for AUD$ based investors. At the end of the quarter the portfolio was most heavily weighted towards North America (56% of the portfolio), followed by Japan (17%), Asia ex-Japan (12%), United Kingdom (8%), France/Germany (6%) and 1% in cash. By sector the Fund was most heavily weighted towards the Financials sector (22% of the portfolio), followed by IT (16%), Industrials (14%), Consumer Discretionary (13%), Health Care (9%), Utilities (9%), Communication Services (7%), Consumer Staples (4%), Energy (3%) and Materials (2%). |
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Performance Report: Frazis Fund
7 Feb 2020 - Australian Fund Monitors
The Frazis Fund rose +11.04% over the December 2019 quarter and ended CY2019 up +24.18%. The portfolio contracted by -4.0% in December, though more than half of this was due to currency.
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7 Feb 2020 - Performance Report: Frazis Fund
By: Australian Fund Monitors
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| Fund Overview | The manager follows a disciplined, process-driven, and thematic strategy focused on five core investment strategies: 1) Growth stocks that are really value stocks; 2) Traditional deep value; 3) The life sciences; 4) Miners and drillers expanding production into supply deficits; 5) Global special situations; The manager uses a macro overlay to manage exposure, hedging in three ways: 1) Direct shorts 2) Upside exposure to the VIX index 3) Index optionality |
| Manager Comments | The Fund's core holdings in Afterpay, Carvana, Pinduoduo and Pointsbet performed well over the year. Frazis noted the Fund is already starting to reap the rewards of increasing their investments in those companies this year. The Fund is now concentrated into seven core investments: US software (Twilio, Alteryx, MongoDB, Shopify), Afterpay, Carvana, Diagnostics (Exact Sciences and Guardant Health), Pinduoduo, a small number of high growth Australian smallcaps such as Pointsbet, and life sciences (drug development, DNA synthesis, tissue regeneration and genetic science). The Fund's average portfolio organic growth rate is tracking at over 80%. Frazis expect this to slow, however they believe it's reasonable to expect the Fund's companies to be over 50% larger on a revenue basis 12 months from now. Frazis expect the next move in interest rates in Australia to be up, with corresponding increase in the AUD. |
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Performance Report: Touchstone Index Unaware Fund
7 Feb 2020 - Australian Fund Monitors
The Touchstone Index Unaware Fund rose +22.84% over 2019 with a volatility of 8.45%. Since inception in April 2016, the Fund has returned +11.55% p.a. with an annualised volatility of 9.87%.
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7 Feb 2020 - Performance Report: Touchstone Index Unaware Fund
By: Australian Fund Monitors
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| Fund Overview | The portfolio is constructed using Touchstone's Quality-At-a-Reasonable-Price ('QARP') investment process. QARP is a fundamental bottom-up process, however, it also incorporates a top-down risk management framework designed to successfully manage the portfolio during varying market conditions and economic cycles. The Touchstone Fund is concentrated, typically holding between 15-20 stocks. No individual stock will ever make up more than 10% of the portfolio at any one time. The Investment Manager may temporarily exceed the exposure limits of the Fund occasionally, particularly during periods of market volatility, to allow for holdings in excess of this 10% limit where the increase in value of the underlying security is due to market movement. The Fund may also hold between 0-50% of the portfolio in cash. The Fund has a high level of associated risk, therefore, the minimum suggested investment time-frame is 5 years. |
| Manager Comments | As at the end of December, the Fund held 21 stocks with a median position size of 4.4%. The portfolio's holdings had an average forward year price/earnings of 17.0, forward year EPS growth of 6.4%, forward year tangible ROE of 23.3% and forward year dividend yield of 3.9%. The Fund's cash weighting was increased to 9.3% from 6.1% as at the end of November. The Fund primarily seeks to select stocks from the ASX300 Index, typically holding between 10-30 stocks. The Fund seeks to invest in reasonably priced, good quality companies with a significant share of expected returns coming from sustainable dividends. |
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