So, what did you expect?

In last Friday's "Hedge Clippings" (which seems much longer than just a week ago) we warned that as a result of yields on 10 year US Treasury Bonds having risen to levels not seen since April 2014, the time was approaching for a seismic shift or tipping point in asset allocations, potentially destabilising the long-running equity bull market.

Having got that call correct, (albeit vague on the definition of "the time") we then incorrectly stated that following Janet Yellen's final remarks at the Fed, that markets "pretty much took things in their stride." Come last Saturday morning - what a difference a day makes! However, we did go on to warn that bull markets rarely end in a whimper, and one shouldn't bet the house on an orderly transition. Two out of three isn't too bad!

There have been some who have been surprised at the extent of the volatility over the past week, particularly in Australia where, while tied to the US, we have a significantly different economy, and market conditions. Meanwhile Hedge Clippings' old friend and sparring partner, Peter Switzer, has today predictably included hedge funds as the culprits. Consider the following:

The yield on US bonds at 2.8% vs. represented a premium of 0.4% to the S&P500's dividend yield of 2.4%, and which had risen more than 20% over the previous 12 consecutive positive months, including more than 5.5% in January alone. Compare that with Australia where the ASX200 has a yield of 4.77%, before even considering the effect of franked dividends and CGT benefits, or that the market had risen at less than half that of the S&P500.

Volatility dropped below 10%, and equities responded with stretched valuations as even 2.4% looked attractive vs. next to nothing as an alternative. All the Central Banks were longing for was a sign of growth, and inflation to go with it.

The US (and Europe) has been force fed with a diet of QE and low/zero/negative interest rates in order to revive their economies, which were dead in the water, and pump priming the equity market boom. Meanwhile the Australian economy, in spite of a market that was a poor performer, has now put together a quarter of a century of continuous economic growth.

So now the Central Bankers have delivered the growth and the first signs on inflation, (still low by historical standards) what did investors expect? Only those with short memories should have expected an orderly transition.

Let's put some perspective into the extent of the falls. The headlines may scream at the record 1,000 point falls, but in percentage terms they're not (not yet anyway) close to the percentage falls of 1987, or those in 2008 when Lehman's hit the wall, and triggering the GFC.

And for the record, while Lehman's demise might have triggered the GFC falls, it was the activity of the previous 5-7 years that caused it. This is just a case of Déjà vu.

The US economy is steadily growing, unemployment is historically low, as is wages growth and inflation, albeit rising. Interest rates remain low and although on the up (except in Australia) only in line with a growing economy, the fundamentals of which remain sound. Equity valuations which were stretched (less so in Australia), will now be coming back into line, but provided the underlying businesses are sound, should find "fair value" once again.

Meme Australian Share Fund

Attached is our most recently updated Fund Review on the Meme Australian Share Fund.

We would like to highlight the following aspects of the Fund;

• The Meme Capital Management is a Perth-based boutique Fund Manager, established in 2012 and manages the Meme Australian Share Fund.

• The Fund specializes in technical and quantitative strategies to identify investment opportunities expected to provide both positive price appreciation and relative price out-performance over the medium to long term.

• The Fund's objective is to outperform the S&P/ASX All Ordinaries Accumulation Index over rolling three year periods, through investing in ASX listed securities outside the S&P/ASX 20. The Fund only takes long positions and does not use derivatives.

• Over the past 12 months, the Fund returned positive 28.38%, versus the Index's 1.90% return. 

Australian Fund Monitors

ATTACHED FILESMeme Australian Share Fund AFM Fund Review November 2015 (pdf format)

Chad Slater, the Joint CIO of the Morphic Global Opportunities Fund discusses the markets and the August monthly outlook.

Watch AFM's other videos.

14th Annual Hedge Funds Rock and Australian Hedge Fund Awards 2015

17 September 2015 at the Ivy Ballroom, Sydney, Australia

The Hedge Fund industry lets its hair down with some drinks, music and great videos at the 14th Annual Hedge Funds Rock and Australian Hedge Fund Awards.

All proceeds to go to Redkite helping children with cancer and their families

We look forward to seeing you at the event.

For more details and ticket bookings please contact:

www.hedgefundsrock.org

Chad Slater, the Joint CIO of the Morphic Global Opportunities Fund discusses the markets and the July monthly outlook.

Watch AFM's other videos.

FEEDING FRENZY - SECURING MARKET SHARE IN A COMPETITIVE ENVIRONMENT

26-28 August 2015
Crowne Plaza, Hunter Valley

The evolving regulation and business of financial services, as well as the rapid growth of Fintech, have made the politics of distribution for financial products more competitive than in recent years. With the market swimming with new entrants, there has never been a better time to collaborate and to compete to achieve distribution success in a crowded ocean. 

The 15th Annual Wraps, Platforms & Masterfunds Conference will provide solutions for succeeding in a distribution world of endless possibilities, showcasing strategies to help your business achieve the biggest bite of market share, use innovation to overcome problems and support opportunities.

Australian Fund Monitors is pleased to offer a discount of $300
to all investors and advisors using coupon code promoFM on registration.

With insights from Steve Baxter, entrepreneur, investor and 'Shark' from Network Ten's television series Shark Tank, this conference will provide a unique perspective on the feeding frenzy of new entrepreneurs keeping platforms alive. 

Key topics and conference themes include:

• The Murray Inquiry and future of financial services
• The changing market dynamics of the financial advice industry
• Licensee negotiation and approved product list strategies
• What financial advisers want from technological service providers
• Developments in the fintech - opportunities and threats
• Overview of the dealer group market and
• What dealer heads want
• Marketing and product distribution strategies
• Adapting to changes in the dealer group market
• Strategies for attaining market share in competitive technology markets

Who should Attend?

The conference is a must-attend event for any financial services business or provider seeking to better understand the current market and opportunities for growth. Over 14 years the conference has delivered market intelligence, insights and opinions to:

• Platform providers
• Dealer group heads and other senior executives
• Investment researchers
• Fund managers
• Distribution heads and senior distribution managers
• Senior product and marketing managers
• Financial advisers
• Mortgage industry executives
• Other intermediary businesses seeking to diversify in the financial planning/advice sector 

Contact

Registration enquiries
Craig Lynch
Phone: 02 8045 2020
Email: [email protected]

General enquiries
Jennifer Hardy
Phone: 02 8045 2067
Email:[email protected]

Sponsorship enquiries
John Briggs
Phone: 02 8045 2010
Mobile: 0418 694 292
Email: [email protected]

ATTACHED FILES2015 wraps platforms conference agenda (pdf format)

Chris Gosselin, CEO of Australian Fund Monitors explains questions asked by investors about the Fees, Terms and Conditions of Hedge Funds and Absolute Return Funds.

Take a look at the earlier videos in the Understanding Hedge Funds series.

Jack Lowenstein, the Joint CIO of the Morphic Global Opportunities Fund discusses the market outlook for 2015 and the Fund strategies.

Watch AFM's other videos.

Chris Gosselin, CEO of Australian Fund Monitors explains Hedge Funds and in particular helps answer the questions asked by investors to determine which Fund Manager with whom to invest.

Take a look at the earlier videos in the series here.

Chris Gosselin, CEO of Australian Fund Monitors explains Short Selling and how it relates to Hedge Funds.

View our other videos here.