NEWS
Performance Report: Bennelong Long Short Equity Fund
9 Aug 2019 - Australian Fund Monitors
The Bennelong Long Short Equity Fund returned +6.92% in July, outperforming the ASX200 Accumulation Index by +3.98% and taking annualised performance since inception in February 2002 to +15.17% versus the Index's +8.55%.
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9 Aug 2019 - 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 | During the month the Fund experienced a favourable balance of fundamental news. In addition, Bennelong noted appetite for higher yield stocks moderated, which was a tailwind for returns. They believe the elimination of the dividend in two ASX200 companies experiencing operating headwinds is a reminder that yield is no certainty in the equity markets. At the sector level Financials were the Fund's top contributor while Consumer Discretionary was the greatest detractor. The number of positive pairs exceeded the negative. The contribution of the Fund's negative pairs was modest. |
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Performance Report: Paragon Australian Long Short Fund
8 Aug 2019 - Australian Fund Monitors
The Paragon Australian Long Short Fund rose +9.4% in July, outperforming the ASX200 Accumulation Index by +6.46% and taking annualised performance since inception in February 2013 to +10.87% versus the Index's +9.22%.
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8 Aug 2019 - 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 +9.4% in July, outperforming the ASX200 Accumulation Index by +6.46% and taking annualised performance since inception in February 2013 to +10.87% versus the Index's +9.22%. Positive contributors came from gold holdings including Alacer Gold, as well as iSignthis, Xero, Agrimin and a short position in Pilbara. Paragon believe the move in gold, particularly the moves in their gold longs, are still in their infancy. Paragon noted they continue to be very constructive on gold, especially A$ gold. They added that gold particularly benefits from accommodative monetary policy (namely low and falling cash rates), quantitative easing (QE), falling bond rates (namely negative or approaching negative real rates) and global market volatility, all four of which arose in the last month. Paragon believe the best returns will be made in identifying key stocks that meet particular criteria:
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Performance Report: NWQ Global Markets Fund
31 Jul 2019 - Australian Fund Monitors
The NWQ Global Markets Fund rose +0.11% in June, taking performance since inception in September 2018 to +2.30%. There were strong positive contributions to the Fund's overall return in June from its equity and fixed income exposures.
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31 Jul 2019 - 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 | NWQ's view is that equity and bond market pricing reflect two very different outlooks for the global economy; equity investors are looking through falling earnings and expecting the Fed to step in and cut interest rates to justify current multiples, while bond investors see deteriorating economic fundamentals and geopolitical risks as potentially leading to a recession in the near term. NWQ believe we are likely to see higher levels of volatility whilst these conflicting outlooks resolve themselves. In this scenario they consider having a diversified portfolio of managers a sound way of navigating the potentially challenging times ahead. |
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Performance Report: Loftus Peak Global Disruption Fund
31 Jul 2019 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund rose +6.5% in June, outperforming AFM's Global Equity benchmark by +1.2% and taking annualised performance since inception in November 2016 to +21.94% versus the Index's +15.45%.
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31 Jul 2019 - Performance Report: Loftus Peak Global Disruption Fund
By: Australian Fund Monitors
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| Fund Overview | The investment process involves a combination of top-down analysis with fundamental bottom-up qualitative and quantitative research to derive a risk-adjusted discounted cash flow (DCF) valuation of companies in the target universe. The investment team will generally buy stocks from the pool of securities that are trading below Loftus Peaks' valuation and sell them when they are trading above Loftus Peak's valuation. The approach allows for both fundamental accounting information as well as market-oriented inputs to be factored into the portfolio construction process. Loftus Peak's model typically does not rely on leverage to deliver investment returns and specifically takes into account risk in the valuation process. Capital preservation can be managed by holding up to 50% cash. Index and currency options and futures may also be used to manage risk. |
| Manager Comments | Loftus Peak noted the Fund's performance in May was largely reversed in June as Presidents Trump and Xi signalled their intentions to restart trade negotiations. As a result, at the end of June a number of Loftus Peak's investee companies performed more strongly after having been unable to sell to Huawei because of the ban. Top contributors included Qualcomm, Xilinx, Nvidia and Apple. Detractors included VMware, Nutanix and Google. At the end of the month the Fund was 82% invested in 23 holdings with the balance in cash. The Australian dollar appreciated +1.3% over the month against the US dollar, which meant the value of the Fund's US dollar positions decreased. As at 30 June 2019, the Fund carried a foreign currency exposure of 99%. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
30 Jul 2019 - Australian Fund Monitors
The Gyrostat Absolute Return Income Equity Fund returned +7.09% over the financial year, outperforming the RBA Cash Rate by +5.61%. Since inception in December 2010, the Fund has returned +4.39% per annum with an annualised volatility of 3.57%.
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30 Jul 2019 - Performance Report: Gyrostat Absolute Return Income Equity Fund
By: Australian Fund Monitors
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| Fund Overview | Our objective is to deliver regular and stable income stream (from ASX20 dividends) in a low interest rate environment with capital security - an 'alternative - defensive' asset class. Fund features: - holds a diversified portfolio of higher yielding ASX20 stocks. - has the lowest cost protection, always in place, at the stock specific level, with upside. - delivers regular equity income by passing through dividends. Advances in investment risk management enable cost effective protection to always be in place for a 'hard' defined risk parameter (say no more than 3% capital at risk). Returns are designed to increase as volatility levels increase, as this provides more opportunities to lower protection costs. Investment Objectives: - Returns: 6% - 8% pa in trending markets, greater than 8% pa in volatile markets, short term bond returns in stable markets - Income: Minimum cash rate + 3% paid semi-annually (currently 4.8% p.a.) from dividends and franking credits - Protection: No quarterly NAV draw-downs exceeding 3% Also includes a 'tail hedge' for gains on large market falls |
| Manager Comments | The Fund's objective is to deliver regular and stable equity income (by passing through ASX 20 dividends) at a minimum of the BBSW 90 + 3% with capital security and growth. The Fund buys and holds ASX 20 shares with lowest cost protection always in place with upside. Gyrostat noted during June 2019 there was very little market volatility - there was a small reduction in NAV of 0-0.42% consistent with the Fund's guidance. Gyrostat believe the Fund is well positioned to benefit from any uplift in market volatility, which is consistent with 'late cycle' market conditions. They continue to be committed to their distinctive 'hard' risk parameter. |
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Performance Report: Bennelong Emerging Companies Fund
30 Jul 2019 - Australian Fund Monitors
The Bennelong Emerging Companies Fund rose +3.44% in June, taking performance over the financial year to +15.08% and annualised performance since inception in November 2017 to +26.58%.
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30 Jul 2019 - Performance Report: Bennelong Emerging Companies Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund may invest in securities expected to be listed on the ASX within 12 months. The Fund may also invest in securities listed, or expected to be listed, on other exchanged where such securities relate to ASX-listed securities |
| Manager Comments | The Fund returned +16.00% over the June quarter. Assisting performance were strong returns from large positions such as Jump Interactive, Zip Co, EML Payments and Nearmap. Bennelong noted they have since trimmed some of their tech holdings, including some of these names, and have diversified more into other sectors where they are finding opportunities. |
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Performance Report: Touchstone Index Unaware Fund
29 Jul 2019 - Australian Fund Monitors
The Touchstone Index Unaware Fund rose +2.14% in June. Since inception in April 2016, the Fund has returned +11.43% per annum with an annualised volatility of 9.89%.
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29 Jul 2019 - 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 June, the Fund held 22 stocks with a median position size of 4.6%. The portfolio's holdings had an average forward year price/earnings of 16.1, forward year EPS growth of 5.1%, forward year tangible ROE of 23.2% and forward year dividend yield of 4.3%. The Fund's cash weighting was decreased to 3.0% from 3.4% as at the end of May. 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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Performance Report: DS Capital Growth Fund
26 Jul 2019 - Australian Fund Monitors
The DS Capital Growth Fund rose +0.75% in June, taking performance since inception in January 2013 to +15.26% p.a. with an annualised volatility of 7.26%. By contrast the ASX200 Accumulation Index has returned +10.72% p.a. with an...
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26 Jul 2019 - Performance Report: DS Capital Growth Fund
By: Australian Fund Monitors
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| Fund Overview | The investment team looks for industrial businesses that are simple to understand; they generally avoid large caps, pure mining, biotech and start-ups. They also look for: - Access to management; - Businesses with a competitive edge; - Profitable companies with good margins, organic growth prospects, strong market position and a track record of healthy dividend growth; - Sectors with structural advantage and barriers to entry; - 15% p.a. pre-tax compound return on each holding; and - A history of stable and predictable cash flows that DS Capital can understand and value. |
| Manager Comments | The Fund returned +10.00% after fees over the financial year. In most cases, the Fund's core Australian investments delivered the earnings growth DS Capital were expecting. Top contributors included Lifestyle Communities, CME Group, Credit Corp, AMA, Interxion, MYOB, Zip Co, Collins Foods, Rightmove, Vista Group, Over the Wire, Uniti Wireless, Experience Co, Seven Group Holdings and Premier Asset Management. Key detractors included Challenger and Axesstoday. DS Capital don't expect interest rates to rise significantly in the short term, however, they remain conscious of the stock market's sensitivity to increases in interest rates and the potential for a rotation from equities back to bank deposits and have therefore positioned the portfolio accordingly. They expect the market to remain susceptible to macro-economic issues, particularly the trade relationship between the US and China. |
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Performance Report: Spectrum Strategic Income Fund
25 Jul 2019 - Australian Fund Monitors
The Spectrum Strategic Income Fund returned +0.45% in June, marking 10 years since inception in June 2009. Over that time the Fund has returned +8.01% p.a. with a maximum drawdown of -1.58%.
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25 Jul 2019 - Performance Report: Spectrum Strategic Income Fund
By: Australian Fund Monitors
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| Manager Comments | Spectrum believe the bond market has adopted a 'wait and see' attitude with regards to the prospect of a Fed rate cut. This, they say, explains why bonds are trading in a tight range both domestically and internationally. Spectrum add that markets are reacting to dovish central banks, persistently low inflation, negative interest rates in Europe and the legacy of QE. Their view is that in this environment anything that provides a yield looks attractive and therefore it's these factors which are driving both equity and bond market rallies. Spectrum say the outlook and demand for credit remain resilient, especially so if equity markets continue to rally. They noted it's hard to say what could change this view, however a geopolitical event such as a conflict between the US and Iran could lead to a surge of bond buying. They don't believe this is likely. |
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Performance Report: Quay Global Real Estate Fund
25 Jul 2019 - Australian Fund Monitors
The Quay Global Real Estate Fund returned +0.3% in June, in line with its benchmark (FTSE/EPRA NAREIT Developed Index Net TD AUD). Since inception in January 2016, the Fund has returned +10.36% per annum.
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25 Jul 2019 - Performance Report: Quay Global Real Estate Fund
By: Australian Fund Monitors
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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 | For the 12 months to June, the largest positive contributors to returned were Sun Communities (US Manufactured Holdings), Ventas (US Health) and Store Capital (Triple net). The largest detractors were Scentre Group (Aust Retail), Boardwalk REIT (Canada Housing) and RLJ (US Hotels). |
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