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28 May 2021 - Hedge Clippings | 28 May 2021
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28 May 2021 - Performance Report: Bennelong Concentrated Australian Equities Fund
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| Fund Overview | The overriding objective of the Concentrated Australian Equities Fund is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings, while satisfying our stringent quality criteria. Bennelong's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The portfolio typically consists of 20-35 high-conviction stocks from the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to ASX-listed securities. Derivative instruments are mainly used to replicate underlying positions and hedge market and company specific risks. |
| Manager Comments | The Fund's Sharpe and Sortino ratios (since inception), 0.97 and 1.42 respectively, by contrast with the Index's Sharpe of 0.62 and Sortino of 0.79, highlight its capacity to produce superior risk adjusted returns while avoiding the market's downside volatility. The Fund's up-capture and down-capture ratios (since inception), 151.55% and 91.58% respectively, indicate that, on average, it has significantly outperformed during the market's positive months while typically not falling further than the market during the market's negative months. The Fund has achieved up-capture ratios greater than 120% and down-capture ratios less than 100% over the past 12, 24, 36, 48 and 60 months. The portfolio ended the month significantly overweight the Discretionary sector (Fund weight: 43.0%, benchmark weight: 8.0%) and underweight the Financials sector (Fund weight: 6.7%, benchmark weight: 29.2%). |
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27 May 2021 - Fund Review: Insync Global Capital Aware Fund April 2021
INSYNC GLOBAL CAPITAL AWARE FUND
Attached is our most recently updated Fund Review on the Insync Global Capital Aware Fund.
We would like to highlight the following:
- The Global Capital Aware Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.
- Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.
- Emphasis on limiting downside risk is through extensive company research, the ability to hold cash and long protective index put options.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - April 2021 (pdf format)
27 May 2021 - Australian Private Equity Well Positioned to Outperform
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Australian Private Equity Well Positioned to Outperform Michael Tobin, Vantage Asset Management 25 May 2021 With Australia now emerging from its first recession in 29 years as a result of the slowing economy caused by the COVID-19 restrictions in 2020, it is timely to compare the historical performance of the Australian & New Zealand Private Equity market across all time frames, to the performance of those Private Equity funds that were established during, or otherwise invested across, previous recessionary periods. Summary statistics provided by AVCAL & Cambridge Associates reveal that the median and upper quartile net returns from Private Equity funds formed in Australia and New Zealand, between 1997 and 2018, focused on the later expansion and buyout financing stage, in which Vantage funds invest, was 11.1% p.a. and 20.3% p.a. respectively. These robust returns demonstrate Private Equity's ability to consistently outperform public markets as the return on the S&P ASX 200 Accumulation Index over the corresponding period was only 8.4% p.a.1. However, during periods of economic contraction, the performance of Private Equity was even more pronounced. Utilising data provided by Preqin (2020) 2, Vantage conducted an analysis of the investment returns delivered by Private Equity Funds during the recessionary periods following the "dot-com crash" in 2000 and the Global Financial Crisis (GFC) of 2008 to 2010. Australian and New Zealand Private Equity funds, focused on investing in the lower to mid-market segment, investing during and up to 2 years following these events generated median and upper quartile net returns of 19.6% p.a. and 45.0% p.a. respectively, significantly outperforming the public market comparables during these periods. WEIGHTED AVERAGE NET IRR % PERFORMANCE OF AUSTRALIAN & NEW ZEALAND PRIVATE EQUITY FUNDS The reason for this outperformance is due to a number of factors which include an increase in opportunities, less competition from listed and trade purchasers and an ultimate decrease in purchase multiples. Vantage's underlying managers' report that purchase multiples have followed a similar downward trajectory to that seen following the dot-com crash and the GFC, providing an increase in the number of attractive investment opportunities. As a result, it is likely that Private Equity funds investing during and following this recessionary period of 2020 - 2023 will more likely outperform historical returns, due to lower purchase multiples combined with the low interest rate environment and ample deployable capital available to be invested. A number of academic papers have analysed and reported on Private Equity's resilience versus non-Private Equity backed peers during past economic downturns. Research conducted by Wilson et la. (2012) 3, from a data set of 14 million financial records, found that Private Equity backed businesses in the United Kingdom during the period 1995 - 2010, experienced significantly positive growth, relative to peers that were non-Private Equity backed throughout the 2008 crisis. Further highlighting Private Equity's resilience during the GFC period, A recent Stanford Business School study, titled "Private Equity and Financial Fragility During the Crisis" by Bernstein, Lerner & Mezzanotti (2017) 4, confirmed that Private Equity backed companies are significantly more resilient and can act as an economic stabiliser during a recession. In the study, Private Equity lead companies were found to be less likely to face financial constraints during an economic downturn such as the GFC, allowing them to grow and increase market share versus their peers throughout the same period. Arguably the current economic contraction has signified the beginning of a new cycle in financial markets and the end of a prolonged period of asset inflation and increasing acquisition multiples. As a result, there will be an increase in attractive investment opportunities for Vantage's underlying Private Equity managers to invest capital at lower than historical valuation multiples, throughout the second half of the calendar year 2020 and into 2021. This re-rating of asset prices and Private Equity's ability to consistently outperform during and following recessionary periods, will ultimately deliver Vantage Fund investors with superior risk adjusted returns over the term of each Vantage Fund. References
Past performance is not necessarily indicative of future performance. Funds operated by this manager: |
27 May 2021 - Performance Report: Frazis Fund
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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 up-capture ratio (since inception) of 237.1% indicates that, on average, it has returned more than twice as much as the market during the market's positive months. The Fund has achieved up-capture ratios over the past 12 and 24 months of 355.9% and 271.6% respectively. Frazis noted that there was a further sell-off in growth stocks that seems to have stabilised. Multiples are down approximately 50% from the start of the year, using estimates for 2021. They added that the latest fall was triggered by a US inflation print of 4%. Frazis believe that inflation is likely to benefit the Fund's companies as they all have extensive pricing power. Frazis' view is that, irrespective of the growth vs value debate, the value of the portfolio's companies will be driven by fundamentals as they increase their user base, gross profit dollars, and in the case of life sciences, bring additional treatment to market. |
| More Information |
26 May 2021 - Performance Report: Insync Global Capital Aware Fund
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| Fund Overview | Insync employs four simple screens to narrow the universe of over 40,000 listed companies globally to a focus group of high quality companies that it believes have the potential to consistently grow their profits and dividends. These screens are size of the company, balance sheet performance, valuation and dividend quality. Companies that pass this due diligence process are then valued using dividend discount models, free cash flow yield and proprietary implied growth and expected return models. The end result is a high conviction portfolio of typically 15-30 stocks. The principal investments will be in shares of companies listed on international stock exchanges (including the US, Europe and Asia). The Fund may also hold cash, derivatives (for example futures, options and swaps), currency contracts, American Depository Receipts and Global Depository Receipts. The Fund may also invest in various types of international pooled investment vehicles. At times, Insync may consider holding higher levels of cash if valuations are full and it is difficult to find attractive investment opportunities. When Insync believes markets to be overvalued, it may hold part of its resources in cash, or use derivatives as a way of reducing its equity exposure. Insync may use options, futures and other derivatives to reduce risk or gain exposure to underlying physical investments. The Fund may purchase put options on market indices or specific stocks to hedge against losses caused by declines in the prices of stocks in its portfolio. |
| Manager Comments | The Fund's capacity to protect investors' capital in falling and volatile markets is highlighted by the following statistics (since inception): Sortino ratio of 1.80 vs the Index's 1.45, maximum drawdown of -10.98% vs the Index's -13.59%, and down-capture ratio of 61.74%. At month-end, the portfolio's top 10 holdings included PayPal, Qorvo Inc, Domino's Pizza, Walt Disney, S&P Global, Nvidia, Facebook, Accenture, Visa and Qualcomm. The portfolio was most heavily weighted towards the 'Contactless Economy' and 'Workplace Automation' megatrends. By sector, the portfolio was significantly overweight the IT sector relative to the MSCI. |
| More Information |
26 May 2021 - Webinar Invitation | Cryptocurrencies
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Thursday, June 03, 2021 4:30 PM AEST Webinar - Cryptocurrencies
Interest in Bitcoin and other crypto currencies has accelerated recently in large part due to media coverage, and human nature which dictates that a relatively small outlay which leads to a massive payoff is seen as a reasonable "bet" - somewhat like buying a lottery ticket, but probably with better odds. That doesn't help the majority of people who're attracted by the risk/reward payoff, but either don't know where to start, or even if they did, don't believe they have the skills, expertise or time to enter the market. As a result we have organised a webinar to be held on Thursday June 3rd at 4:30 to try to clarify what to many is the unknown world of crypto currencies and for those - believers and disbelievers alike - who'd like to know more but perhaps didn't know where to start, or want to understand how to avoid the risks.
Time: 04:30 PM AEST Date: Thursday the 3rd of June, 2021
We look forward to seeing you there! |
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Speakers |
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Clint Maddock |
| CIO, Digital Asset Management | |
| Clint is founder of Sydney based Digital Asset Funds Management (DAFM), and CIO of their newly launched Digital Asset Fund. Clint heads DAFM's team of over 20 financial markets and software professionals and has over 17 years experience trading complex derivative products with an impressive CV that includes studying Aerospace Engineering before co-founding Tibra, a high frequency trading operation, in 2006. | |
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Chris Gosselin |
| CEO, Australian Fund Monitors | |
| Australian Fund Monitors Pty Ltd was established in October 2006 to provide an information service to investors interested in the Australian Absolute Return sector. By providing an "eyes and ears" information and analysis service, both investors and Fund Managers are able to compare different funds and investment strategies using a common format and consistent analysis tools. As Founder and CEO, Chris has over 30 years experience in the Financial Services industry, including managing Macquarie Equities' and HSBC James Capel's Melbourne offices prior to establishing InfoChoice Ltd in 1993. | |
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26 May 2021 - Performance Report: Prime Value Emerging Opportunities Fund
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| Fund Overview | The Fund is comprised of a concentrated portfolio of securities outside the ASX100. The fund may invest up to 10% in global equities but for this portion typically only invests in New Zealand. Investments are primarily made in ASX listed and other exchange listed Australian securities, however, it may also invest up to 10% in unlisted Australian securities. The Fund is designed for investors seeking medium to long term capital growth who are prepared to accept fluctuations in short term returns. The suggested minimum investment time frame is 3 years. |
| Manager Comments | The Fund's Sharpe and Sortino ratios (since inception), 1.00 and 1.40 respectively, by contrast with the Index's Sharpe of 0.69 and Sortino of 0.83, highlight its capacity to produce superior risk adjusted returns while avoiding the market's downside volatility. The Fund's up-capture and down-capture ratios for performance over the past 12 months, 153% and -4.6% respectively, highlight its significant outperformance over that period in both the market's positive and negative months. Key positive contributors for the month were Mainstream (MAI +119.9%), Uniti Wireless (UWL +20.4%) and City Chic (CCX +17.6%). Key detractors were Redbubble (RBL -18.2%), Southern Cross Media (SXL - 9.9%) and Helloworld (HLO -13.0%). |
| More Information |
26 May 2021 - Performance Report: Laureola Australia Feeder Fund
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| Fund Overview | Life Settlements are resold life insurance policies and can be thought of as a form of finance extended to an individual backed by the person's life insurance policy. This financing is repaid upon maturity by collecting the death benefit from the insurance company. Risk mitigation measures implemented by Laureola include science-driven due diligence of policies, active monitoring of insured through a vertically integrated operation, and investor aligned fund design. |
| Manager Comments | The Fund's Sharpe and Sortino ratios (since inception), 2.43 and 7.37 respectively, by contrast with the Index's Sharpe of 0.99 and Sortino of 1.49, highlight its capacity to produce superior risk adjusted returns while avoiding the market's downside volatility. The Fund's non-correlated nature is demonstrated by its consistently low down-capture ratios over all time periods. Its down-capture ratio since inception is -37.45%. A negative down-capture ratio indicates that, on average, the Fund has risen during the market's negative months. The Fund's capacity to protect investors capital is further highlighted by its maximum drawdown (since inception) of -4.90% vs the Index's -12.35% over the same period. The Fund has outperformed the Index in all 10 of the Index's 10 worst months since the Fund's inception. The April performance was due to the maturity of 3 small policies. Laureola emphasised in their latest report that the Fund has protected investors against inflation, even on an after-tax basis. They added that inflation can have negative effects on both traditional asset classes and on the real economy, especially at the end of the credit cycle. Laureola believe that under this scenario, the genuine non-correlated nature of the returns of the Fund will become valuable, as returns that depend on mortality will not be affected by slowdowns in the economy or by upheavals in the stock, bond, or currency markets. The Fund now holds 183 policies with a total face value of $131.8 ml. 35% of the insureds have LEs of 48 mos. or less, indicating that the Fund will continue to experience strong internally generated cash flow and a high level of realised gains. |
| More Information |
26 May 2021 - Performance Report: Premium Asia Fund
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| Fund Overview | The Fund is managed by Value Partners using a disciplined value-oriented approach supported by intensive, on-the-ground bottom-up fundamental research resulting in a portfolio of individual holdings, which are, in the view of Value Partners, undervalued and of high quality, on either an absolute or relative basis, and which have the potential for capital appreciation. The Fund will primarily have exposure to the equity securities of entities listed on securities exchanges across the Asia (ex-Japan) region, however, the Fund may also gain exposure to entities listed on securities outside the Asia (ex-Japan) region which have significant assets, investments, production activities, trading or other business interests in the Asia (ex-Japan) region as well as unlisted instruments with equity-like characteristics, such as participatory notes and convertible bonds. The Fund may also invest in cash and money market instruments, depositary receipts, listed unit trusts, shares in mutual fund corporations and other collective investment schemes (including real estate investment trusts), derivatives including both exchange-traded and OTC, convertible securities, participatory notes, bonds, and foreign exchange contracts. |
| Manager Comments | South Korean and Taiwanese information technology names were among the top performance contributors in the Fund last month, as global demand for technology products remains strong. Financials also gained, particularly a South Korean financial holding company, which became the top performance contributor. Its share price was boosted by the company's plan to list its mobile retail banking service subsidiary. The Chinese shipping companies sustained their strong momentum in April. A slight detraction came from some of the Fund's exposure in the China consumer discretionary names as sentiment was muted. However, Premium's outlook remains positive on some of these names, as they believe they will be beneficiaries of the expected ongoing economic recovery. Premium continue to be overweight in North Asia, as the market continues to provide better risk-reward opportunities relative to other parts of Asia, which are still working their way out of the pandemic. They noted that, while market fundamentals in China remain unchanged, more catalysts, particularly earnings, are needed to drive up positive sentiment. The manager's bottom-up approach suggests corporate fundamentals remain solid, and they continue to prefer companies with visibility in their earnings. |
| More Information |
