NEWS
16 Mar 2021 - Manager Insights | AIM Investment Management
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Australian Fund Monitors' CEO, Chris Gosselin, speaks with Charlie Aitken from AIM Investment Management about the AIM Global High Conviction Fund's recent and long-term performance. The AIM Global High Conviction Fund is a long-only fund that invests in a high conviction portfolio of global stocks. The Fund has achieved a down-capture ratio since inception in July 2015 of 81.83%, highlighting its capacity to outperform when market's fall. The Fund has outperformed the Index in 7 out of 10 of the Index's worst months since the Fund's inception, further emphasising its strength in negative markets.
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16 Mar 2021 - Manager Insights | Prime Value
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Damen Purcell, COO of Australian Fund Monitors, speaks with Richard Ivers from Prime Value Asset Management about the Prime Value Emerging Opportunities Fund. Since inception in October 2015, the Fund has returned 14.86% p.a. against the Index's annualised return over the same period of +9.64%. The Fund's Sortino ratio (since inception) of 1.27 vs the Index's 0.74, in conjunction with the Fund's down-capture ratio (since inception) of 45.74%, highlights its capacity to significantly outperform in falling markets.
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16 Mar 2021 - Performance Report: Surrey Australian Equities Fund
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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 | Top contributors in February included Sealink (SLK), Betmakers (BET) and Uniti Wireless (UWL). On the negative side, Cleanspace (CSX) and Domain Holdings (DHG) detracted from performance. Despite the negative share price performance of these two companies, Surrey remain confident in their long-term prospects and continue to hold their shares. The Fund ended the month with 4% in cash and 31 individual stock positions. By sector, the Fund was most heavily weighted towards the Industrials and IT sectors. Top holdings included Auckland International Airports, Omni Bridgeway, Pointsbet, Sealink and Uniti Wireless. |
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16 Mar 2021 - The Bond Market: The Tail Wagging the Dog?
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The Bond Market: The Tail Wagging the Dog? Aitken Investment Management 11 March 2021 US political strategist James Carville once remarked, "I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. Now I would like to come back as the bond market. You can intimidate everybody!" This witticism was vividly bought to life in February. The ongoing progress made in administering vaccines more widely has raised the prospect of considerable levels of pent-up demand being unleashed as the global economy re-opens in the second half of 2021. Combined with ample amounts of monetary and fiscal stimulus - and assurances by governments and major central banks that policy will remain accommodative for several years - the outlook for an increasingly robust economic recovery over the next 18 months is taking shape. Alongside the prospect of this stronger economic recovery is the fear that permanently higher levels of inflation - benign for a long period of time - could be unleashed. In our recent investor webinar, we specifically addressed the issue of inflationary risks in some detail (which you can watch by clicking here). We anticipated the potential for an inflation-led market wobble during the first half of 2021 as reported year-on-year inflation cycles the disinflationary period of March to July 2020. The volatility experienced in February may be the first sign markets are beginning to price in the implications of potentially higher levels of inflation. Should inflation run hotter than the Federal Reserve is comfortable with - meaningfully above 3% year-over-year for a sustained period of time - the risk of interest rates needing to be increased to cool down the economy would be materially higher than markets assume today. To illustrate why higher bond yields could negatively impact valuation, imagine that you invest in an asset that will produce $1 in cash flow in year one, growing thereafter at 3% every year into perpetuity. How much should you pay for this asset? The answer depends to a significant degree on your discount rate, which is determined by the prevailing interest rate offered on long-dated government bonds. In the chart below - adapted from our aforementioned webinar - we illustrate that as the discount rate rises, the fair value (or justified price) of a stock declines. Higher interest rates, all else equal, leads to lower valuations. At present, our central case is that inflation will increase in 2021, but will then trend back down towards 2% over time. However, despite the fact that we believe there is a high likelihood of an inflation overshoot this year, it is an open question whether the current market positioning and structure is sufficiently robust to absorb rates moving sharply higher. On the evidence offered in February, there are potentially quite a few pockets of the market where higher discount rates will have a materially negative impact on valuations - in particular for highly leveraged investors. We remain cognizant of this risk and have taken appropriate steps to protect the capital in the Fund. In anticipation of a potential increase in discount rates, the Fund had already reduced its exposure to technology businesses with long duration cash flows, selling out of Apple, Netflix and Salesforce.com. Funds operated by this manager: |
16 Mar 2021 - Webinar | Airlie Funds Management
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Finding hidden value in volatile markets Against a backdrop of heightened economic uncertainty and ever-falling interest rates, Australian investors have flocked to "quality": paying higher multiples across the board for the highest returning, fastest growing businesses. The challenge, in this environment, is to satisfy the desire to invest in quality businesses, without overpaying for them. |
15 Mar 2021 - Manager Insights | Premium China Funds Management
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Damen Purcell, COO of Australian Fund Monitors, speaks with Jonathan Wu, Executive Director at Premium China Funds Management. Premium China was started their first fund in 2005 and have grown to offer 4 actively managed specialist Asian equity and fixed-income funds to both Australian and New Zealand investors. Their Premium Asia fund, which was started in 2009 has returned 12.97% per annum since inception outperforming the Asia Pacific Ex Japan benchmark by over 8% per annum.
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15 Mar 2021 - Performance Report: Cyan C3G Fund
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| Fund Overview | Cyan C3G Fund is based on the investment philosophy which can be defined as a comprehensive, clear and considered process focused on delivering growth. These are identified through stringent filter criteria and a rigorous research process. The Manager uses a proprietary stock filter in order to eliminate a large proportion of investments due to both internal characteristics (such as gearing levels or cash flow) and external characteristics (such as exposure to commodity prices or customer concentration). Typically, the Fund looks for businesses that are one or more of: a) under researched, b) fundamentally undervalued, c) have a catalyst for re-rating. The Manager seeks to achieve this investment outcome by actively managing a portfolio of Australian listed securities. When the opportunity to invest in suitable securities cannot be found, the manager may reduce the level of equities exposure and accumulate a defensive cash position. Whilst it is the company's intention, there is no guarantee that any distributions or returns will be declared, or that if declared, the amount of any returns will remain constant or increase over time. The Fund does not invest in derivatives and does not use debt to leverage the Fund's performance. However, companies in which the Fund invests may be leveraged. |
| Manager Comments | The Fund's Sharpe and Sortino ratios (since inception), 0.93 and 1.31 respectively, by contrast with the Index's Sharpe of 0.44 and Sortino of 0.49, highlight its capacity to produce superior risk-adjusted returns while avoiding the market's downside volatility over the long-term. The Fund's up-capture and down-capture ratios (since inception), 105.6% and 58.2% respectively, indicate that, on average, the Fund has outperformed in both the market's positive and negative months. Strong portfolio performers in February included Raiz (RZI), Alcidion (ALC) and Singular Health (SHG). Key detractors included Readcloud (RCL) and Quickstep (QHL). |
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15 Mar 2021 - Fund Review: Bennelong Long Short Equity Fund February 2021
BENNELONG LONG SHORT EQUITY FUND
Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.
- The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large-caps from the ASX/S&P100 Index, with over 19-years' track record and an annualised returns of 14.54%.
- The consistent returns across the investment history highlight the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market. The Fund's Sharpe Ratio and Sortino Ratio are 0.87 and 1.38 respectively.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - February 2021 (pdf format)
12 Mar 2021 - Hedge Clippings | 12 March 2021
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12 Mar 2021 - Manager Insights | Prime Value
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Damen Purcell, COO of Australian Fund Monitors, speaks with Richard Ivers from Prime Value Asset Management about the Prime Value Emerging Opportunities Fund. Since inception in October 2015, the Fund has returned 14.86% p.a. against the Index's annualised return over the same period of +9.64%. The Fund's Sortino ratio (since inception) of 1.27 vs the Index's 0.74, in conjunction with the Fund's down-capture ratio (since inception) of 45.74%, highlights its capacity to significantly outperform in falling markets.
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