Performance Report: Surrey Australian Equities Fund

9 Jul 2020 - Australian Fund Monitors

The Surrey Australian Equities Fund returned +0.4% in June, taking 12-month performance to +4.04% against the ASX200 Accumulation Index's -7.68%. Since inception in June 2018, the Fund has returned +3.12% on an annualised basis.

9 Jul 2020 - Performance Report: Surrey Australian Equities Fund

By: Australian Fund Monitors

Report Date	09 July 2020
Manager	Surrey Asset Management Pty Ltd
Fund Name	Surrey Australian Equities Fund
Strategy	Equity Long
Latest Return Date	June 2020
Latest Return	0.40%
Latest 6 Months	0.28%
Latest 12 Months	4.04%
Latest 24 Months (pa)	2.80%
Annualised Since Inception	3.12%
Inception Date	01 June 2018
FUM (millions)
Fund Overview	The Investment Manager will be primarily focussed on investing in companies listed in the S&P/ASX Small Ordinaries Index while retaining capacity to invest up to 30% of the Fund in ASX listed companies outside this benchmark. The Investment Manager believes this approach offers attractive, under researched investment opportunities that can provide capital upside and growing dividend income over rolling 5-year periods. 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	The Surrey Australian Equities Fund returned +0.4% in June, taking 12-month performance to +4.04% against the ASX200 Accumulation Index's -7.68%. Since inception in June 2018, the Fund has returned +3.12% on an annualised basis. Surrey noted the Fund has attempted to navigate the choppy waters of the second half of FY20 by focussing on facts rather than hypotheticals. The Fund ended the Financial Year with 9% of the portfolio in cash and a diversified portfolio of 28 individual stock positions. The Fund was most heavily weighted towards the IT and Industrials sectors. Top holdings at month-end included Appen (APX), Imrcor (IMR), Omni Bridgeway (OBL), Opticom (OPC), Xero Limited (XRO). Top contributors to performance over the Financial Year included Appen, Xero, Pointsbet and Imricor. Looking forward, Surrey expect the day-to-day share price movements to continue but remain confident in the long-term outlook for the globe as we recover from the impact of COVID-19. As can be seen by the Fund's top shareholdings mentioned above, the Fund is positioned in industries with strong structural growth tailwinds and where Surrey believe the economic exposure to COVID-19 is somewhat limited.
More Information	View Fund's Profile View Manager's Report

Infrastructure Spending Emerging as the Focus

9 Jul 2020 - Karl Hunt, Delft Partners

After the heavy contractions in GDP throughout the world following the COVID pandemic, governments are under a lot of pressure to directly boost GDP. With borrowing costs low, one area that is increasingly in focus is infrastructure where...

Performance Report: Bennelong Long Short Equity Fund

8 Jul 2020 - Australian Fund Monitors

The Bennelong Long Short Equity Fund rose +4.19% in June, outperforming the ASX200 Accumulation Index by +1.58% and taking 12-month performance to +30.56% against the Index's -7.68%. Since inception in February 2002, the Fund has returned...

8 Jul 2020 - Performance Report: Bennelong Long Short Equity Fund

By: Australian Fund Monitors

Report Date	08 July 2020
Manager	Bennelong Long Short Equity Management, a Bennelong boutique
Fund Name	Bennelong Long Short Equity Fund
Strategy	Equity Market Neutral
Latest Return Date	June 2020
Latest Return	4.19%
Latest 6 Months	8.61%
Latest 12 Months	30.56%
Latest 24 Months (pa)	8.58%
Annualised Since Inception	15.61%
Inception Date	01 January 2003
FUM (millions)	AU$374.3
Fund Overview	Bennelong Long Short Equity Management applies a qualitative stock selection process to construct a diversified portfolio of paired securities based on relative value. The Bennelong Long Short Equity Management strategy invests primarily in the S&P/ASX 100 and is dollar neutral at cost. 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	The Bennelong Long Short Equity Fund rose +4.19% in June, outperforming the ASX200 Accumulation Index by +1.58% and taking 12-month performance to +30.56% against the Index's -7.68%. Since inception in February 2002, the Fund has returned +15.61% p.a. vs the Index's annualised return of +7.47%. The Fund's capacity to significantly outperform in falling markets is highlighted by its Sortino ratio of 1.57 vs the Index's 0.35 and down-capture ratio of -171.44%. The Fund's down-capture ratio indicates that, on average, the Fund has risen during the months the market has fallen. Bennelong noted elevated volatility and regular sharp mood swings continue to create an environment that is very difficult to navigate. They emphasise that they operate on the basis that fundamentals rule the long-term, while liquidity swings the short-term. Equal top pairs for the month were long TPG / short Telstra and the three-legged pair long JBH / short SUL and MYR. Performance was driven by a very strong share price performance by TPG on consummation of the merger with Vodafone. Bennelong retain a very positive outlook for the new TPG. Long JHX / short CSR was the portfolio's third best pair as JHX upgraded earnings during the month. The Fund had no material negative pairs.
More Information	View Fund's Profile View Manager's Report AFM Research Reports

Serial acquirers: A dangerous addiction or underappreciated compounders?

8 Jul 2020 - Will Dowd, CFA - Fairlight Asset Management

A widely accepted maxim in the value investing ideology is the notion that acquisitions destroy value. Indeed, few topics seem to enjoy such a cheery consensus amongst analysts, experts, and academics. Despite the evidence that...

Performance Report: Paragon Australian Long Short Fund

7 Jul 2020 - Australian Fund Monitors

The Paragon Australian Long Short Fund rose +5.9% in June, outperforming the ASX200 Accumulation Index by +3.29% and taking annualised performance since inception in March 2013 to +10.27% versus the Index's +6.43%.

7 Jul 2020 - Performance Report: Paragon Australian Long Short Fund

By: Australian Fund Monitors

Report Date	07 July 2020
Manager	Paragon Funds Management
Fund Name	Paragon Australian Long Short Fund
Strategy	Equity Long/Short
Latest Return Date	June 2020
Latest Return	5.90%
Latest 6 Months	7.48%
Latest 12 Months	15.60%
Latest 24 Months (pa)	0.36%
Annualised Since Inception	10.27%
Inception Date	28 February 2013
FUM (millions)	AU$32
Fund Overview	The Paragon Fund is a concentrated long/short Australian listed equities product that is fundamentally driven with a focus on the industrial and resource sectors. 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 +5.9% in June, outperforming the ASX200 Accumulation Index by +3.29% and taking annualised performance since inception in March 2013 to +10.27% versus the Index's +6.43%. The Fund's down-capture ratio for performance since inception of 68.74% indicates that, on average, the Fund has outperformed during the market's negative months. Paragon remain bullish on gold and continue to actively research the entire ASX gold sector. In their latest report, they highlight De Grey as a stock which they believe to be one of the most exciting gold 'discovery-delineation' stocks globally. Read the latest report for the full discussion. The Fund ended the month with 23 long positions and 4 short positions, with a net exposure of 138%. The Fund is currently invested in several stocks which Paragon expect to drive strong returns in the medium to long-term.
More Information	View Fund's Profile View Manager's Report

Healthcare - An Attractive Opportunity

7 Jul 2020 - Alphinity Investment Management

Demand growth for healthcare services is not tied to the economic cycle, which all else being equal, has historically made healthcare companies attractive investments, particularly during cyclical downturns. This downturn has been somewhat...

Corporate bond investors should be careful what they wish for

6 Jul 2020 - Ardea Investment Management

Is central bank support for corporate bond markets truly unlimited? Our sense is decidedly not. Corporate bonds are not a natural asset for central banks to own and investors need to be aware of the risk that central bank...

Hedge Clippings | 03 July 2020

3 Jul 2020 - Australian Fund Monitors

June 30th saw the end of the 2020 financial year, and for the last six months of it, extraordinary market volatility: Firstly, one of the 10 sharpest quarterly declines in history, followed by one of the 10 sharpest rallies. We'd suggest...

3 Jul 2020 - Hedge Clippings | 03 July 2020

By: Australian Fund Monitors

Hedge Clippings | Friday, 03 July 2020

June 30th saw the end of the 2020 financial year, and for the last six months of it, extraordinary market volatility: Firstly, one of the 10 sharpest quarterly declines in history, followed by one of the 10 sharpest rallies. We'd suggest that's a "V" shaped recovery if ever we saw one. But that's the market. From where we sit, the economy is going to be a very different beast.

Tech rules! Actually money does, but where there's tech, it seems there's wealth. Tesla is now the most valuable automaker in the world, and today's paper says Afterpay is knocking on the door of the ASX Top 20.

Meanwhile medically, the pandemic - particularly in the USA, South America and other major population centres of the world - shows no real sign of abating, seemingly because people either can't, or won't, socially distance. And why would they when (unlike in Australia) their political masters seem to be actively encouraging themselves not to do so?

We even heard (surely this is folklore?) that in Alabama people are holding COVID parties with an entry fee, which is collected as a "pot" which is then "won" by the first person to test positive.

Insanity prevails!

Elsewhere the Chinese government has made its long-awaited move on Hong Kong, possibly hoping to do so under the cover of COVID. In turn, Australia (and other democracies) seem to have finally woken up to the concerns of the average Australian. Having been seduced by seemingly easy Chinese wealth for the past 15 or 20 years, we're seeing the inevitable drawback of that complacency.

Having seen Chinese agents of influence at work here and abroad, Australia is being firmly told not to even consider meddling in Chinese affairs by offering assistance or asylum to anyone wanting to leave, or flee, Hong Kong. The Chinese "absorption" of Hong Kong is complete. Next will be the democratic Republic of China, namely Taiwan.

How will Australia and the democratic world respond when (not if) that's next on the list?

Australia is eventually going to have to face the alternative of trade and wealth, or freedom. Maybe we've always been secretly aware of the threat, but lacked the vision, ability, resolution or inclination to take appropriate action. Just like the boiling frog.

News & Insights

Will COVID-19 Cripple the 4 Banks? by Marcel von Pfyffer, Arminius Capital

Surviving the Dividend Drought by Malcolm Whitten, Nikko Asset Management

Is There Something Systematically Wrong with Victoria's COVID-19 Performance? by Christopher Joye, Coolabah Capital Investments

Performance News

Insync Global Quality Equity Fund: +7.39% in May, +13.91% p.a. since inception in October 2009

Touchstone Index Unaware Fund: +4.93% in May, +6.09% p.a. since inception in April 2016

Delft Global High Conviction Strategy: +14.78% p.a. since inception in August 2011

Quay Global Real Estate Fund: +5.78% p.a. since inception in July 2014

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Is There Something Systematically Wrong with Victoria's COVID-19 Performance?

3 Jul 2020 - Christopher Joye, Coolabah Capital Investments

Our data scientists' analysis of Victoria's COVID-19 infection trajectory has unearthed a disturbing finding: it would appear that since April our southern neighbour has systematically underperformed the rest of Australia's key...

Surviving the Dividend Drought

2 Jul 2020 - Malcolm Whitten, Portfolio Manager & Senior Analyst, Equities, Nikko Asset Management

The nature of the post COVID-19 business operating environment is unclear. Consumer willingness to go out and employee caution and practicalities of a return to the office will weigh on consumption. Businesses have deferred...

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9 Jul 2020 - Performance Report: Surrey Australian Equities Fund

9 Jul 2020 - Infrastructure Spending Emerging as the Focus

8 Jul 2020 - Performance Report: Bennelong Long Short Equity Fund

8 Jul 2020 - Serial acquirers: A dangerous addiction or underappreciated compounders?

7 Jul 2020 - Performance Report: Paragon Australian Long Short Fund

7 Jul 2020 - Healthcare - An Attractive Opportunity

6 Jul 2020 - Corporate bond investors should be careful what they wish for

3 Jul 2020 - Hedge Clippings | 03 July 2020

3 Jul 2020 - Is There Something Systematically Wrong with Victoria's COVID-19 Performance?

2 Jul 2020 - Surviving the Dividend Drought

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