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23 Oct 2020 - Hedge Clippings | 23 October 2020
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23 Oct 2020 - Fund Review: Bennelong Twenty20 Australian Equities Fund September 2020
BENNELONG TWENTY20 AUSTRALIAN EQUITIES FUND
Attached is our most recently updated Fund Review on the Bennelong Twenty20 Australian Equities Fund.
- The Bennelong Twenty20 Australian Equities Fund invests in ASX listed stocks, combining an indexed position in the Top 20 stocks with an actively managed portfolio of stocks outside the Top 20. Construction of the ex-top 20 portfolio is fundamental, bottom-up, core investment style, biased to quality stocks, with a structured risk management approach.
- Mark East, the Fund's Chief Investment Officer, and Keith Kwang, Director of Quantitative Research have over 50 years combined market experience. Bennelong Funds Management (BFM) provides the investment manager, Bennelong Australian Equity Partners (BAEP) with infrastructure, operational, compliance and distribution services.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - September 2020 (pdf format)
23 Oct 2020 - 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 | As at the end of September, the portfolio's top holdings included Domino's Pizza, Dollar General, PayPal, S&P Global, Visa, Facebook, Adobe, JD Sports Fashion, Microsoft and Nvidia. The top three megatrends in the portfolio by weight were the 'Cashless Society' megatrend (14% of the portfolio), the 'Age related health solutions' megatrend (13%) and the 'Digitisation' megatrend (12%). By sector, the portfolio was most heavily weighted towards the IT and Consumer Discretionary sectors. |
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23 Oct 2020 - Performance Report: DS Capital Growth Fund
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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 September quarter featured reporting season. The results of businesses in the portfolio were mostly in line with DS Capital's expectations. They noted that outlook commentary, which is usually a focus, was understandably absent. The acceleration in adoption of new technology solutions due to the pandemic has fast tracked several sectors such as online retailers and cloud software businesses and, subsequently, this has had a favourable impact on several of the Fund's technology investments. Notable positive contributors over the quarter included Kogan, Sydney Airport and Breville, while A2 Milk detracted from performance. DS Capital expect COVID-19 will continue to be the dominant influence on stock markets for the foreseeable future. While they are not optimistic of a vaccine in the short-term, they believe that, in the event of a vaccine, the combination of significant stimulus, pent up demand and relief would lead to a rapid and strong recovery in economic conditions. |
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22 Oct 2020 - Fund Review: Bennelong Kardinia Absolute Return Fund September 2020
BENNELONG KARDINIA ABSOLUTE RETURN FUND
Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile.
- The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies.
- The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in May 2006 and also has significantly lower risk KPIs. The Fund has an annualised return of 8.31% p.a. with a volatility of 7.46%, compared to the ASX200 Accumulation's return of 5.16% p.a. with a volatility of 14.37%.
- The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Kristiaan Rehder and Stuart Larke have significant market experience, while Bennelong Funds Management provide infrastructure, operational, compliance and distribution capabilities.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - September 2020 (pdf format)
22 Oct 2020 - Performance Report: Glenmore Australian Equities Fund
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| Fund Overview | The main driver of identifying potential investments will be bottom up company analysis, however macro-economic conditions will be considered as part of the investment thesis for each stock. |
| Manager Comments | Top contributors in September included Coronado Global Resources, Opticomm, Temple & Webster, People Infrastructure and ARB Corporation. The most notable detractor was Mineral Resources. Glenmore noted that following five consecutive positive months on the ASX, some form of retraction was not surprising. They continue to be positive on the portfolio's holdings despite the clear health crisis posed by COVID-19 and hold the view that most governments are realising living with the virus is the most logical way forward. They also believe fiscal and monetary policy remains supportive to stocks and is likely to remain accommodative for the foreseeable future. |
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21 Oct 2020 - Fund Review: Insync Global Capital Aware Fund September 2020
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 - September 2020 (pdf format)
21 Oct 2020 - Performance Report: Bennelong Emerging Companies Fund
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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 | True to the Fund's investment style, Bennelong continue to seek to invest in high quality companies that they believe have solid growth prospects over the foreseeable future. Despite the market's inevitable short-term volatility, Bennelong believe the portfolio's investments are all incrementally building value which they expect will ultimately underpin strong returns over the long-term. The portfolio remains reasonably diversified across sector and risk-return drivers. |
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20 Oct 2020 - 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 returned -5.19% in September. More than half of the Fund's holdings encountered some price pressure during the month which Cyan believe was due to the weak market sentiment and investor profit taking rather than negative company-specific news. Key positive contributors included Kip McGrath Education and Jaxsta, while Quickfee, Swift Networks and City Chic were the main detractors. Cyan noted the divergence of financial performance from month-to-month and across differing companies and industry sectors remains significant. They've seen an enormous flow of capital raisings from companies impacted both positively and negatively by COVID-19 and a regular stream of new IPOs coming to market. Given that Cyan operates so actively in this environment, they're optimistic about the near-term opportunities for the Fund. |
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19 Oct 2020 - Performance Report: Bennelong Kardinia Absolute Return Fund
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| Fund Overview | The Fund's discretionary investment strategy commences with a macro view of the economy and direction to establish the portfolio's desired market exposure. Following this detailed sector and company research is gathered from knowledge of the individual stocks in the Fund's universe, with widespread use of broker research. Company visits, presentations and discussions with management at CEO and CFO level are used wherever possible to assess management quality across a range of criteria. Detailed analysis of company valuations using financial statements and forecasts, particularly focusing on free cash flow, is conducted. Technical analysis is used to validate the Manager's fundamental research and valuations and to manage market timing. A significant portion of the Fund's overall performance can be attributed to the attention and importance given to the macro economic outlook and the ability and willingness to adjust the Fund's market risk. |
| Manager Comments | In September, the Fund returned -5.88%. Key contributors included Boral (+37 basis point contribution), Exore Resources (+20bp), Arden Leisure (+18bp), Aristocrat Leisure (+17bp) and West African Resources (+15bp). Detractors included Zip Co (-112bp), Aumina (-31bp), Harvest Technology (-28bp), Commonwealth Bank (-28bp) and Fortescue Metals (-25bp). While some of the Fund's recent strong performers were weaker during September, particularly in the Financials and Consumer Discretionary sectors, Bennelong continue to expect good returns from these stocks over the medium term. Kardinia reduced the Fund's net market exposure from 74.5% to 37.8% (74.9% long and 37.1% short), with the key changes being an increase in the Fund's short position in Share Price Index Futures. They continue to build the Fund's exposure to stocks that benefit from a re-opening scenario. Kardinia believe good progress is being made on potential vaccines and treatments. They expect Governments will increasingly move towards a 'living with the virus' approach as the economic damage from lockdowns becomes apparent. |
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