Performance Report: Bennelong Long Short Equity Fund

12 Dec 2019 - Australian Fund Monitors

The Bennelong Long Short Equity Fund rose +2.84% in November, taking annualised performance since inception in February 2002 to +15.47% p.a. with an annualised volatility of 12.39%.

12 Dec 2019 - Performance Report: Bennelong Long Short Equity Fund

By: Australian Fund Monitors

Report Date	12 December 2019
Manager	Bennelong Long Short Equity Management, a Bennelong boutique
Fund Name	Bennelong Long Short Equity Fund
Strategy	Equity Market Neutral
Latest Return Date	November 2019
Latest Return	2.84%
Latest 6 Months	20.96%
Latest 12 Months	14.87%
Latest 24 Months (pa)	8.95%
Annualised Since Inception	15.47%
Inception Date	01 January 2003
FUM (millions)	AU$387.6
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 +2.84% in November, taking annualised performance since inception in February 2002 to +15.47% p.a. with an annualised volatility of 12.39%. By contrast, the ASX200 Accumulation Index has returned +8.52% p.a. with a similar level of volatility over the same period. The Fund's Sortino ratio of 1.53 vs the index's 0.50 and down-capture ratio of -179.73% highlight the Fund's capacity to avoid the market's downside over the long-term. In November, the number of positive and negative pairs was equal, however none of the negative pairs made a significant return. The dominant sector contribution was Industrials, with Healthcare a distant second. The Fund's top pair was ALS (ALQ) / Aurison (AZJ). ALS reported their September half results with the highest improved and above forecast margins in the Life Sciences division. The second best pair was Qantas (QAN) / Flight Centre (FLT), with Qantas disclosing bullish long-term financial targets in their investor day presentation. Third best was Macquarie (MQG) / Bendigo Bank (BEN) with Macquarie's September half result slightly ahead of estimates.
More Information	Fund Profile Manager's Report AFM Research Reports

Caltex Cruising on a Full Tank

12 Dec 2019 - Luke Cummings - Harvest Lane Asset Management

A brief look at Alimentation Couche-Tarde's non-binding, conditional takeover offer for Caltex Australia.

Three small caps to keep an eye on

11 Dec 2019 - Roger Montgomery, Montgomery Investment Management

There is no doubt that Australia's small companies market has the ability to generate significant wealth. This is because stockbrokers don't earn enough revenue from brokerage on small companies and therefore don't research them, leaving...

Performance Report: Paragon Australian Long Short Fund

11 Dec 2019 - Australian Fund Monitors

The Paragon Australian Long Short Fund has risen +17.13% over the past 12 months as returned +9.98% p.a. since inception in March 2013.

11 Dec 2019 - Performance Report: Paragon Australian Long Short Fund

By: Australian Fund Monitors

Report Date	11 December 2019
Manager	Paragon Funds Management
Fund Name	Paragon Australian Long Short Fund
Strategy	Equity Long/Short
Latest Return Date	November 2019
Latest Return	0.20%
Latest 6 Months	8.20%
Latest 12 Months	17.13%
Latest 24 Months (pa)	-10.27%
Annualised Since Inception	9.98%
Inception Date	28 February 2013
FUM (millions)	AU$36.1
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 has risen +17.13% over the past 12 months as returned +9.98% p.a. since inception in March 2013. By contrast, the ASX200 Accumulation Index has returned +9.12% p.a. since the fund began. The Fund's down-capture ratio of 42.2% indicates that, on average, the Fund has significantly outperformed during the months the market has fallen since inception. The Fund returned +0.2% in November. Positive contributors included Adriatic, Alacer Gold, Xero and PoistBet. These were offset by declines in Agrimin, Atrum and Alkane. The Fund ended the month with 26 long positions and 6 short position. Paragon discuss their views on Adriatic Metals (ADT) in depth in their latest monthly report. Adriatic Metals is one of the Fund's key long positions. Paragon noted ADT released an outstanding scoping study for its high-grade polymetallic Vares project during the month. They believe that, despite the stock breaking all-time highs, there remains considerable upside.
More Information	Fund Profile Manager's Report

Japan, rugby and a city apart

11 Dec 2019 - Pete Morrissey - APN Property Group

Travelling to Japan is always something to savour. The people, culture, food and experiences are wonderful. And the opportunity to be there during the final stages of the rugby world cup was even better. My most recent trip...

Two Steps Forward, One Back in Japan

10 Dec 2019 - Delft Partners Global Investment Management

Kevin Smith takes a look at foreign participation in the Japanese equity market and likely impact of the proposal amendments to disclosure rules.

Performance Report: Gyrostat Absolute Return Income Equity Fund

10 Dec 2019 - Australian Fund Monitors

The Gyrostat Absolute Return Income Fund has risen +6.37% over the past 12 months and returned +4.35% p.a. with an annualised volatility if 3.76% since inception in December 2010.

10 Dec 2019 - Performance Report: Gyrostat Absolute Return Income Equity Fund

By: Australian Fund Monitors

Report Date	10 December 2019
Manager	Gyrostat Capital Management
Fund Name	Gyrostat Absolute Return Income Equity Fund
Strategy	Equity Income
Latest Return Date	November 2019
Latest Return	-0.76%
Latest 6 Months	1.08%
Latest 12 Months	6.37%
Latest 24 Months (pa)	5.06%
Annualised Since Inception	4.35%
Inception Date	10 December 2010
FUM (millions)	AU$12
Fund Overview	Gyrostat's absolute return income equity fund is designed to combine protection, returns and regular income through all stages of the investment cycle (including large market falls). The investment 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. Gyrostat has for 34 consecutive quarters operated within a 'hard' defined risk parameter (no more than 3% capital at risk with our maximum draw-down 2.2% in any circumstances) always in place, delivered regular income at a minimum BBSW90 + 3% by passing through ASX-20 dividends, and met returns guidance based upon market conditions (demonstrating increasing returns with market volatility). The fund buys and holds ASX-20 shares with lowest cost protection always in place with upside. It is an 'alternative - defensive' conservative asset allocation. 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, BBSW90 + 3% in stable markets - Income: Minimum cash rate + 3% paid semi-annually (currently 4.2% 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 Gyrostat Absolute Return Income Fund has risen +6.37% over the past 12 months and returned +4.35% p.a. with an annualised volatility if 3.76% since inception in December 2010. Gyrostat noted market volatility was low with returns as per guidance in November. The Fund ended the month down -0.76%. The Fund is a solution for falling interest rates. It has a 'conservative' asset allocation and has for 35 consecutive quarters since inception operated with a 'hard' defined risk parameter (no quarterly NAV drawdowns exceeding 3%), delivered regular equity income (by passing through ASX20 dividends), and has provided superior returns during periods of heightened market volatility due to the Fund's tail hedge on large gains for large market falls. Gyrostat noted they anticipate increasing levels of 'late cycle' market volatility with geopolitical tensions elevated, historically high debt levels and elevated valuations.
More Information	Fund Profile Manager's Report

Brexit From a European Viewpoint

10 Dec 2019 - Marcel von Pfyffer, Arminius Capital

In the wake of the GFC, and again after the June 2016 Brexit referendum, many fund managers left the City of London for European shores, in search of lower tax rates and less regulation, not to mention the fear that Brexit would cut them...

Performance Report: Surrey Australian Equities Fund

9 Dec 2019 - Australian Fund Monitors

The Surrey Australian Equities Fund returned +3.1% in November, taking 12-month performance to +17.99% and annualised performance since inception in June 2018 to +6.23%.

9 Dec 2019 - Performance Report: Surrey Australian Equities Fund

By: Australian Fund Monitors

Report Date	09 December 2019
Manager	Surrey Asset Management Pty Ltd
Fund Name	Surrey Australian Equities Fund
Strategy	Equity Long
Latest Return Date	November 2019
Latest Return	3.10%
Latest 6 Months	8.66%
Latest 12 Months	17.99%
Latest 24 Months (pa)
Annualised Since Inception	6.23%
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 +3.1% in November, taking 12-month performance to +17.99% and annualised performance since inception in June 2018 to +6.23%. They Fund ended the month with 31 individual stocks owned, down from 37 as at the end of October. The Fund's month-end cash balance remained at 6%. The Fund's November performance was driven by a range of different companies, highlighting the Fund's diversity. Surrey have been lifting their position in Catapult (CAT) on the back of a strengthened management team, strong product offering, growing cashflows and valuation. Similarly, the Fund's weightings in Xero (XRO) and Pointsbet (PBH) have been increasing and have been of benefit. Negative contributors included Smart Group (SIQ) and Sezzle (SZL). Surrey remain confident in the long-term prospects of both companies. Surrey noted they remain positive on the outlook for local and global equity markets. They encourage investors to continue watching the US 10-year bond yield which they believe is providing a very positive relative valuation benchmark for stocks
More Information	Fund Profile Manager's Report

Hedge Clippings | 06 December 2019

6 Dec 2019 - Australian Fund Monitors

Hedge Clippings' tends to alternate our weekly commentary between either what's happened in the past (e.g. poor behaviour from the banking sector) or trying to take a forward view on what might be on the horizon, or sometimes a combination...

6 Dec 2019 - Hedge Clippings | 06 December 2019

By: Australian Fund Monitors

Hedge Clippings | Friday 06 December, 2019

Hedge Clippings' tends to alternate our weekly commentary between either what's happened in the past (e.g. poor behaviour from the banking sector) or trying to take a forward view on what might be on the horizon, or sometimes a combination of the two.

This week there's the less than surprising antics of Donald in Europe, in Watford of all places, as anyone who has ever been there would attest to, plus the less than surprising news that Australia's economy is holding its head above water, but only just.

As far as the economy goes it seems the average consumer is, either by design or necessity as a result of pressures on the household budget, keeping their hands firmly in their pocket rather than spending the savings from interest rate cuts, or the tax cut delivered a couple of months ago.

New car sales, usually a reliable barometer of consumer spending and confidence have been steadily falling for the past 12 months, and are down almost 10%, and while the Toyota Hi-Lux ute remains the top-selling vehicle, its sales have fallen by 21% over the same period, presumably indicating the pressure the building industry and the bush is under.

And talking of pressure, Australia has taken out a less than commendable silver medal by having the second-highest level of taxes on income and profits (58.8%), second only to Denmark at 63.3% and waa-aay ahead of the OECD average of 34%, or the UK at 35%. Thank goodness Scomo is taking to the public service, although to what extent that will really change things remains to be seen.

It could be worse - had Wee Willie Shorten been elected last time around we'd be heading for the top spot for sure. All jesting (and bias) aside, unless we're competitive, we can't compete (yes, I know that sounds obvious), and we need to be able to do so.

So, looking ahead and we have the UK's election next Thursday, as well as the Democrats' attempt to unseat (or should that be unsettle?) Donald Trump via an impeachment process - a process which we have to admit we don't fully understand. Something to do with politicians not being (or seen to be) dishonest.

Now there's a novel idea!

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12 Dec 2019 - Performance Report: Bennelong Long Short Equity Fund

12 Dec 2019 - Caltex Cruising on a Full Tank

11 Dec 2019 - Three small caps to keep an eye on

11 Dec 2019 - Performance Report: Paragon Australian Long Short Fund

11 Dec 2019 - Japan, rugby and a city apart

10 Dec 2019 - Two Steps Forward, One Back in Japan

10 Dec 2019 - Performance Report: Gyrostat Absolute Return Income Equity Fund

10 Dec 2019 - Brexit From a European Viewpoint

9 Dec 2019 - Performance Report: Surrey Australian Equities Fund

6 Dec 2019 - Hedge Clippings | 06 December 2019

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