NEWS
27 Nov 2018 - Performance Report: Bennelong Australian Equities Fund
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| Fund Overview | The Bennelong Australian Equities Fund seeks quality investment opportunities which are under-appreciated and have the potential to deliver positive earnings. The investment process combines bottom-up fundamental analysis with proprietary investment tools that are used to build and maintain high quality portfolios that are risk aware. The investment team manages an extensive company/industry contact program which helps identify and verify various investment opportunities. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to the ASX-listed securities. The Fund typically holds between 25-60 stocks with a maximum net targeted position of an individual stock of 6%. |
| Manager Comments | As at the end of October, the Fund's weightings had been increased in the Communication, Industrials, Materials, REIT's and Financials sectors, and decreased in the Discretionary and Consumer Staples sectors whilst the Fund's Health Care sector weighting remained unchanged at 20.7% of the portfolio. The Fund's cash weighting increased to 0.9% from 0.7% at the end of September. The Fund aims to invest in high quality companies with strong growth outlooks and underestimated earnings momentum. By comparison with the ASX300 Accumulation Index, the Fund's holdings, on average, have a higher Return on Equity and lower Debt/Equity (Premium Quality), higher sales growth and higher EPS growth (Superior Growth), and higher Price/Earnings and lower dividend yield (Reasonable Valuation). This indicates that the Fund's portfolio is in line with Bennelong's objective. |
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27 Nov 2018 - Performance Report: Spectrum Strategic Income Fund
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| Manager Comments | Spectrum noted that for many in the market there were few places to hide in October. Not only did equities retreat but so too bond prices at times. In the U.S., bond indices recorded the third steepest decline since 1970 (BoA), which mean that bonds did not provide a sufficient flight to safety from declining equity prices. They believe the decline in bond indices is partly due to increasing issuance of government bonds by central banks; as their weights have increased in the index, so too has duration. They noted that in a rising yield environment this will lead to falls in those bond indices. The Fund holds a diversified portfolio of debt and income securities with a view to minimising any loss of income and capital of the Fund. Issuers may be government bodies, banks, corporations and, to a limited extent, specialist financing vehicles. To maintain a diversified portfolio structure, certain limits are imposed on security type, credit risk, industry and issuers. |
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26 Nov 2018 - 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 | In October the Fund returned -6.2%, falling roughly in line with the market. Broadly, the impact of the market correction was felt across the Fund. Key detractors included Afterpay (-30%) and Readcloud (-30%). There were approximately 20 other positions which all fell by various amounts and, in total, contributed around 5% of the Fund's underperformance. The major positive was Freelancer (+37%). In addition, Cyan added Murray River Organics (MRG) to the portfolio in October. Cyan noted the Fund has remained diversified with 24 positions and no individual holding representing more than 5% of the total portfolio. The Fund has also retained more than 35% in cash but they have begun to deploy further capital into new and existing positions as prices become more attractive. Cyan continue to have compelling expectations for the companies in which they have invested and believe these businesses will grow materially over the next year. |
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26 Nov 2018 - Performance Report: Bennelong Twenty20 Australian Equities Fund
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| Fund Overview | The Fund is managed as one portfolio but comprises and combines two separately managed exposures: 1. An investment in the top 20 stocks of the markets, which the Fund achieves by taking an indexed position in the S&P/ASX 20 Index; and 2. An investment in the stocks beyond the S&P/ASX 20 Index. This exposure is managed on an active basis using a fundamental core approach. The Fund may also invest in securities expected to be listed on the ASX, securities listed or expected to be listed on other exchanges where such securities relate to ASX-listed securities.Derivative instruments may be used to replicate underlying positions and hedge market and company specific risks. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Accumulation Index. The Fund typically holds between 40-55 stocks and thus is considered to be highly concentrated. This means that investors should expect to see high short-term volatility. The Fund seeks to achieve growth over the long-term, therefore the minimum suggested investment timeframe is 5 years. |
| Manager Comments | As at the end of October, the Fund's weightings had been increased in the Health Care, Industrials, REIT's, Financials and Materials sectors, and decreased in the Discretionary, Consumer Staples, Communication and Energy sectors. The Fund's cash weighting remained unchanged at 2.3%. The Fund fell in line with the market in October, returning -6.81% after fees. The Twenty20 Australian Equities Fund comprises a passive investment in the ASX20, which has a weighting of over 50% of the portfolio, and an active investment in ASX ex-20 companies. Therefore, the Fund's returns will largely be influenced by the activity of the ASX's top 20 stocks. However, the active investment in ASX ex-20 has the goal of allowing the Fund to outperform the broader market, which the statistics mentioned earlier show has been successful; superior Sharpe and Sortino, and up-capture and down-capture ratios highlighting outperformance in both rising and falling markets over the long-term. |
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23 Nov 2018 - Hedge Clippings - 23 November, 2018
Just because a problem is obvious it doesn't mean it's going to be solved.
Hedge Clippings would love to claim the above adage as our own and would also be more than happy to credit the author if only we could recall in which of the thousands of emails we receive each week we found it. In any event it struck a chord based on the chorus of negative possibilities and opinions that are currently doing the rounds.
It is worth noting that based on what we are seeing, reading and hearing we are more in the glass "half empty" than "half full" camp, and in one conversation with a "half full" (metaphorically speaking) investor over the past week we pondered which, if any, of the following scenarios might be more positive in 6 or 12 months' time than they are now.
Australian Property/Equities:
Problem: Negative influences coming from oversupply (units) and reduced demand (particularly from Chinese buyers), potential reductions in immigration, tightening credit from banks following the Hayne Royal Commission, low wages growth, higher mortgage costs as fixed deals turn to variable, higher US interest rates impacting bank's cost of funds, and reduction in negative gearing if there's a (likely) change in government next year.
Solution/Outlook: Glass half full, and a reminder not to listen to property experts who as recently as April this year couldn't, or wouldn't, see the writing on the wall.
Australian Economy:
Problem: The Australian economy is the envy of the world - growth forecast around 3%, low interest rates, low unemployment, but also a hostage to global, and particularly China's, fortunes. See above - if the property market weakens further it will impact significantly on consumer sentiment, spending, and thus unemployment. Any slowdown and the RBA has nowhere to move.
Solution/Outlook: Glass half full. And then there's the federal election.
US Economy/Equities:
Problem: Rising interest rates, stretched valuations, The Donald, and after the recent mid-term elections no longer fully in control, potential expiry of tax and infrastructure short term "sugar pill", trade policy, Chinese tariff war.
Solution/Outlook: Glass half full. Anyone able to predict "double down" Donald please let us know.
US/China Tariff War:
Problem: As above - who's going to blink first, Donald or Xi? There's a good chance that if it gets worse before it's resolved, Donald might have scored an own goal.
Solution/Outlook: Could go either way. If solved expect a bounce, but could get worse before it gets better.
Chinese Economy:
Problem: As above - the tariff war is likely to hurt China more than the US, it's slowing, although still a significant force. There's more than just the tariff issue at play, including mountains of debt.
Solution/Outlook: The government is doing everything it can - and they can do more than most to solve problems as they don't have to face elections - but they can't control everything.
Brexit/Europe:
Problem: The UK's previously dominant position as a (the) global financial centre is irreversibly damaged, and with it a significant section of the economy is relocating to the EU.
Solution/Outlook: Whatever the outcome, no one's going to be happy! Definitely half full, and a reminder that David Cameron must have had a brain snap when he announced the Brexit referendum!
In Summary:
In case you're wondering if we're alone in these thoughts, last night we listened to Dr John Hewson give his economic outlook at EY's Annual Hedge Fund Symposium. Being a self-confessed economist, he was able to quote reams of facts and figures which yours truly couldn't memorise at the time, or if he could, couldn't a couple of glasses of chardonnay later. However, it's fair to say he was definitely in the glass half empty camp.
For what it's worth, while happy to identify the problems, the good Doctor wasn't forthcoming on how to solve any of them either. How times have changed since he left politics!
23 Nov 2018 - Fund Review: Insync Global Capital Aware Fund October 2018
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 - October 2018 (pdf format)
22 Nov 2018 - Bennelong Twenty20 Australian Equities Fund October 2018
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 - October 2018 (pdf format)
21 Nov 2018 - Spectrum Insights - Never a better time to boost bank capital
21 Nov 2018 - Fund Review: Bennelong Kardinia Absolute Return Fund October 2018
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 with over ten-year track record.
- 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 9.57% p.a. with a volatility of 7.11%, compared to the ASX200 Accumulation's return of 5.37% p.a. with a volatility of 13.38%.
- The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Mark Burgess and Kristiaan Rehder 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 - October 2018 (pdf format)
