NEWS
Morphic Global Opportunities Fund
14 May 2013 - Australian Fund Monitors
The Morphic Global Opportunities Fund had sound April 2013 returning 2.80% and its six month return to 12.99%.
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14 May 2013 - Morphic Global Opportunities Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund’s top stock contributors this month came mostly from Japan, led by long term holdings in HR services outsourcing company Relo and lease financer Century Tokyo. Also helping in Japan were Karaoke equipment maker Daiichikosho and two baskets, comprising three Japanese drug stores and two Japanese tyre producers. A recent Japanese purchase, low cost home builder Arnest One also achieved high returns, although this was partly offset by a short position in two other home builders established to hedge the exposure. Other positive contributions came from Korean cable shopping network GS Home Shopping, Turkish steel producer Kardemir, a collection of US financials, and a long-short Macau gaming stock position. Most of the underperformance in the Fund was due to long positions in two individual stocks, a basket of commodity related investments and partial reversals in previous gains on a handful of unpaired short positions. Shorting proved difficult in a month with such a strong underlying surge in global markets. The Manager closed out all its short equity positions other than the long-short pairs set up for hedging purposes mentioned above, but only after reporting losses that eroded somewhat previously profitable trades in a Hong Kong retailer and a pair of European power generators. From a macroeconomic perspective, the month saw a tug-of-war between deteriorating economic data battling investor optimism caused by expanded global money printing. Liquidity would appear to have the upper hand so far. The Manager expects this to persist and has slightly lifted Fund exposures to emerging market and commodities. However confidence remains fragile and vigilance is required for any sign this stance requires review. The Fund remains un-hedged into Australian dollars. |
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Monash Absolute Investment Fund
13 May 2013 - Australian Fund Monitors
The Monash Absolute Investment Fund returned 1.13% for April 2013 bringing its since inception return (July 2012) to 18.56%.
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13 May 2013 - Monash Absolute Investment Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund places a high priority on capital preservation, and have an absolute return focus in accepting market risk. The Manager employs a comprehensive approach to making investment decisions utilising value, growth and discounted cash flow styles. The portfolio is somewhat concentrated and the manager looks to diversify the portfolio across industries and themes rather than staying near an index. The portfolio may at times have a large amount of cash or other protection. |
| Manager Comments | The manager has commented on the following investments; G8 Education (GEM) continued to climb. This month it was up another +16.3%. GEM owns and operates 167 childcare centres in Australia and has interests in another 69 centres in Singapore. Exiting the Flight Centre / Wotif pairs trade (FLT/WTF). Despite a rising market for industrial cyclicals the Fund managed to make money from shorting Wotif, which dropped -2.7% while invested and also made money from owning Flight Centre which rose and made +4.6% over the same period. Southern Cross Electrical Engineering (SXE) was down -15.9%, getting caught in the fall with all mining services companies and resource companies generally. At the end of the month the portfolio had nine Outlook Driven stocks, seven Event Driven stocks and one Pairs Trades. Gross exposure was 69% and net exposure was 67%. |
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Aurora Fortitude Absolute Return Fund
10 May 2013 - Australian Fund Monitors
The Aurora Fortitude Absolute Return Fund had a sound April 2013 with a return of 1.68% bringing the twelve month return to 5.24%.
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10 May 2013 - Aurora Fortitude Absolute Return Fund
By: Australian Fund Monitors
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| Manager Comments | Investors searching for dividend income aggressively bought Finance, Telco and Consumer related companies which resulted in a 6.7% rally in the All Industrials Index. Ongoing concerns regarding slowing Chinese growth and the impact on commodity prices saw the All Resources Index fall 3.7%. The net result was a 4.5% return for the S&P/ASX 200 Accumulation Index. The most significant contribution (0.77%) came from the recovery in the Australian Infrastructure Fund. The fund released an update on the completion of asset sales and the timing of capital returns to unit holders. A standout among larger resources companies was the 8.3% total return from Woodside Petroleum. This was largely in response to the announcement of a special dividend and increased dividend payout ratio which was music to the ears of yield hunters. There continues to be some supply of short dated hybrid instruments as investors continue to switch into new issues and ordinary shares. The manager continues to seek alpha in this area with the knowledge that returns will accelerate as maturity approaches. |
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Bennelong Long Short Equity Fund
9 May 2013 - Australian Fund Monitors
The Bennelong Long Short Equity Fund had a flat month in April 2013 recording a return of 0.01%.
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9 May 2013 - Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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| Manager Comments | Global equity markets had a strong month in April, fuelled mainly by the Bank of Japan’s announcement of a massive expansion of money supply in an effort to stimulate inflation. The S&P/ASX 200 got caught up in the excitement and ended up 4.5%. The focus of the local market rally was primarily dividend yield which drove Telcos up 10%, Financials up 9%, REITs up 8% and Staples up 7% whilst Resources were sold off heavily. Gains in Health Care and Consumer Staples were equally offset by losses in Consumer Discretionary and Utilities. The Fund's long portfolio was up over 6% for the month but the short portfolio losses neutralised the net position. This was a disappointing outcome as the fund continues to be impacted by exogenous factors rather than fundamental factors. The manager is conscious that some investors have disregarded the equity risk premium concept resulting in valuation premiums in some stocks being unjustified in the manager's opinion. Further the manager regards the current market conditions as challenging for fundamental investors but expects that the Fund have by now withstood the majority of thematic headwinds and expect an element of reversion to be forthcoming, enabling the Fund to regain lost ground. Locally, the economy is marked by weak business and consumer confidence which is reflected in some recent downgrades and softer outlook commentaries. Equity markets are looking through FY 2013 earnings and the market is starting to see some earnings softness occurring in the FY 2014 outlook. |
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Platinum Japan Fund - AUD
8 May 2013 - Australian Fund Monitors
The Platinum Japan Fund had an exceptional April 2013 with a performance of 13.75%, 4.55% ahead of its benchmark.
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8 May 2013 - Platinum Japan Fund - AUD
By: Australian Fund Monitors
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| Manager Comments | The Fund holdings were 85.6% Japan, 3.4% Korea (net) and 11.0% cash with 50.4% of the Fund hedged back into $US. By sector the largest holdings were in Industrials 23.7%, Consumer Discretionary 21.6% and Financials 11.5%. Lowest sector holding was in consumer staples at 2.4%. The three largest holdings were Toyota, SBI Holdings (Telecomms) and Mitsubishi UFJ. |
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Fund Review: Bennelong Kardinia Absolute Return Fund
7 May 2013 - Australian Fund Monitors
AFM's updated Fund Review for BKARF, showing KPI's for April 2013 vs ASX200, Performance (net of fees) and Cumulative Performance since inception.
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7 May 2013 - Fund Review: Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
Fund Review: Bennelong Kardinia Absolute Return Fund (pdf format)
BENNELONG KARDINIA ABSOLUTE RETURN FUND
Attached is our most recently updated Fund Review on the Bennelong Kardinia Absolute Return Fund.
We would like to highlight the following aspects of the Fund:
- Kardinia is a boutique Australian based Fund Manager established in August 2011 in conjunction with the Bennelong Group to continue the management of the Herschel Absolute Return Fund.
- Long biased, research driven, active equity long/short strategy investing in listed ASX companies with a six year track record and an annualised return of 14% net of fees.
- Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while the Bennelong Group provide infrastructure, operational, compliance and distribution capabilities.
- Consistent top decile long short equity sector performance. Key Performance and Risk Statistics indicate an attractive risk/reward profile, and a strong focus on capital protection in negative markets.
Research and Database Manager
Australian Fund Monitors
Fund Review: Bennelong Kardinia Absolute Return Fund (pdf format)
Bennelong Kardinia Absolute Return Fund
7 May 2013 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund recorded 1.34% for April 2013 bringing its consecutive positive months to 11.
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7 May 2013 - Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund consists of a concentrated long/short portfolio typically comprising 30 to 40 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. There is a slight bias to large cap stocks in the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. The Fund was launched on 17th August 2011 following the resignation of Portfolio Managers Mark Burgess and Kristiaan Rehder from Herschel Asset Management in late July 2011. While at Herschel Burgess and Rehder had managed the Fund under the name of the Herschel Absolute Return Fund. As a result management of the Fund was transferred to Kardinia Capital, a new boutique fund manager 65% owned by Burgess and Rehder, with the balance owned by Bennelong Funds Management. The Fund's investment strategy and prior track record remains intact. |
| Manager Comments | Global equity markets continued to rally in April despite weakness in economic data from China and the US. A reasonable start to the first quarter earnings season in the US helped drive the S&P500 Index to a new record high. The Australian equity market outperformed as investors chased yield with the All Ordinaries Accumulation Index rising 3.8%. National Australia Bank, ANZ, Telstra and Commonwealth Bank were all large positive contributors to performance, whilst Share Price Index futures contracts (hedging long exposures), Sirius Resources, Rio Tinto and MACA were the largest detractors. The Fund’s net equity market exposure (including derivatives) was kept fairly stable around 35.2% (58.8% long and 23.6% short). |
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CSAG Long Only Program
6 May 2013 - Australian Fund Monitors
The Commodity Strategies Long Only Fund delivered - 0.16% for the month and - 4.39% for the year to end March 2013.
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6 May 2013 - CSAG Long Only Program
By: Australian Fund Monitors
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| Manager Comments | The Fund's 8.1% pa compares well with the Fund's benchmark (Dow Jones-UBS Commodity Index Total Return) return of 4.01% pa over the same time. The Fund's Sharpe and Sortino ratio are also in excess of the benchmark while its annualised volatility is also notable at 13.32% as against 17.38%. |
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K2 Australian Absolute Return Fund
3 May 2013 - Australian Fund Monitors
The K2 Australian Absolute Return Fund had a strong April delivering 4.54% while the All Ordinaries Accum returned 3.82%.
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3 May 2013 - K2 Australian Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | - The Fund is managed 'opportunistically'. Investments are made throughout Australia and New Zealand across sectors that the investment team believes will add greatest value. - Typically the Fund will hold between 50 and 70 listed equities. - If deemed appropriate, the Fund may be 100% invested in cash. - To implement the Fund's Long/Short investment strategy, K2 is able to use leverage or gear the Fund. However, the net invested position of the Fund shall not exceed the Net Asset Value (NAV) of the Fund. |
| Manager Comments | The manager's view is that the low point in the Australian earning cycle has now been past. Even during April analysts reduced forward estimates for just 6% of Australian top 100 companies; the lowest level in 20 years. This is an encouraging trend and the manager expects that this will continue throughout the year and that cost out programs will be the dominant earnings driver for at least the next 6 months. The manager was surprised that 40% of Australia’s leading stocks fell on average by 6% during April. Accordingly, excess performance was all about what you didn’t own. Given that the manager had anticipated declining inflation and subsequently lower interest rates, they had tilted the portfolio towards industrial stocks that exhibit appreciating dividend streams. The manager was particularly pleased when the Fund's largest holding, ANZ Bank, announced in its 1H’13 profit release that it would be lifting its dividend pay-out ratio from 60% to about 70%. As a result, ANZ’s interim dividend per share for 2013 was 10.6% ahead of last year. As always, “sell in May and go away” echoes through financial markets. However, the Fund's equity exposure will only change near term if some of the important lead indicators that are due to be released within the next 2 weeks turn unfavourable. Specifically, prior to the RBA interest rate decision on 7th of May, the manager expects ANZ job advertisements to remain weak, retail sales to remain below trend and trade data to be relatively weak. Hence the RBA could justify cutting the official cash rate by 25 bpts. |
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Pengana Australian Equities Fund
2 May 2013 - Australian Fund Monitors
The Pengana Australian Equities Fund had a flat March with a return of 0.0% but a strong 12 months delivering 22.5% for the year ended March 2013.
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2 May 2013 - Pengana Australian Equities Fund
By: Australian Fund Monitors
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| Manager Comments | As at March 31st, cash (including notes and preference shares) represented 32% of the Fund. The top five holdings by value were: DUET, ANZ Bank, News, Telstra and NAB. The largest positive contributors to the Quarter’s performance included NAB, News Corporation, ANZ, DUET Group, Seven West Media, Ainsworth Game Technology, Seven Group Holdings, Resmed and Myer Holdings. It is particularly pleasing that there were no detractors over the quarter. The Fund had an active March Quarter, acquiring several new holdings including Caltex, Fairfax and Speciality Fashion Group. In addition, the Fund deployed cash into existing holdings including Duet Group, Telstra, ANZ, Woolworths, Seven West Media and McMillan Shakespeare. The Fund’s exposure to non-Australian dollar earnings streams (inclusive of companies with global earnings profiles such as Resmed and News Corporation, NZ based companies and US dollar exposure) stands at 16.6%. The Fund continued its policy of maximising the cash or “near cash” rates available by acquiring several short dated hybrids at attractive rates. The Fund disposed of its holdings in CSL, Myer, Mastermyne Group and Amcom Telecommunications. The Fund also trimmed its holdings in Credit Corp, NIB Holdings and Tatts Group. While the consensus outlook for the global economy remains gloomy, tentative signs of economic recovery are beginning to emerge. Coordinated efforts by governments through a combination of rescue packages, “extremely loose” monetary policies and large stimulatory spending programs do appear to be having some positive effects. Given the extent of these wholesale efforts (that have included even the proverbial kitchen sink being thrown at the problem) one shudders to think what the implications of no reaction would have been. However, as pragmatic investors the Fund remains alert for those well managed companies with the business models and balance sheets to take advantage of the following dynamics - a) The US economy’s ability to consistently reinvent itself combined with the potential “game changer” of becoming energy self sufficient due to its recently accessible (and massive) oil shale reserves; b) The Chinese authorities efforts to reinvigorate (or at least stabilise) economic growth may be successful and c) The significant reduction in interest rates domestically may be creating a base for consumer confidence. |
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