NEWS
Performance Report: Bennelong Kardinia Absolute Return Fund
10 Jan 2019 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund has returned +9.31% p.a. with an annualised volatility of only 7.14% since inception in May 2006. Over the same period, the ASX200 has returned +5.14% p.a. with an annualised volatility of 13.36%.
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10 Jan 2019 - Performance Report: Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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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 November the Fund returned -2.18%, falling in line with the market as quality growth stocks such as Aristocrat and CSL hurt performance. The greatest positive contributor was a short position in Share Price Index Futures (+48 basis points contribution). The individual stock short book also performed well (+21bp) with shorts in the telco, health insurance and automotive retail sectors being the key contributors. Other positive contributors included ANZ (+37bp), NAB (+26bp), Netwealth (+28bp) and Qantas (+19bp). Detractors included Aristocrat (-65bp), CSL (-48bp), Seven Group (-41bp) and Computershare (-31bp). Net equity market exposure was reduced from 55.0% to 47.3% (81.3% long and 34.0% short), with the key changes being new positions in Commonwealth Bank, James Hardie, Nine Entertainment and Woodside Petroleum, as well as increased weightings in ANZ and NAB, offset by the sale of Whitehaven Coal and CYBG, seven new individual stock short positions and an increased short position in Share Price Index Futures. |
| More Information |
Performance Report: Bennelong Twenty20 Australian Equities Fund
9 Jan 2019 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund returned -1.80% in November, outperforming the ASX200 Accumulation Index by +0.41% and taking annualised performance since inception in November 2009 to +9.31%.
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9 Jan 2019 - Performance Report: Bennelong Twenty20 Australian Equities Fund
By: Australian Fund Monitors
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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 | By the end of November, the Fund's weightings had been increased in the Discretionary, Health Care, Industrials, REIT's, Financials and Materials sectors, whilst the weightings in the Consumer Staples and Communication sectors were decreased. The Fund combines a passive investment in the S&P/ASX20 Index and an actively managed investment in Australian listed stocks outside this index. The passive position is achieved by investing individually in each of the S&P/ASX20 Index's individual stocks with approximately the same weightings they represent in the S&P/ASX300. Currently, this weighting is over 50%. The active position in ex-20 stocks aims to allow the Fund to outperform the broader market. |
| More Information |
Fund Review: Insync Global Capital Aware Fund November 2018
21 Dec 2018 - Australian Fund Monitors
Latest Fund Review on Insync Global Capital Aware Fund is now available. 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...
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21 Dec 2018 - Fund Review: Insync Global Capital Aware Fund November 2018
By: Australian Fund Monitors
AFM Fund Review - November 2018 (pdf format)
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 - November 2018 (pdf format)
Performance Report: Harvest Lane Asset Management Absolute Return Fund
21 Dec 2018 - Australian Fund Monitors
The Harvest Lane Absolute Return Fund returned -0.62% in November, outperforming the ASX200 Accumulation Index by +1.59% and taking performance over the past 12 months to +13.50% versus the Index's -0.96%.
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21 Dec 2018 - Performance Report: Harvest Lane Asset Management Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | Harvest Lane Asset Management employs a conservative, highly selective and opportunistic approach. Using their extensive knowledge in the area of corporate actions, the Fund's managers assess each opportunity based on a thoughtful, diligent and disciplined process and invest where they believe an opportunity exists to generate above average investment returns relative to the risk incurred. Investment decisions are made without speculating on market direction, with rigid risk controls enforced to minimise the risk of large losses of investor capital. The Fund invests in securities that are predominantly listed on the ASX and occasionally in those listed in other developed markets. Equity swaps and other derivatives may be used at times to reduce risk. The fund typically holds high levels of cash in the absence of sufficiently attractive opportunities to deploy investor capital in accordance with its objectives. |
| Manager Comments | Harvest Lane noted that, despite the low volatility of the Fund's performance during the month as different positions provided diversification to the Fund's returns, November was in fact an eventful month characterised by contested bids and continuing takeover and merger activity against a volatile investment environment more broadly. In addition, seven new positions were added to the portfolio in November, resulting in the Fund being almost fully invested by the end of the month. Harvest Lane reiterate their confidence in continuing to deliver meaningful positive returns for their investors, as well as deliver an outcome that is consistent with what one might expect from a market neutral absolute return fund. They believe it is critically important for investors to continue to pursue genuine diversification to protect them from equity market risk, with the recent mini-crisis in markets providing important clues as to where that diversification may be found. |
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Performance Report: Glenmore Australian Equities Fund
21 Dec 2018 - Australian Fund Monitors
The Glenmore Australian Equities Fund has returned +8.20% over the past 12 months versus the ASX200 Accumulation Index's -0.96%. Since inception in June 2017, the Fund has returned +21.64% p.a. versus the Index's +3.70%.
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21 Dec 2018 - Performance Report: Glenmore Australian Equities Fund
By: Australian Fund Monitors
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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 | The Fund returned -2.06% in November, outperforming the ASX200 Accumulation Index by +0.15%. Key contributors included Stanmore Coal (+22%) and Jumbo Interactive (+14.6%). Detractors included Emeco Holdings (-9.1%), as well as Atlas Arteria, Bravura Solutions, Worley Parsons, Pinnacle Investment Management and Mastermyne. Glenmore's view is that the recent decline in equity markets has been more of a valuation-based correction, driven by a need for valuation metrics to move back to more reasonable levels. In Australia, they identify falling house prices and a potential change of federal government as emerging headwinds, however, Glenmore strongly believe that the domestic economy is still sufficiently healthy that quality businesses can continue to thrive and grow earnings through the cycle. |
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Performance Report: Loftus Peak Global Disruption Fund
20 Dec 2018 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund has returned +4.90% over the past 12 months versus AFM's Global Equity Index's +2.92%. Since inception in November 2016, the Fund has returned +20.20% per annum.
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20 Dec 2018 - Performance Report: Loftus Peak Global Disruption Fund
By: Australian Fund Monitors
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| Fund Overview | The investment process involves a combination of top-down analysis with fundamental bottom-up qualitative and quantitative research to derive a risk-adjusted discounted cash flow (DCF) valuation of companies in the target universe. The investment team will generally buy stocks from the pool of securities that are trading below Loftus Peaks' valuation and sell them when they are trading above Loftus Peak's valuation. The approach allows for both fundamental accounting information as well as market-oriented inputs to be factored into the portfolio construction process. Loftus Peak's model typically does not rely on leverage to deliver investment returns and specifically takes into account risk in the valuation process. Capital preservation can be managed by holding up to 50% cash. Index and currency options and futures may also be used to manage risk. |
| Manager Comments | Loftus Peak noted November was another volatile month, marked by significant uncertainty as China and the US manoeuvred for position in the trade war, resulting in the Fund delivering -2.50%. Key detractors included Nvidia and Apple. Positive contributors included Alibaba, Tencent, NXPI, Broadcom and Tesla. In addition, Loftus peak noted the Australian dollar appreciated 3.24% over the month against the US dollar which hurt the value of the Fund's US dollar positions. As at 30 November 2018, the Fund carried a foreign currency exposure of 99%. |
| More Information |
Performance Report: Bennelong Long Short Equity Fund
19 Dec 2018 - Australian Fund Monitors
The Bennelong Long Short Equity Fund has risen +3.33% over the past 12 months versus the ASX200 Accumulation Index's -0.96%. Since inception in February 2002, the Fund has returned +15.51% per annum.
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19 Dec 2018 - Performance Report: Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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| Fund Overview | 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 Fund returned -3.07% in November, with performance impacted by elevated market volatility and macro concerns which overshadowed fundamental company news. Bennelong noted earnings updates provided at AGMs and financial results released during the month led to three profit downgrades in the short book, however, this was offset by two downgrades in the long book. The top pairs were long Orica / short Downer EDI and long Harvey Norman / short Myer/Coca-Cola Amatil. The worst performing pairs included long BlueScope Steel / short Sims Metal, long Origin Energy / short AGL Energy and long ALS Ltd / short Aurizon. |
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Performance Report: NWQ Fiduciary Fund
18 Dec 2018 - Australian Fund Monitors
The NWQ Fiduciary Fund has returned +5.51% per annum with an annualised volatility of only 4.97% since inception in May 2013. The ASX200 Accumulation Index has returned +6.21% p.a. with a volatility of 11.06% over the same period.
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18 Dec 2018 - Performance Report: NWQ Fiduciary Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund aims to produce returns, after management fees and expenses of between 8% to 11% p.a. over rolling five-year periods. Furthermore, the Fund aims to achieve these returns with volatility that is a fraction of the Australian equity market, in order to smooth returns for investors. |
| Manager Comments | The Fund returned -2.22% in November, with bonds providing only modest support (+0.24%). NWQ noted the relative weakness of high-quality growth stocks (favoured by the underlying managers) compared with defensive value stocks continued into November as markets were choppy and driven more by macro issues than company fundamentals. These macro issues included uncertainty around the Fed tightening cycle and the outlook for US interest rates, the issues faced by PM May in the UK on Brexit and the ongoing trade tensions between the US and China. NWQ believe that as markets gain clarity on these issues company fundamentals will once again be the dominant factor driving stock prices. In addition, they noted the Fund is well placed to benefit from such a shift. |
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Performance Report: Cyan C3G Fund
17 Dec 2018 - Australian Fund Monitors
The Cyan C3G Fund has returned +19.37% per annum since inception in August 2014 versus the ASX200 Accumulation Index's +4.78%. This return has been achieved with a similar level of volatility.
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17 Dec 2018 - Performance Report: Cyan C3G Fund
By: Australian Fund Monitors
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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 | Cyan noted the difficult market conditions continued to drag on performance in November, resulting in the Fund retracing -1.9%. The Fund has retained slightly more cash than it did last month which has helped in the bearish environment. Key detractors included Pivotal Systems (-20%) and Motorcycle Holdings (-27%). Positive contributors included Afterpay (+15%), Experience Co (+16%), Freelancer (+30%). Cyan exited their position in Pivotal Systems and entered a new position in Isentia (ISD). |
| More Information |
Hedge Clippings - 14 December, 2018
14 Dec 2018 - Australian Fund Monitors
Looking back it was a year when the music stopped on a number of fronts - although it had been becoming pretty discordant for some time.
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14 Dec 2018 - Hedge Clippings - 14 December, 2018
By: Australian Fund Monitors
This is our last "Hedge Clippings" for the year. Thank you for your support and feedback over 2018, we hope our various Friday afternoon musings have been to your liking - or at least if not, of interest. We'll be back after the break, but in the meantime would like to take this opportunity of wishing you and your families a Happy Christmas and a Healthy and Prosperous New Year.
Looking back it was a year when the music stopped on a number of fronts - although it had been becoming pretty discordant for some time. It's been a year when geopolitics has been the dominant theme - or themes, with markets and economists trying to work out what's next, and getting the wobbles in the process:
Brexit - David Cameron will be remembered for making an offer he didn't need to, and giving 36% of the UK electorate control over an outcome he didn't want. It was always going to be ugly, but it has turned out to be a disaster where no one is likely to be happy with whatever the eventual outcome holds. What on earth was he thinking? The truth is he probably wasn't, so he neatly sidestepped his responsibility, leaving it to his stoic but hapless successor to sort out the mess he created.
Trump - Where do you start? The Donald seems immune to any kind of advice or what one might call statesmanlike behaviour. He thrives on confrontation and apportioning blame and responsibility for his mistakes to others - aides, Chiefs of Staff, Lawyers - and even the Federal Reserve. He has certainly achieved certain gaols - to what extent they'll be of the own goal variety (or maybe that should be in goal?) remain to be seen.
China - The music hasn't stopped but it is getting louder! The Chinese Communist Party finally seems to be being held to account for wanting to dominate the world's economy, and is not liking the pushback it is receiving from the incumbents.
Australia - A combination of the Hayne Royal Commission, and the revolving door at the Lodge are threatening what's been a record economic run. The HRC has helped to put the skids under an overly heated residential property market - something the Reserve Bank had been trying to do more subtlety for a while. Either way the above combinations - along with the strong chance of a change of government next year - are likely to see consumer confidence erode further, with the risk that the economic record comes to an end.
The music may not have stopped, but the tune will have changed significantly.
