ARCO ABSOLUTE TRUST (formerly Optimal Australia Absolute Trust)

AFM have released the most recently updated Fund Review on the ARCO Absolute Trust.

We would like to highlight the following aspects of the Fund;

• ARCO Investment Management is a specialist Australian equity investment manager and the Fund has a long/short equity strategy typically with a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200. 

• The investment team comprising George Colman, Peter Whiting, and Stephen Nicholls bring 100 years combined experience in equity markets.

• The Fund has an annualised return since inception of +8.35%. The Fund's approach to risk is shown by the Sharpe ratio of 1.38 (Index 0.30), Sortino ratio of 2.89 (Index 0.33), both of which are well above the ASX 200 Accumulation Index and has recorded over 78% positive months.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - February 2018 (pdf format)

Trump's Tariffs obscures bond and equity market risks - for now.

Trump's trade restriction deal is still a work in progress, but in typical Donald style it's all part of a bigger negotiation play, and possibly directed as much at the rust belt which helped him into the White House in the first place than foreign nations dumping steel on the US market. 

We're not sure his change in US tariff policy (now clearly aimed at China and Asian imports, although that's gone unsaid) will necessarily turn around that section of the US economy, which is also facing other significant structural and long term issues. However, whilst not agreeing with his economic logic, one has to give Donald the politician points for keeping to his electoral promises.

We also noted that when it comes to trade and tariffs, he's now saying the Mexican's are his good friends, along with Canada. How much steel and aluminium (or even aluminum) is required to build the WALL?

Meanwhile the bond/equity market two step has receded from the front pages* of all but the financial press, but it is still there. As per this report from HSBC's Steven Major this morning:

"Our view is that the correction in risky asset markets (equities) should be taken as a warning of what could follow," Major wrote in the report. "Historical correlations between asset classes are unlikely to be stable as the global economy adjusts for the normalisation of unconventional monetary policy."

We've written about this for a while, but this chart from Deutsche puts it all in simple terms. As they say, a picture paints a thousand words...

This chart was produced before Trump's announcement on tariffs, but the key boxes are "An unfavourable rise in interest rates" and "Lower stock prices". Don't ignore the message!

In breaking news it has been announced that Donald Trump and North Korea's Kim Jong Un will meet in May - refer above to Trump's negotiating style rather than political skills.  There will be plenty of claims to bringing this historic meeting about, firstly from Trump himself by ramping up both rhetoric and sanctions, but also China for the pressure they've brought to bear behind the scenes. If nothing else it will put two of the most distinctive global haircuts into the same space at the same time. 

*So too, thankfully, has Barnaby's maybe baby and the PM's "bonk ban". The wider world must be wondering what life down under is all about.

BENNELONG LONG SHORT EQUITY FUND

Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.

• The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large large-caps from the ASX/S&P100 Index, with over fourteen-year track record and annualised returns of 16.38% p.a.

• The consistent returns across the investment history indicate the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market. The Fund's Sharpe Ratio and Sortino Ratio are 1.00 and 1.65 respectively.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - February 2018 (pdf format)

We see human longevity as a huge new investment theme. Whilst its impact on the healthcare system alone will be enormous, we expect its ripples to extend further, washing into the broader economy.

ATTACHED FILESKIS Capital Research - Human Longevity (pdf format)