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 16.51% 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 1.66 respectively.

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

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - January 2018 (pdf format)

Markets stumble, then find their feet - for now…

The major story of the past week - or "non-story" depending on how you look at it - is that the sky has not quite fallen in (much like the member for New England) after the US market's sudden spike in volatility earlier in the month.

Inevitably there will be those who will be saying "what was that all about, it was just an over-reaction, and now there's a great buying opportunity!"

That may be, but as Hedge Clippings warned a couple of weeks ago, don't risk betting the house on it. The US market, having risen for 12 straight months, including over 5% in January, was approaching the "irrationally exuberant" stage, underpinned by low/zero/negative interest rates (depending on where in the world you are), the promise of US tax cuts and infrastructure spending, low inflation, and low wages growth, all of which are feeding into an improving economy and corporate earnings.

The canary in the mine is the 10 year bond yield at over 2.8% (and rising) vs the S&P500's 2017 yield of 2.4%, and an uptick in inflation. Perversely this is precisely what the FED has been trying to achieve. The renewed volatility (the VIX having traded around 10% for a large part of the last 6 months) was a useful warning shot across investors' bows, and luckily for them, the market seems to have stabilised - for now - rather than going into free fall.

While the economy and corporate earnings continue to improve, that won't fully insulate the market from an impending switch in asset allocation as the US10 year bond yield moves to 3% and above - which it will at some stage, and probably in the not too distant future.

Locally the damage to the Australian market was not as great, simply because in 2017 it had only risen half as much as the S&P500, but it still wasn't immune to the volatility. While it's only halfway through February, there'll be the usual wide range of fund results come the end of the month, but many absolute return funds had either short positions, or were carrying a high level of cash as at the end of January. As such their relatively low net market exposure will buffer them from the volatility, proving their worth in rocky markets.

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 10.80% p.a. with a volatility of 6.95%, compared to the ASX200 Accumulation's return of 5.72% p.a. with a volatility of 13.53%.

• 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.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - January 2018 (pdf format)

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 +8.56%. The Fund's approach to risk is shown by the Sharpe ratio of 1.44 (Index 0.30), Sortino ratio of 3.07 (Index 0.33), both of which are well above the ASX 200 Accumulation Index and has recorded over 79% positive months.

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

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - January 2018 (pdf format)