NEWS
25 Jan 2017 - Pengana PanAgora Absolute Return Global Equities Fund
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| Fund Overview | PanAgora believes the best way to find opportunities in the global markets is to combine fundamental analysis with robust quantitative techniques in order to filter the investment universe and select the investments. The Fund invests primarily in listed equity securities from a global universe of developed markets and a select group of emerging market countries. The Fund's objective is to seek absolute returns by identifying and exploiting multiple inefficiencies that may exist in global equity markets. These inefficiencies are primarily exploited through the use of a long/short equity strategy which aims to construct a portfolio that is generally neutral to market movements. As such the performance of the investment strategy is largely independent of the market's performance. The Fund seeks to achieve its objective by using a diversified set of strategies that have low correlation to one another. In addition, because many of these strategies are designed to generate profit under different market conditions, their combination is expected to result in more stable returns over time than any individual strategy in and of itself. |
| Manager Comments | The December return was largely driven by the US and International long-term models, which contributed -0.78% and -0.48% respectively. The intermediate strategies outperformed modestly, resulting in a total contribution of +0.04% (both the US merger arbitrage and the US share class arbitration trades performed strongly). The short-term arbitrage strategies detracted -0.17%. The underperformance of the sleeve was almost exclusively caused by levered ETF trades. |
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25 Jan 2017 - 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 | The largest contributors to the year's performance were Fortescue Metals Group, Newcrest, Vocus Communications and Flight Centre. The main detractors included TPG Telecom, Domino's Pizza Enterprises, South32 and Fisher & Paykel Healthcare. Throughout the year, the Fund trimmed or sold out of a number of high PE names, but maintained positions in companies in which the company fundamentals justified doing so. The investment team remains confident that these fundamentals will dictate returns over the long-term and therefore comfortable with the Fund's holdings. In more general terms, the Fund benefitted from an underweight position in bond proxies, such as REITs, Infrastructure, and Utilities stocks. On the other hand, the Fund's performance was hindered by an overweight exposure to the Healthcare sector, specifically through positions in Ramsay Health Care and Fisher & Paykel Healthcare, and from its exposure to the Retail sector, where a number of names held underperformed. |
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24 Jan 2017 - King Tide NZ/Australian Long/Short Equity Fund
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| Fund Overview | The fund seeks to outperform the market with less volatility than the market by allocating capital to a select group of eight to sixteen funds whose investment mandates allow them to use short selling of equities and equity indices, to use derivatives to manage risk, to use leverage and to hold large amounts of cash. In-depth proprietary research is used to select and monitor fund managers with particular emphasis on their ability to manage equity market risk through stock selection, short selling and the use of derivatives and cash. |
| Manager Comments | However, LHC was hit by two very large downgrades in two of core its positions; Sirtex and Mayne Pharma which fell 50% and 16% respectively, resulting in a -9.7% fall in the fund. Paragon, Wavestone, Monash, Smallco and Wilson all rose less than 1%, while Bennelong Long/Short, from which the Fund has now fully redeemed, fell -3.2%. The Listed Investment Company (LIC) 8EC's share price was down -0.5% despite their underlying portfolio gaining 2%. The two PIE funds (NZ based funds) were weaker but performed better than the sector once again in 2016. The Fund is considering a couple of funds and plans on adding one new underlying manager on February 1, bringing the total to 16. |
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24 Jan 2017 - Fund Review Pengana Absolute Return Asia Pacific Fund December 2016
PENGANA ABSOLUTE RETURN ASIA PACIFIC FUND
Attached is our most recently updated Fund Review on the Pengana Absolute Return Asia Pacific Fund.
- The Pengana Absolute Return Asia Pacific Fund ("PARAP") was established in 2008 by portfolio managers Antonio Meroni and Vikas Kumra. The Fund is a feeder fund into a Cayman Islands AUD share class fund.
- The Fund invests both long and short in Asia Pacific equities, including in Australian and New Zealand, after a stock specific "event" has either occurred or been announced and the portfolio aims to be uncorrelated to the underlying equity markets. A combination of the Manager's experience, thorough research and continuous back- testing identify the most attractive of these events.
- Risk controls include limits on individual positions as well as gross and net exposure. Limits are in place for option exposure and cash borrowing, with stop loss limits on individual positions. Overall the manager is looking to derive returns from the event strategies as opposed to any currency or market exposures.
- Since inception, the Fund has an annualised return of 8.56% p.a., compared to the MSCI ACWI Asia Pacific Price Index's return of 2.86% p.a.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - December 2016 (pdf format)
23 Jan 2017 - Fund Review: Optimal Australia Absolute Trust December 2016
OPTIMAL AUSTRALIA ABSOLUTE TRUST
AFM have released the most recently updated Fund Review on the Optimal Australia Absolute Trust.
We would like to highlight the following aspects of the Fund;
- Optimal Australia 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 nearly 100 years combined experience in equity markets.
- In October, the Fund rose 0.29% in December, to take annualised return since inception to 8.54% p.a. The Fund's approach to risk is shown by the Sharpe ratio of 1.39 (Index 0.25), Sortino ratio of 2.92 (Index 0.24), both of which are well above the ASX 200 Accumulation Index and has recorded 80% positive months.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - December 2016 (pdf format)
23 Jan 2017 - QATO Capital Market Neutral Long/Short Fund
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| Fund Overview | The Fund seeks to preserve capital and maximise absolute returns through active and constant risk management, targeting monthly a net market exposure of 0% to hedge broader market risks with up to 50 S&P/ASX-100 positions (up to 25 long positions & 25 short positions). Historically, the strategy has been uncorrelated to traditional asset classes with a negative beta to equity markets. Qato Capital's process is entirely systematic - stock selection and risk management are all employed in a rules based approach. Positions in Qato's long-portfolio and short-portfolio are rotated monthly dependent upon their Q-Score ranking. The strategy employs no financial leverage/gearing to purchase securities, no derivatives and no financial products to imitate leverage. |
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21 Jan 2017 - Hedge Clippings
So long 2016: Welcome 2017 but stay on your toes!
Firstly, Happy New Year from Hedge Clippings. We trust you have had a relaxing and peaceful break and, depending where in the world you are, have survived the extremes of temperature. From our perspective in Sydney it has been hot and humid which, while not unusual for this time of the year, seems to have been more so than usual.
And so goodbye to 2016. Judging by the comments received from many over the past few weeks there aren't too many who were sad to see the back of it. It was certainly a turbulent year from a political point of view, and depending on one's leanings, either very satisfactory or very disappointing. Brexit, the potential for which was only brought to our attention 12 months ago, although done and dusted has a long way to run, longer certainly than most of the proponents originally envisaged.
Meanwhile, tonight sees the inauguration of probably the most unexpected (at least from an outsider's point of view) of US Presidents in memory. Looking back over our commentaries of the past 12 months it would be fair to say we misjudged the mood of middle America, as did most of those on the east and west coast. To what extent President Trump will be able to bring the disbelievers along with him on his journey of 'Making America Great Again' remains to be seen but is certainly going to make for interesting, and turbulent times.
Turbulent probably also describes Australia's equity markets in 2016. It's fair to say that they started the year with a whimper, falling 10% in the first two months, only to end the year with a roar, rising 8% in the last two months, and as pointed out by George Colman of Optimal Australia, rising 13.1% between November 9 and January 9 this year. Furthermore in the three weeks from December 19 only three stocks in the ASX 100 lost ground.
Going forward it is probably fair to say that, with valuations at current levels and earnings still uncertain, there is plenty of room for volatility. And whilst on the subject of volatility and earnings, woe betide any company missing expectations or disappointing investors.
From a fund manager's perspective, it was also a tough year. With 70% of AFM's database reported, only 11% outperformed the ASX 200 Accumulation Index. Many proven, tried and tested funds found it difficult to negotiate and navigate both political and earnings uncertainties over the year, particularly the strength of the last two months. For many, it will go down as a forgettable year, and probably one in which the marketers will be reminding investors that its a longer term game.
On the other hand, there were some excellent performances particularly from new and smaller managers, and those investing outside the top 100, who benefited from the ability to select outstanding companies, and profit accordingly. We look forward to bringing you information, news and research on these, and others, over the coming 12 months.
Over the last 12 months, the S&P/ASX 200 Total Return Index returned +11.80%, the MSCI Asia Pacific Ex-Japan Index returned +9.49% and the S&P 500 Total Return Index returned +14.77%.
Allard Investment Fund rose 0.57% in December (MSCI Asia Pacific ex-Japan A$ +1.28%). The Fund has returned 9.25% over the past 12 months, taking annualised return since inception to 9.02% p.a.
The Paragon Australian Long Short Fund returned +0.80% in December, +6.82% for the latest 12 months and since inception, the fund has an annualised return of 15.11% p.a.
Totus Alpha Fund returned +2.74% in December and -14.25% for the latest 12 months. Since inception in April 2012, the Fund has an annualised return of 21.02% p.a.
Bennelong Kardinia Absolute Return Fund gained 1.45% in December, however, fell -2.44% for the most recent 12 months. 2016 marked the first negative year for the Fund since inception in May 2006, taking the annualised return to 11.22% p.a.
Optimal Australia Absolute Trust returned +0.29% in December 2016 and +4.75% for the latest 12-months. The Fund has not recorded a negative year since inception in September 2008 and has an annualised return of 8.54% p.a.
Touchstone Index Unaware Fund generated +4.42% in December, slightly ahead of the market rise of 4.38% (S&P/ASX 200 Accumulation Index). Since inception in April 2016, the Fund has returned +14.24%.
Cyan C3G Fund returned -1% in December, taking the most recent 12 months return to 14.79%. Since inception in August 2014, the Fund has an annualised return of 27.15% p.a.
Affluence Investment Fund increased 1.08% in December resulting in a +10.65% return for the 2016 calendar year, and 10.01% p.a. annualised returns.
APN AREIT Fund increased 6.80% in December, taking the prior 12 months performance to +13.73%. Since inception in February 2009, the annualised return for the Fund is 17.22% p.a.
Pengana Absolute Return Asia Pacific Fund finished up +0.37% for December 2016, marking the first negative year for the Fund, returning -2.10%. Since inception, the Fund has an annualised return of 8.56% p.a.
KIS Asia Long Short Fund returned -0.42% in December, taking the return for the most recent 12 months to +13.46%. The Fund has an annualised return of 14.63% p.a. since inception in October 2009.
Bennelong Long Short Equity Fund returned -3.23% in December taking the latest 12 months to -13.07%, in a rare negative year over 15 years of history. Since inception in February 2002, the annualised return for the Fund is 16.14% p.a.
FUND REVIEWS released this week: Bennelong Kardinia Absolute Return Fund
And on that note, have a great weekend.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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20 Jan 2017 - NWQ Fiduciary Fund
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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. |
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20 Jan 2017 - Bennelong Long Short Equity Fund
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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. |
| Manager Comments | In December, the Fund made several stocks and weightings changes in line with the investment team's assessment of risk and reward. However, on the whole, the Fund maintained its core stocks/strategies as the team continues to see them delivering positive performance in the future. The top 3 spreads for the month came from the following pairs; Long Oil Search/Short Santos, Long Qantas/Short Flight Centre and Long CSL/Short Sonic Health. The bottom 3 spreads came from long Ramsay Health/Short Primary Healthscope, Long Star Entertainment/Short Metcash/Woolworths and Long Resmed/Short Ansell. |
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19 Jan 2017 - Touchstone Index Unaware Fund
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| Fund Overview | The portfolio is constructed using Touchstone's Quality-At-a-Reasonable-Price ('QARP') investment process. QARP is a fundamental bottom-up process, however, it also incorporates a top-down risk management framework designed to successfully manage the portfolio during varying market conditions and economic cycles. The Touchstone Fund is concentrated, typically holding between 15-20 stocks. No individual stock will ever make up more than 10% of the portfolio at any one time. The Investment Manager may temporarily exceed the exposure limits of the Fund occasionally, particularly during periods of market volatility, to allow for holdings in excess of this 10% limit where the increase in value of the underlying security is due to market movement. The Fund may also hold between 0-50% of the portfolio in cash. The Fund has a high level of associated risk, therefore, the minimum suggested investment time-frame is 5 years. |
| Manager Comments | The Fund's position in Star Entertainment Group (SGR) traded lower over the month and quarter (-2.1% mom, -14.1% qoq), after a partial recovery in November. The Fund continues to hold SGR given its strong growth outlook and solid balance sheet. The high level of cash was a drag in the quarter however, the Fund is currently comfortable with its holding. The investment team believes the Fund is well-positioned, considering the extended financial asset valuations and the heightened geopolitical and economic uncertainty going forward. |
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