Optimal Australia Absolute Trust

15 Jun 2017 - Australian Fund Monitors

The Optimal Australia Absolute Trust reported a net return of +0.17% in May 2017, to take the annualised return since inception to 8.02% p.a.

15 Jun 2017 - Optimal Australia Absolute Trust

By: Australian Fund Monitors

Report Date	12 June 2017
Manager	Optimal Fund Management Australia
Fund Name	Optimal Australia Absolute Trust
Strategy	Equity Long/Short
Latest Return Date	May 2017
Latest Return	0.17%
Latest 6 Months	-0.52%
Latest 12 Months	-0.84%
Latest 24 Months	9.01%
Annualised Since Inception	8.02%
Inception Date	15 September 2008
FUM (millions)	AU$115
Fund Overview	The investment objective of the Fund is to seek to achieve above average returns in absolute terms, through investing in listed securities in Australia and New Zealand, subject to the overarching requirement of capital preservation. Investments will predominantly be in equity securities but may include fixed interest instruments, money market instruments, derivatives and foreign exchange contracts. The Fund's bias is likely to be net long under normal market conditions, with the core strategy being to construct a portfolio of listed equity securities priced at levels that do not adequately reflect their underlying value. The Fund will seek to boost returns and limit potential market downside by selective short selling of individual stocks which are priced at levels that are viewed as materially above their underlying value. The Fund will also use certain trading strategies both within its core portfolio (through rebalancing stock weights and overall market exposure in response to price movements) and in certain other situations (typically of a shorter-duration and/or opportunistic nature) with the objective of further increasing returns.
Manager Comments	The Optimal Australia Absolute Trust reported a net return of +0.17% in May 2017, outperforming the S&P/ASX 200 Accumulation Index's return of -2.75%, by 2.92%. Since inception, the Fund has an annualised return of 8.02% p.a. (ASX 200 Accumulation Index 5.91% p.a.), which has been achieved with relatively low volatility of 3.72% p.a. (Index 13.99% p.a). The Fund's short positions in the financial and healthcare sectors made positive contributions to the month's performance. Also, the Henderson/Janus merger closed on schedule, and the stock was a positive contributor to returns. However, one of the Fund's international-facing financials, CYBG, did less well following its earnings report and pre-UK election uncertainty. The investment team continues to actively position the Fund to be slightly net short beta exposure, and the long positions remain tactically weighted to stocks which feature little dependence on the domestic economy, strong balance sheets and free cash flows, and defensive valuations.
More Information	Fund Profile Manager's Report AFM Research Reports

Fund Review: Bennelong Long Short Equity Fund May 2017

15 Jun 2017 - Australian Fund Monitors

Latest Fund Review is now available on Bennelong Long Short Equity Fund which has an annualised return of 16.85% p.a.

Bennelong Kardinia Absolute Return Fund

14 Jun 2017 - Australian Fund Monitors

Bennelong Kardinia Absolute Return Fund fell 0.75% in May, taking the annualised return since inception to 10.93% p.a.

14 Jun 2017 - Bennelong Kardinia Absolute Return Fund

By: Australian Fund Monitors

Report Date	13 June 2017
Manager	Kardinia Capital, A Bennelong boutique
Fund Name	Bennelong Kardinia Absolute Return Fund
Strategy	Equity Long/Short
Latest Return Date	May 2017
Latest Return	-0.75%
Latest 6 Months	3.02%
Latest 12 Months	1.94%
Latest 24 Months	3.94%
Annualised Since Inception	10.93%
Inception Date	01 May 2006
FUM (millions)	AU$305.835
Fund Overview	The Fund consists of a concentrated long/short portfolio typically comprising 20 to 50 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. On average since inception the Fund's exposure has averaged 40% net long. There is a slight bias to large cap stocks on the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 5% to 10% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position. 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	Bennelong Kardinia Absolute Return Fund fell 0.75% in May. Since inception in May 2006, the Fund has an annualized performance of 10.93% p.a, compared to the ASX 200 Accumulation Index's return of 5.34% p.a. The Fund's performance has been achieved with lower volatility of 7.10%, than that of the Index's 13.88%, to give notable Sharpe and Sortino ratio of 0.98 (Index 0.17) and 1.78 (Index 0.14) respectively. Aristocrat Leisure (+35bp) was the largest contributor to the month's performance. Share Price Index Futures (+23bp) hedging long positions added value given the fall in the market. Other key contributors included RCR Tomlinson (+19bp) and Boral (+11bp). Short positions in retailers, retail REITs and banks were also effective. The key negative contributors included NAB (-32bp), ANZ (-27bp), Incitec Pivot (-22bp) and CSR (-14bp). Net equity market exposure including derivatives reduced from 60.3% to 21.5% (38.1% long and 16.6% short) as the Fund moved from a significant long exposure to the four major banks to a net short position.
More Information	Fund Profile Manager's Report AFM Research Reports

Cyan C3G Fund

13 Jun 2017 - Australian Fund Monitors

Cyan C3G Fund posted a small 0.2% gain in May, outperforming the S&P/ASX 200 Accumulation Index's return of -2.75%.

13 Jun 2017 - Cyan C3G Fund

By: Australian Fund Monitors

Report Date	09 June 2017
Manager	Cyan Investment Management
Fund Name	Cyan C3G Fund
Strategy	Equity Long
Latest Return Date	May 2017
Latest Return	0.20%
Latest 6 Months	4.34%
Latest 12 Months	8.50%
Latest 24 Months	54.49%
Annualised Since Inception	25.03%
Inception Date	24 July 2014
FUM (millions)	AU$12
Fund Overview	The Cyan C3G Fund operates as a wholesale unregistered managed investment scheme under a unit trust structure. The Fund primarily invests in ASX listed companies outside the ASX 100 and typically holds between 15-35 stocks. 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 C3G Fund posted a small 0.2% gain in May, outperforming the S&P/ASX 200 Accumulation Index's return of -2.75%. Since inception, the Fund has an annualised return of +25.03% p.a, against the S&P/ASX200 Accumulation Index's return of +5.35% p.a. The Fund benefitted from price strength in a few of its key long-term holdings through May. Getswift (GSW) continued its run from the prior month, rising another +21% in May. Afterpay (AFY) and Touchcorp (TCH) also rose (+15%) for the month in anticipation that the merger between the two Fintech businesses is likely to be completed by the end of June 2017. However, the Fund's small holding in Nick Scali was down 10% lower. The Fund is still conservatively positioned but ready to deploy as an opportunity presents itself.
More Information	Fund Profile Manager's Report

Hedge Clippings

12 Jun 2017 - Australian Fund Monitors

Valuations are at all time highs. The VIX is at all time lows. What is there to worry about?

12 Jun 2017 - Hedge Clippings

By: Australian Fund Monitors

There's nothing to worry about, is there?

Today's AFR's article "Gurus nervous it's 2008 all over again" provides a fair warning.

Valuations are at all time highs. The VIX is at all time lows. What is there to worry about?

Trump might be impeached.
May may (and more likely will) lose the unlosable UK election as we pre-empted in last week's Hedge Clippings.
The Middle East is a mess. OK, so that's been the case for the best part of 70, 100, or 2,000 years depending on your point of view and which side you are, or were, on.
North Korea's only a rocket or two away from overstepping the mark.

And Australia, in spite of recording record growth - at least from a longevity perspective - is a political, economic, taxation and legislative mess because neither side of politics are prepared to compromise for the long-term benefit of the country, and neither can govern without the support of a tiny minority. And they call that democracy.

Meanwhile some clown on the radio say's "don't worry about the threat of terrorism, you're statistically more likely to be killed by a bee sting than a lunatic with a driving licence and a knife", carefully ignoring the fact that one is accidental, the other deliberate.

Relax. Be Happy!

PERFORMANCE NEWS

Allard Investment Fund increased 1.87% during the month of May 2017 and is up 19.71% for the latest 12 months. The Fund has an annualised return since inception of 9.43% p.a.

Bennelong Long Short Equity Fund rose 2.86% for the month of May, outperforming the S&P/ASX 200 Accumulation Index, which returned -2.75%, by +5.61%. Since inception, the Fund's has an annualised return of 16.85% p.a.

Quay Global Real Estate Fund delivered a +1.8% return for the month of May 2017, outperforming the FTSE/ EPRA NAREIT Developed Index Net TR AUD Index, which returned +1.3%, by 0.5%. Since inception in July 2014, the Fund has an annualised return of 16.1% p.a.

Paragon Australian Long Short Fund gained 1.30% for the month of May, outperforming the S&P/ASX 200 Accumulation Index by +4.05%. The Fund has an annualised return since inception of 11.83% p.a.

And, on that note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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APN Asian REIT Fund

12 Jun 2017 - Australian Fund Monitors

APN Asian REIT Fund rose 3.37% for the month of May, outperforming the Bloomberg Asia REIT Index which returned +3.14%, by 0.23%.

12 Jun 2017 - APN Asian REIT Fund

By: Australian Fund Monitors

Report Date	09 June 2017
Manager	APN Funds Management Limited
Fund Name	APN Asian REIT Fund
Strategy	Real Estate
Latest Return Date	May 2017
Latest Return	3.37%
Latest 6 Months	7.66%
Latest 12 Months	3.67%
Latest 24 Months	9.54%
Annualised Since Inception	14.70%
Inception Date	19 July 2011
FUM (millions)	AU$12.63
Fund Overview	The APN Asian REIT Fund (Fund) is a property securities fund that invests in a quality portfolio of Asian REITs, listed on the securities exchanges of the Asian Region (including, but not limited to, Hong Kong, Singapore, Malaysia, Japan and New Zealand, but excluding Australia), as well as cash and fixed interest investments. Pete Morrissey and Corrine Ng are the Portfolio Managers of the Fund. Morrissey has over 15 years financial markets experience and joined APN in 2006. Previously, he worked at Lonsec and also managed an internationally focused private investment fund as well as spending several years as an analyst in the UK for Nomura, amongst others. He has also completed Masters level academic research papers on both commercial real estate cycles and global property cycles. Ng also has a strong background in property and REITs in Australia, Asia and the North American markets. Prior to joining APN, Ng worked for Aviva Investors (Senior Investment Analyst, North America Real Estate Securities Team) and Goldman Sachs & Co (Vice President, Goldman Sachs Asset Management Real Estate Securities Team) in New York. The Fund aims to deliver a competitive yield with lower risk than the market. The underlying stocks are selected based on a highly disciplined investment approach that focuses on the fundamentals and number of valuation approaches. The universe is expected to be dynamic as new IPO's, other corporate actions take place and / or corporate governance improvements at country or REIT level bring new stocks into focus. The Fund focuses on passive rental earnings derived from well managed Asian REITs listed in mature capital markets and will not invest in infrastructure, property development companies or stocks with a 'loose association with property'. The Fund provides access to a wide spread of property-based revenue streams that are specifically analysed, selected and weighted with the aim of delivering strong and sustainable income returns. The Fund is an unhedged product. The Fund is suited to medium to long term investors seeking a relatively high income and some capital growth over the long term.
Manager Comments	APN Asian REIT Fund rose 3.37% for the month of May, outperforming the Bloomberg Asia REIT Index which returned +3.14%, by 0.23%. Since inception, the Fund has an annualised return of 14.7% p.a., with a volatility of 9.33% p.a., to give notable Sharpe and Sortino ratios of 1.25 and 2.23 respectively. The portfolio continues to have significant exposure to Japan (39.2%) and Singapore (30.2%), with over 63% invested in Retail REITs (37.2%) and Office REITs (26.3%). The top five holdings: Gip J-REIT, Ascendas Real Estate Inv Trust, Keppel Dc REIT, Japan Retail Fund Investment, and Prosperity REIT, comprised over 21% of the portfolio, with four holdings above 4% each.
More Information	Fund Profile Manager's Report

Quay Global Real Estate Fund

9 Jun 2017 - Australian Fund Monitors

Quay Global Real Estate Fund delivered a +1.8% return for the month of May 2017, outperforming the FTSE/ EPRA NAREIT Developed Index Net TR AUD Index, which returned +1.3%, by 0.5%.

9 Jun 2017 - Quay Global Real Estate Fund

By: Australian Fund Monitors

Report Date	08 June 2017
Manager	Quay Global Investors
Fund Name	Quay Global Real Estate Fund
Strategy	Real Estate
Latest Return Date	May 2017
Latest Return	1.80%
Latest 6 Months	11.26%
Latest 12 Months	1.49%
Latest 24 Months	17.48%
Annualised Since Inception	16.10%
Inception Date	31 July 2014
FUM (millions)	AU$8.1
Fund Overview	Quay is a boutique investment management business established in 2013 with a focus on preserving and creating wealth for investors through investments in real estate securities. Quay uses a dual manager approach to the investment and portfolio management decision making process. This involves both Principals collaborating to determine significant portfolio investments and positions. The Fund will invest in a number of global listed real estate companies, groups or funds. The investment strategy is to make investments in real estate securities at a price that will deliver a real, after inflation, total return of 5% per annum (before costs and fees), inclusive of distributions over a longer-term period. The Investment Strategy is indifferent to the constraints of any index benchmarks and is relatively concentrated in its number of investments. The Fund is expected to own between 20 and 40 securities, and from time to time up to 20% of the portfolio maybe invested in cash. The Fund is $A un-hedged.
Manager Comments	Quay Global Real Estate Fund delivered a +1.8% return for the month, with approximately +1.1% derived from underlying investment performance, while a weaker AUD added +0.7%. The Global real estate Index (FTSE/ EPRA NAREIT Developed Index Net Total Return AUD) returned +1.5%. Since inception in July 2014, the Fund has an annualised return of 16.1% p.a. Leg Immobilien (German residential property) and Hispania Activos (Spanish Diversified) were among the strongest contributors to the month's total return. However, holdings in Store Capital (US) and Brixmor (US) detracted from the performance. Multifamily/apartments (16.4%), Storage (11.8%) and Industrial (10.9%) were the most heavily weighted sectors in the portfolio. During the month, cash holdings increased from the prior month's 5.2% to 13.3%.
More Information	Fund Profile Manager's Report

Paragon Australian Long Short Fund

9 Jun 2017 - Australian Fund Monitors

The Paragon Australian Long Short Fund rose 1.30% for the month of May, outperforming the S&P/ASX 200 Accumulation Index, which returned -2.75%, by +4.05%.

9 Jun 2017 - Paragon Australian Long Short Fund

By: Australian Fund Monitors

Report Date	08 June 2017
Manager	Paragon Funds Management
Fund Name	Paragon Australian Long Short Fund
Strategy	Equity Long/Short
Latest Return Date	May 2017
Latest Return	1.30%
Latest 6 Months	-5.48%
Latest 12 Months	-16.67%
Latest 24 Months	3.37%
Annualised Since Inception	11.83%
Inception Date	28 February 2013
FUM (millions)	AU$73.8
Fund Overview	The Fund is a concentrated long/short Australian equities product that is fundamentally driven with a focus on the industrial and resource sectors. Paragon's own research process and active portfolio management is overlaid with risk management and an overarching focus on capital preservation. Paragon believes that markets are not always efficient, exhibiting a common tendency to price securities well outside of their intrinsic value over the medium term. This market characteristic provides the opportunity for Paragon, an active manager with a flexible mandate, to generate superior investment returns over the longer term. Paragon believes that it is critical to understand both the companies and the industries in which they operate, in order to fully comprehend each investment opportunity. Accordingly, a fundamental approach to company research is taken. Assessing the potential downside is also paramount in framing the risk/reward trade-off for potential investments.
Manager Comments	The Paragon Australian Long Short Fund rose 1.30% for the month of May, outperforming the S&P/ASX 200 Accumulation Index, which returned -2.75%, by +4.05%. The Fund's annualised return of 11.83% p.a., remains in excess of the ASX 200 Accumulation Index's 7.4% p.a. Main contributors to the positive result in May were gains in Kidman Resources, Aristocrat Leisure, Agrimi, and Global Geoscience, plus short positions in Select Harvest and Super Retail Group. At the end of the month, the Fund had 34 long positions and 19 short positions, with 47.5% of the portfolio in cash.
More Information	Fund Profile Manager's Report

Allard Investment Fund

8 Jun 2017 - Australian Fund Monitors

The Allard Investment Fund (AIF) increased 1.87% during the month of May 2017 and is up 19.71% for the latest 12 months.

Bennelong Long Short Equity Fund

7 Jun 2017 - Australian Fund Monitors

Bennelong Long Short Equity Fund rose 2.86% for the month of May, outperforming the S&P/ASX 200 Accumulation Index, which returned -2.75%, by +5.61%.

7 Jun 2017 - Bennelong Long Short Equity Fund

By: Australian Fund Monitors

Report Date	06 June 2017
Manager	Bennelong Long Short Equity Management, a Bennelong boutique
Fund Name	Bennelong Long Short Equity Fund
Strategy	Equity Market Neutral
Latest Return Date	May 2017
Latest Return	2.86%
Latest 6 Months	13.18%
Latest 12 Months	1.61%
Latest 24 Months	33.56%
Annualised Since Inception	16.85%
Inception Date	01 January 2003
FUM (millions)	AU$430.9
Fund Overview	Bennelong Long Short Equity Management applies a qualitative stock selection process to construct a diversified portfolio of paired securities based on relative value. The Bennelong Long Short Equity Management strategy invests primarily in the S&P/ASX 100 and is dollar neutral at cost. 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	Bennelong Long Short Equity Fund rose 2.86% for the month of May, outperforming the S&P/ASX 200 Accumulation Index, which returned -2.75%, by +5.61%. The Fund's long-term performance since inception remains strong with annual returns of 16.85% p.a. (ASX 200 Accumulation Index 7.95% p.a.) with a volatility of 12.08% (Index 12.81%). Performance comprised a majority of profitable pairs vs loss-making pairs. The Fund's top pairs for the month were long Aristocrat (ALL) / short Tabcorp (TAH) and long Qantas Airways (QAN) / short Flight Centre (FLT). While the two bottom spreads included long BlueScope Steel (BSL) / short Sims Metal (SGM) and long Carsales (CAR) / short News Corp (NWS).
More Information	Fund Profile Manager's Report AFM Research Reports

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15 Jun 2017 - Optimal Australia Absolute Trust

15 Jun 2017 - Fund Review: Bennelong Long Short Equity Fund May 2017

14 Jun 2017 - Bennelong Kardinia Absolute Return Fund

13 Jun 2017 - Cyan C3G Fund

12 Jun 2017 - Hedge Clippings

12 Jun 2017 - APN Asian REIT Fund

9 Jun 2017 - Quay Global Real Estate Fund

9 Jun 2017 - Paragon Australian Long Short Fund

8 Jun 2017 - Allard Investment Fund

7 Jun 2017 - Bennelong Long Short Equity Fund

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