APN Asian REIT Fund

Attached is our most recently updated Fund Review on the APN Asian REIT Fund.

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

• APN is an ASX-listed fund manager specialising in property investment, with an investment team of six. Established in 1996, APN now has FUM of $A2.1bn including four REIT (Real Estate Investment Trust) funds.
• 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, with the ability to hold some cash and fixed interest investments. 
• 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 can include 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 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.
• APN's Asian REIT Fund invests in a portfolio of 25-40 listed Asian REITs with a core philosophy of investing in properties with sustainable rental income streams.
• The Fund has delivered an annalised return of 17.09% p.a., since inception in July 2011 with a standard deviation of 9.57% p.a. The Sharpe and Sortino ratios are 1.41 and 2.63 respectively.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - May 2016 (pdf format)

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 9.75% p.a., compared to the AFM's Asia Pacific Index of 5.17%. The Fund has achieved this with lower volatility of 6.08% (Index 11.96%).

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

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - May 2016 (pdf format)

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 a nine-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 11.86% p.a. with a volatility of 7.28%, compared to the ASX200 Accumulation's return of 4.78% p.a. with a volatility of 14.21%.

• 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 - May 2016 (pdf format)

Look out for the unknown unknowns...

I don't know if it is just me, boredom with the election campaign both here and in the US, or a case of going grey, getting old (and grumpy) but I get the feeling that something significant is going to shake the world's major economies and their current low growth, low inflation trends.

In the US the Fed kept things on hold once again this week. They have been trying to raise rates for at least a year, but the combination of the economy and the markets won't let them do it. They also have to worry about the potential election of President Trump… 12 months ago that was considered unlikely and therefore, a known known. Now its a known unknown.

Europe is on hold waiting to see if Brexit occurs, and if it does what impact it will have on both economies and markets, and whether it will lead to other European countries following suit. Even six months ago Brexit was hardly mentioned - now it's a known unknown.

Locally we're stuck waiting for the outcome of the July 2 election result, which before Christmas was considered a known known. Now, with the whole nation (excepting the politicians themselves) becoming immune to the daily dose of political campaigning it looks like a known unknown. Even after the election is over, whoever is elected will have to work out how to pay for their promises and kick-start a post-mining boom economy. Another known unknown.

Whilst not always a fan of Donald Rumsfeld, Hedge Clippings would agree that it is the  "unknown unknowns - the ones we don't know we don't know…. that tend to be the difficult ones."

The bottom line  is that whenever investors get used to or expect something to happen (or in this case not to happen), there is the potential for the "unknown unknowns" to arrive unexpectedly and (normally) negatively affect markets.

Of course, as it's unknown, it would be unwise for me to try and predict what such an event might be, and maybe I am being excessively cautious.

So while from week to week we look at some of the best performing funds, there is also  sound reasoning for also looking at the most defensive. Those funds that in spite of the worst that markets throw at them, protect investors' capital.

PERFORMANCE NEWS

Overall the share markets rose in May. The Australian share market (S&P/ASX 200 Index) was up +2.4% for the month. The US market (S&P 500 Index) returned +1.5%, Europe (MSCI Europe Index) gained +1.5%, Japan rose +3.4%, while the rest of Asia was slightly weaker (MSCI Asia ex-Japan -1.6%).

Bennelong Kardinia Absolute Return Fund rose 1.60%, to take annualised return since inception to 11.86% p.a.

Pengana Absolute Return Asia Pacific Fund returned -0.56%, for an annualised return of 9.75%.

Totus Alpha Fund rose 9.36%, to take annualised returns since inception to 25.89% with standard deviation of 15.91%.

Pengana Global Small Companies Fund generated a positive return of 5.11% in May.

APN Asian REIT Fund returned +0.90%, outperforming the Bloomberg Asia REIT Index which returned 0.64%, by 0.26%  and taking annualised returns since inception to 17.09%.

FUND REVIEWS released this week: Meme Australian Share Fund; Jamieson Coote Bonds Active Fund; Optimal Australia Absolute Trust; Bennelong Long Short Equity Fund;

And on that note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.