Meme Australian Share Fund

Attached is our most recently updated Fund Review on the Meme Australian Share Fund.

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

• The Meme Capital Management is a Perth-based boutique Fund Manager, established in 2012 and manages the Meme Australian Share Fund.

• The Fund specializes in technical and quantitative strategies to identify investment opportunities expected to provide both positive price appreciation and relative price out-performance over the medium to long term.

• The Fund's objective is to outperform the S&P/ASX All Ordinaries Accumulation Index over rolling three year periods, through investing in ASX listed securities outside the S&P/ASX 20. The Fund only takes long positions and does not use derivatives.

• Over the past 12 months, the Fund has returned a positive 9.20%, versus the Index's negative 9.59% return. 

Australian Fund Monitors

ATTACHED FILESMeme Australian Share Fund AFM Fund Review March 2016 (pdf format)

SUPERVISED HIGH YIELD FUND

Attached is AFM's updated Fund Review on the Supervised High Yield Fund.

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

• The Supervised High Yield Fund (SHYF) has a 6 year track record investing in fixed interest investments. The Investment strategy aims to deliver returns with zero correlation to equity markets by investing in debt securities with minimal default probability and offering a premium return above the risk free rate.
• The Fund is managed by Philip Carden whose experience in debt and capital markets spans over 33 years, including time with JB Were's Capel Court Securities and Macquarie Bank, where he was the Executive Director responsible for the Debt Markets Division.
• SHYF is an Alternative Income fund which invests in Global and Australian debt markets, with all foreign currency receivables hedged back to Australian dollars.
• The Fund utilises a top down analysis of the economic environment and market to screen and identify debt market opportunities which it believes offer low risk with high yield. The next stage is the development of a risk matrix and investment strategy, following which detailed research is undertaken on specific investment opportunities which meet the pre-defined criteria established in the investment strategy.
• Prior to approving an investment for the Fund each potential investment is subject to two stress tests. The first of these is for credit and default risk, in which the investment is stress-tested to ensure that in a worst case economic environment it can repay 100% of its principal and interest obligations case scenario for the asset by examining the highest margin over the risk rate that the investment has previously experienced in a crisis situation. Any decline in value under the stress test that exceeds 10% of the Fund's value is avoided The second test examines market risk.  In this case Carden looks at the worst case scenario for the asset by examining the highest margin over the risk rate that the investment has previously experienced in a crisis situation.  Any decline in value under the stress test that exceeds 10% of the Fund's value is avoided.

Australian Fund Monitors

ATTACHED FILESSupervised High Yield Fund AFM Review February 2016 (pdf format)

QATO Capital Market Neutral Long/Short Fund

Attached is our most recently updated Fund Review on the QATO Capital Market Neutral Long/Short Fund.

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

• Qato Capital is a Melbourne-based boutique fund manager backed by single family office, Larkfield Funds Management.
• Qato has a systematic, market-neutral strategy which invests exclusively in S&P/ASX 100 stocks.
• The QATO Capital's Q-score process captures and quantifies six broad fundamental factors, which assess multiple underlying sub-categories. Those companies with the top score (quality companies) are included in the "long" portfolio, those with the lowest score are sold short.
• 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 through 30 S&P/ASX-100 positions (15 long & 15 short equally-weighted positions).
• Qato Capital's process is entirely systematic - stock selection and risk management are employed in a rules based approach. The Fund employs no financial leverage/gearing to purchase securities, no derivatives and no financial products to imitate leverage.

Australian Fund Monitors

ATTACHED FILESQato Capital AFM Fund Review February 2016 (pdf format)

INSYNC GLOBAL TITANS FUND

Attached is our most recently updated Fund Review on the Insync Global Titans Fund.

We would like to highlight the following:

• The Fund decreased by 1.8% in February. The performance was driven by positive contributions from the holdings in Paypal, McGraw-Hill, Gilead Sciences, Comcast and Reckitt Benckiser. The main negative contributors were Sanofi, Nestle, McDonald's, Time Warner and Microsoft. The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downsid

• The Global Titans Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.

• Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.

• Emphasis on limiting downside risk is through extensive company research, the ability to hold cash and long protective index put options.

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

Australian Fund Monitors

ATTACHED FILESInsync Global Titans Fund AFM Monthly Report - February 2016 (pdf format)

"Beta" Rally does some damage, and so long Ronnie Corbett. RIP.

While no fund performances for March are available as yet, anecdotal evidence suggests it has been a pretty tough month for many active managers courtesy of a "beta" rally, particulary in stocks of pretty dubious quality, or those that had previously been oversold. This can make it difficult for non index type funds, such as hedge or those seeking absolute returns, as they normally have good reason to either avoid, or short stocks with poor management or a poor outlook, only to see a significant bounce in the price against all apparent logic or fundamentals.

These situations work themselves out over time as the cream always floats to the top, and the dregs sink to the bottom. However, it can take a while for the turbulence to end, and the froth to subside before the end product declares itself and is worth consuming. In this environment investors are best either sitting tight in funds which have a sound long term track record and good risk adjusted performance, or sitting on the sidelines, as many SMSF's have done over the past few years.

The problem with sitting on the sidelines in the current interest rate environment is evident, and sooner or later investors will have to lower their targeted returns from the previously acheivable double digits, to a more realistic single digit number. And if cash is only hovering around 2-3% (and unlikely to move higher in the foreseeable future) then a return of 2 to 3 times that, provided it doesn't come with excess risk, is likley to be pretty attractive.

On a different note we have uploaded an excellent piece to our library by Hugh Dive of Aurora Funds Management on the subject of short selling. Clear and concise the article takes you through the history, mechanics, logic and rationale for short selling in a brief 3 pages which won't send you to sleep or have you reaching for a glass of something.

Against a backdrop of further volatility in March the ASX200 rose 4.17% for the month to halve the YTD losses to 4.02%. Meanwhile:

APN AREIT Fund rose 3.13%, outperforming the S&P/ASX300 Porperty Trust Accumulation Index's return of 2.81%, by 0.32%.

Jamieson Coote Bonds Active Fund rose 1.08% to take annualised performance since inception to 6.10% p.a., achieved with low volatility of 2.53%.

NWQ Fiduciary Fund fell 2.53% bringing the net performance for the trailing 12 months to 9.27%.

The Bennelong Twenty20 Australian Equities Fund returned -2.67% against the ASX 200 Accumulation Index which returned -1.76%.

Affluence Investment Fund returned -0.20% against the Australian equities market return of -1.76%, to give an outperformance of 1.56%.

Pengana Absolute Return Asia Pacific Fund rose 1.10%, compared to FTSE All World Asia Pacific Index which fell 2.05%.

Newgate Real Estate and Infrastructure Fund delivered a negative 0.70% outperforming the ASX200 Accumulation Index, by 1.06%.

Insync Global Titans Fund returned -1.80%, compared to the MSCI All Country World ex-Australia Net Total Return Index in $A, which returned -1.6%.

Pengana PanAgora Absolute Return Global Equities Fund returned -1.62% for the month of February. The Fund has low systematic risk (beta) to the ASX200 and the MSCI World Indices of 0.10.

FUND REVIEWS released this week: Bennelong Kardinia Absolute Return Fund; Meme Australian Share Fund; APN Asian REIT Fund; Totus Alpha Fund; Pengana Absolute Return Asia Pacific Fund; Bennelong Twenty20 Australian Equities Fund

We have not been publishing our usual "and now for something completely different" for some time, partly due to the time it took to find original, and hopefully funny, or original content. However the sad passing of Ronnie Corbett overnight, the "little" half (or should that be one third) but the remaining one of the Two Ronnies should have provided plenty of material.

Sadly the choice was so great it was difficult to choose, but here's a selection put forward by the Independent.  Meanwhile I couldn't find my own favourite, although I can't recall which of the two Ronnies delivered it, dead pan as only they could:

"And now some late news in from Sydney, Australia where a woman has been taken to hospital after being bitten on the funnel by a finger-web spider."

And on that note, have a great week-end.

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.