Hindsight is so easy!

I can't imagine there is anything left to say about Donald Trump's stunning victory last Tuesday that hasn't been said or written elsewhere, but for better or for worse, here's a few more.

It is probably fair to say that the only people who were truly surprised were either those outside the USA, or Democrats within it. And possibly a few Republicans as well, although they might not choose to be reminded of it.

There will no doubt be books written, lectures given, and certainly debates held for a long time to come as to what, depending on one's opinion, went right or wrong. What is most surprising however is the "new" Donald Trump - gracious, polite and reasonable, all characteristics that would have been difficult to ascribe to him based on his electioneering over the past 18 months or so.

Only time will tell whether this is a temporary reprieve, or if Trump in election mode was just a carefully devised plan to gain attention from the so-called "forgotten and downtrodden" and in so doing polarise the electorate. Irrespective of the answer, he is now the President-Elect, and his Party has a seemingly iron grip on government at all levels for the next four years. (Malcolm, how would you like that?)

Over the past few weeks Hedge Clippings has received regular feedback to our Trump/Clinton election comments from a U.S. based subscriber who was adamant that those outside the US, plus those on the West and East coast, simply did not understand reality. Needless to say soon after the result was known we received an email from him titled: Was I Right?

Given that he was 100% spot on, it is worth taking notice of his opinion that "contrary to what the Australian media would like you to believe and have been toting, Donald Trump may make a good President". Assuming he will or can curb the excessive rhetoric, maybe he will.  Our 100% correct subscriber went on to add that it will be interesting to watch Trump and Putin as he feels there will be a big change in the relationship between Russia and the USA.

Certainly equity markets, which had previously been nervously awaiting the outcome, seem to think the outcome is positive, even if it just serves to remove the uncertainty of the unknown. Trump's massive infrastructure spending promise ($1,000 billion over 10 years) could well kick the economy along, and provide some much needed inflation to boot. If only it were all so simple.

Locally there's market uncertainty however, as Trump will govern for America first, and the rest of the World, and Australia second. The potential for trade, or currency wars, would seem to heightened.

PERFORMANCE NEWS 

Bennelong Long Short Equity Fund returned -1.76% in October. The Fund is up 33.63% for the latest 24-months.

Optimal Australia Absolute Trust rose 0.35% in October 2016, outperforming the ASX 200 Total Return Index, which returned -2.15%, by 2.50%.

Pengana Global Small Companies Fund returned -1.20% in October 2016, outperforming the MSCI AC World SMID Cap Index which returned -2.4%, by 1.2%.

Bennelong Kardinia Absolute Return Fund returned -1.85% in October to take the annualised return since inception to 11.29% p.a.

Finally, news has just arrived that one of our favourites from "and now for something completely different", Leonard Cohen has died aged 82. Hedge Clippings is old enough to remember seeing him at the Isle of Wight in 1969. Here's a link to a live version (and explanation) of his great hit Chelsea Hotel.

And on that sad note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

Connect with me on LinkedIn Twitter Facebook

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.

Inertia and indecision to decide the outcome.

The spectre of President Trump is looming larger than ever with investors certainly taking risk off the table - or at least holding fire until the outcome of Tuesday's vote is known, next Wednesday (AEST).

What seemed unthinkable until recently to those outside the Trump camp is now a distinct possibility, but this is going to be difficult to predict and according to the polls, will go down to the wire. There is no doubt that like the recent Brexit vote, it will be the voters who DON'T vote who will decide the outcome of who sits in the White House for the next four years.

As bizarre as this might seem in a country with compulsory voting such as Australia, there is no doubt that Americans, and probably the British, who think a system whereby an upper house candidate can do secret deals and thus, in spite of only achieving a minute vote in percentage terms, hold sway over the government of the day, is equally crazy. Or that the State with the smallest population has the same representation in the Senate as the largest.

And while on politics and Brexit, an interesting dilemma has emerged for British MP's, with the High Court ruling overnight that any decision to invoke Article 50 to leave the EU must be made in Parliament. Should each MP follow the outcome of a national referendum, where less than 40% of the eligible population voted to leave? Or should they abide by the wishes of the voters of their own constituency, who elected them in the first place, the majority of whom may have voted to stay? 

Meanwhile to markets: Trump as Commander-in-Chief would undoubtedly un-nerve markets if for no other reason than it will invoke change, uncertainty, and a fear of the unknown. A second President Clinton (back) in the Oval Office will unnerve investors based on higher taxes, and a Democrat who according to many, (including the Russians who have reportedly been behind her hacked email account) has a dubious past.

Hence risk off.

Meanwhile October fund performances have yet to emerge, but with the ASX falling 2.15% over the month for a 12 month return of 6.1% there is likely to be the usual range. 

FUND REVIEWS released this week: Insync Global Titans Fund

And on that note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

Connect with me on LinkedIn Twitter Facebook

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.

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's unit price decreased by 1.75% in September. The performance was driven by positive contributions from the holdings in Paypal, BAT, Diageo, Unilever and Visa Inc. The main negative contributors were Medtronic, Reckitt Benckiser, Mead Johnson Nutrition and Oraclen. 

• 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 FILESAFM Fund Review - September 2016 (pdf format)

Could we be misjudging the US election outcome?

We are less than two weeks away from the US election which will provide both a media frenzy, and likely decide all our futures. Sitting in Australia the feeling is that no one in their right mind would vote for a President Trump, but sitting in Australia we are not voting.

However, what happens if Trump wins? And could Trump be Hilary Clinton's greatest electoral asset, who based on Wikileaks reports might not be a perfect candidate anyway?

Is there the possibility that like Brexit, a combination of non-compulsory voting, voter apathy with conventional politics, and not being close enough to the detail, means that we are not in a good place to judge the outcome? Today's media seems to indicate that the unthinkable might actually happen.

Either way, Hilary Clinton has promised to raise taxes and spend $500 billion on infrastructure. Trump has promised to reduce taxes and spend double that on infrastructure. That will surely change the supply/demand ratio in the bond market, and send interest rates upwards.

In that environment what will happen to equities? The optimists are hoping that increased economic activity will generate sufficient growth to offset the increase in interest rates, while the doomsday merchants believe it's all going to come down to a case of tears before bedtime.

Remembering what happened when interest rates rose unexpectedly in 1987 - before the stock market crashed - even without the buildup of debt we have seen over the past 7 years, suggests caution will be the investor's best friend.

PERFORMANCE NEWS 

Pengana PanAgora Absolute Return Global Equities Fund rose 1.77% in September. The Fund continues to have a low systematic risk (beta) to the ASX200 and the MSCI World Indices of 0.08 and 0.09 respectively.

APN AREIT Fund returned -3.21% in September. The long term performance since inception remains strong with annual returns of 17.90% p.a.

Totus Alpha Fund returned -5.31% in September. Since inception, the Fund has an annualised return of 24.74% p.a.

Insync Global Titans Fund returned -1.75% in September, compared to the MSCI All Country World ex-Australia Net Total Return Index in $A, which returned -1.20%.

King Tide NZ/Australian Long/Short Equity Fund rose 1.83% in September and +23.77% over the latest 24-months.

FUND REVIEWS released this week: Qato Capital Market Neutral Long/Short Fund; Bennelong Twenty20 Australian Equities Fund;

And on that note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

Connect with me on LinkedIn Twitter Facebook

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.