• The Aurora Fortitude Absolute Return Fund  (AFARF) has a 10 year track record investing in ASX listed equities. A Market Neutral overlay is used across a multi strategy approach which allows for flexible asset allocation to maximise returns and minimise risk under a variety of market conditions and cycles.CIO John Corr has over 20 years financial market experience with a strong focus on risk.

• Significant use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. Risk statistics are impressive and shows the Funds risk philosophy; over 85% of monthly performances have been positive with no losing months in 2008, the Fund's largest drawdown is -2.09% and the Sharpe ratio 1.07.

• ASX listed Aurora Funds Limited was established on the merger of three existing fund management businesses, managing approx. $230m on behalf of more than 2,500 retail and wholesale investors.

ATTACHED FILESAurora Fortitude Absolute Return Fund Review June 2015 (pdf format)

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 supported by Stephen Nicholls and Justin Hay have over 100 years combined experience in equity markets.

• The Fund's approach to risk is shown by the Sharpe ratio of 1.38 (Index 0.24), Sortino ratio of 3.04 (Index 0.23), 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.

Australian Fund Monitors

ATTACHED FILESFund Review: Optimal Australia Absolute Trust July 2015 (pdf format)

• The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with an nine year track record. 

• The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in April 2006 and also has significantly lower risk KPI's. The Fund has an annualised return of 12.84% p.a. with a volatility of 7.29%, compared to the ASX200 Accumulation's return of 5.37% p.a. with volatility of 14.18%.

• 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.

ATTACHED FILESFund Review: Bennelong Kardinia Absolute Return Fund July 2015 (pdf format)

When the going gets tough....

Regular readers of Hedge Clippings will know that our commentary frequently varies from a focus on fund or industry returns. This week however, given the volatility in markets and the uncertainty that prevails, we will take a look at how actively managed funds as a whole have performed in recent times.

Prior to doing so however it's worth just reflecting on some of the factors disappointing markets. Firstly in Australia the reporting season has been less than stellar, with more disappointments evident than surprises to the upside. Elsewhere the overnight news from Greece was probably a surprise, but it's doubtful if anyone outside Greece is taking much notice any more.

China and the USA remain the big issues driving markets, with two big questions arising: Will the Chinese authorities have a Mario Draghi moment and actually come out and declare that they'll do "whatever it takes", or have they already indicated that they'll do so by their actions? Meanwhile in the US we are getting closer and closer to the day when interest rates will finally rise, and this week has shown that while most understand that, when it actually happens there will be a significant impact on the market.

And so back to the performance of absolute return and actively managed funds. There have been plenty of comments in the press over the past few years that as a whole active managers have not performed sufficiently to justify their fees. In somecases that may well have been the case, but it's difficult to outperform in a strongly rising market, while still protecting the downside.

However, it is evident that when markets begin to underperform, or become volatile, absolute return funds come into their own. Over the past 12 months to the end of July the ASX 200 Accumulation Index has risen 5.68%. When one considers that the index includes dividends, the ASX 200 (excluding dividends) has risen just 1.18%.

Over the same 12 month period equity-based funds in AFM's database have risen 13.43% on average, with 63% of funds outperforming the ASX 200 Accumulation Index. Taking June returns by themselves, when the market fell 5.3% funds significantly protected investors' downside, albeit that they also fell 1.88%. That's still an outperformance of almost 3.5 percent, with 85% of all funds outperforming the market.

Specific results received this week include the following PERFORMANCE UPDATES:

FUND REVIEWS released this week: Monash Absolute Investment Fund; Morphic Global Opportunities Fund; Bennelong Long Short Equity Fund

UPCOMING EVENTS:

20 - 21 August 2015 - The 2nd Superannuation Fund Investment Operations Forum 2015 is a two day forum providing invaluable technological, regulatory compliant and best practice insights into improving back and middle office efficiency to drive member loyalty, bottom line profitability and a competitive edge

26 - 28 August 2015 - The 15th Annual Wraps, Platforms & Masterfunds Conference will provide solutions for succeeding in a distribution world of endless possibilities, showcasing strategies to help business achieve the biggest bite of market share, use innovation to overcome problems and support opportunities. Australian Fund Monitors is pleased to offer a discount of $300 to all investors and advisors using coupon code promoFM on registration.

17 September 2015 - The 14th Annual Hedge Fund Rock and Australian Hedge Fund Awards 2015 as the industry lets its hair down with some drinks, music and great videos. All proceeds go to Redkite helping childern with cancer and their families.

And Now for Something Completely Different. Koala's are renowned for all sorts of things, but generally for being cute, cuddly and sleepy, I'm told becasue they're stoned on the gum leaves they munch all day. Not this one.

On that note, have a good week-end.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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