• 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 1.06.

• 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)

Twelve month industry and sector performance review

The past 12 months have not been easy for Australian investors, particularly those who had become used to double digit returns from high yielding equities, and bank stocks in particular, over the past couple of years. Just to add insult to injury, the ASX200 dropped over 5% in June as the crisis in Greece reached a crescendo.

As a result the ASX200 Accumulation Index managed to return only 5.67% for the financial year to 30 June, with 5 out of the 12 months in negative territory. Considering September 2014 recorded a negative -5.37% to add to June's -5.30% this was probably not a bad end result, although probably saved by the buoyant start to the calendar year which saw the market rise 3.27% in January, and a further 6.88% in February.

In the 12 months to June 2014 the market returned 17.43%, and for the period to June 2013 an even better 22.67%, so investors had been provided with a period of 24 months averaging 20% plus per annum. As most investors would appreciate most of the performance was coming from a handful of heavyweight financial stocks and Telstra, so the yield hungry, concentrated portfolios were doing even better.

By comparison, actively managed equity and hedge funds performed admirably in the most recent 12 months, returning 11.34% on average, with 75% outperforming the 5.68% return of the ASX200. Including non-equity funds took a little, but not a lot of, gloss off the result, with all single funds returning 10.53% for the same period.

Of interest was the fact that when looking at individual strategies, Long Only (+16.87%) outperformed Equity Long/Short (+11.76%), while Market Neutral struggled at 4.48%. Taking a geographical breakdown showed Asia leading the regions, with Asia up 12.95% and Asia ex Japan up 18%, while Global funds produced 10.72%, and Australian focused funds came in at 7.92%, with currency gains presumably providing significant tail winds for those not hedging their A$ exposure.

So while a creditable 75% of funds outperformed the local equity market, once again fund selection, and having a reasonably diversified portfolio balancing both performance and risk seemed the best solution for the smart investor.

Full details can be found on the www.fundmonitors.com industry and sector performance page.

Specific results received this week include the following PERFORMANCE UPDATES:

Insync Global Titans Fund outperformed its benchmark MSCI All Country World ex-Australia Net Total Return Index ($A) by 0.50%.

FUND REVIEWS released this week: Bennelong Kardinia Absolute Return Fund; Pengana Absolute Return Asia Pacific Fund; Totus Alpha 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.

15 September 2015 - The AIMA Australia Hedge Fund Forum 2015 is the annual non-profit hedge fund conference organised by the industry for the industry.

And now for something completely different: Today is the last day of July, ushering in the month of August, so named in 8BC by Julius Caesar in honour of Augustus around the time of several of his great triumphs, including the conquest of Egypt. 

So what you might ask? Well, there has been an email doing the rounds entiltled Silver Pockets Full which claims that this August will be unique in that it has 5 Fridays, 5 Saturdays and 5 Sundays, and that this phenomenon only occurs every 823 years.

For those of you who have received the email and belived it, take another look because you've been conned. Apart from the fact that today is Friday, July 31st, every month with 31 days has three days of the week which occur 5 times, and four that occur 4 times.

It took Hedge Clippings a while to work it out, by which time we had forwarded it to a few people, none of whom seemed to spot the issue either. But it does beg the question, who thinks of these things?

And while on the subject of something completely different.... politicians behaving badly: If we thought a $5,000 helicopter ride for our Speaker of the House was above and beyond, how about the (now former) Deputy Speaker of the House of Lords, Lord Sewel who was reported as saying "The question of whether my behaviour breached the code of conduct is important, but essentially technical". 

This after being filmed snorting cocaine, dressed in a red bra, while cavorting with a couple of prostitutes. 

On that note (a five pound one I understand) have a good week-end.

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.

• Totus Capital is a Sydney based long short fund manager established in 2012 by Ben McGarry which aims to place equal emphasis on performance and capital preservation.  The Fund invests mainly in Australia, but also in other developed economies, with a primary exposure to equity markets.
• The Totus Alpha Fund's investment strategy is to identify structural themes, and then seek to drive performance by investing in securities that have concentrated exposure to those themes.  Single stock short positions are used to generate alpha, frequently in under researched parts of the market such as the small and mid-cap space. Index derivatives are used to hedge the portfolio's market risk.
• McGarry qualified as a Chartered Accountant with PWC in 1999 and has 14 years market experience, commencing his career covering European building materials and construction sectors at Morgan Stanley in London. Previous experience included analytical roles at Ausbil, a Sydney based $10bn+ long-only manager, and sell side emerging companies experience at UBS. McGarry's emerging company research with UBS included exposure to a range of sectors including energy, materials, industrials, tech, financials, retail and telecommunications.
• The Fund has delivered an annalised return of 24.97% since inception in March 2012 as compared to 12.14% for the ASX 200 Accumulation Index. The standard deviation has been higher than the Index at 13.44% as compared to 11.48% and the Sharpe ratio is 1.53.  

ATTACHED FILESFund Review: June 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 12.70% p.a. with a volatility of 7.32%, compared to the ASX200 Accumulation's return of 4.93% p.a. with volatility of 14.19%.

• 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 June 2015 (pdf format)