NEWS
25 Jul 2015 - Hedge Clippings
GST finally on the table
It took New South Wales Premier Mike Baird to get the subject of raising and broadening the GST onto the front pages, and I expect we will never know if this was at the behest of Tony Abbott or Joe Hockey, or if he did it off his own bat. In any event at least it's done, and maybe there can now be a sensible debate about proper tax reform.
Regular readers of Hedge Clippings would know that we have been advocating for (or some would say banging on about) the need to expand the GST since Joe Hockey's first budget was released back in May 2014. In our view the rate could be increased to 15% and broadened across all goods and services, which would merely bring it into line with most other developed countries. In fact at 15% it would still be well under the rate charged in many parts of the world.
Of course the immediate response from some sections of the community, including a couple of State Labour Premiers, was that the GST was an unfair tax because it took a larger proportion of poorer people's incomes compared with higher earners. For some reason they completely ignored (presumably because they chose to) the logical suggestion put forward by Baird that there should be appropriate compensation for those on lower incomes, or on pensions.
They also ignored the fact that higher income earners are also higher spending consumers, and therefore would generate greater GST revenue. They also ignored the fact that now the system is installed, increasing the rate or broadening it is very simple from an administrative and collection perspective.
The risk now would seem to be that either the proposal doesn't make it through to reality, or worse still that a further compromise is done and it will take another 10 or 15 years before anyone has the political will to do it properly. One has to remember that the current system is a compromise in itself, with John Howard giving in to pressure from the Greens to apply GST to only half the economy in order to get it through Parliament.
Assuming the GST does get into the mix at the upcoming Taxation Review, which Abbott had previously indicated would not be the case, it might be helpful if the government allowed other taxation sacred cows, such as negative gearing and superannuation concessions, to be debated at the same time. There seems little point in having a taxation review, like the one organised by the previous government under the care of Ken Henry, if the entire system can't at least be explored.
Specific results received this week include the following PERFORMANCE UPDATES:
Pengana Absolute Return Asia Pacific Fund finished -2.39% for the month, compared to the Asia Pacific markets which fell -3.3%. Since inception the Fund has an annualised return of 10.90% p.a.
FUND REVIEWS released this week: Bennelong Long Short Equity Fund; Morphic Global Opportunities Fund
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 Conferenc ewill 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 $300to all investors and advisors using coupon codepromoFMon 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 finally, best wishes for a happy and healthy week-end ahead,
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
Connect with me on LinkedIn Twitter Facebook
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Registration to AFM is free and provides general information and performance data on Absolute Return, Hedge Funds and Alternative Investments. |
Fund Managers and paid Subscribers have access to details on Individual Managers and Funds, with historical results, key performance indicators, latest news andperformancereports. |
Prism Select provides self-directed investors and their advisors with factual information, performance data and opportunity to apply for funds online usingOLIVIA123. |
Tune into Sky Business on Foxtel every week on Monday at 2:15pm for AFM's weekly comment. |
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.
24 Jul 2015 - Pengana Absolute Return Asia Pacific Fund
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| Fund Overview | The Fund will usually hold 40 to 80 positions and will be well diversified across the various event strategies. In keeping with the absolute return focus the Manager will eliminate market risk where appropriate by hedging market and foreign currency risks. Since inception the Fund has averaged a net equity market exposure of ~10%. Sizing of an investment position will depend on the expected risk adjusted returns while taking account the liquidity and volatility of the stock. In addition, the maximum potential loss on any one position should be greater than 0.5% of the NAV and the position should not exceed 30% participation of stressed volume assuming a $200m NAV. Other criteria considered are ability to hedge and the availability of pair candidates as well as the average bid-ask size. For M&A strategies average long position is 3 to 5.5% and average short position 2 to 5%. |
| Manager Comments | Macro turbulence hit full swing with the de-risking in China overshadowing events in Greece. This extreme volatility made hedging the Fund's greater China exposure challenging, resulting in the negative performance of Chinese companies across most sub-strategies. The Fund ended the month with average net and gross exposure of 10.7% and 231% respectively. The Index Futures strategies contributed most towards the Fund's monthly performance. However, Capital Management and M&A strategies were the major detractors. The country exposure as percentage (%) of NAV was most in Japan with gross of 59.40%, followed by Hong Kong/China at 50.30%. Click below to read the complete Fund Manager's Report |
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23 Jul 2015 - Meme Australian Share Fund
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| Fund Overview | The Fund's investment strategy seeks to identify low-risk entry opportunities and then build positions in these stocks. Once established in the portfolio, individual stock holdings are maintained for as long as their long-term upward trend remains intact and while they continue to make positive contributions to portfolio growth. Positions are reduced and ultimately closed out as their trends become exhausted or as their relative long-term performance against the broad market weakens. The Fund believes that longer time frame investments also provide a number of advantages. The effect of false signals and 'noise' which attend shorter term time frames is mitigated by only attending to signals which are confirmed by our longer term assessments. Also, the Fund gains exposure to the more expansive price trends which can last for months and years, allowing dividends and distributions received during this time to further enhance portfolio returns. |
| Manager Comments | The Fund return for the Quarter was negative, at -4.36% although it comfortably outperformed the Fund's Benchmark All Ordinaries Accumulation Index, which returned -6.25% for the same period. Recent market volatility has resulted in an increase in the cash holding in the portfolio to about 30% and exposures to all market sectors have reduced apart from Materials, Energy and Information Technology which have enjoyed small absolute increases. Click below to read the latest Fund Manager's commentary on the Fund. |
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23 Jul 2015 - Fund Review: Bennelong Long Short Equity Fund June 2015
BENNELONG LONG SHORT EQUITY FUND
Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.
- The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large cap stocks from the ASX/S&P100 Index, with over twelve year track record and annualised returns of 17.35%.
- The consistent returns across the investment history indicates the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market. The Fund's Sharpe Ratio and Sortino Ratio are 1.05 (Index 0.32) and 1.76 (Index 0.35) respectively.
Fund Review: Bennelong Kardinia Absolute Return Fund June 201522 Jul 2015 - Signature Quantitative Fund
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| Fund Overview | SQF has been established to profit from anomalies surrounding event driven, behavioural & factor based structural market inefficiencies which generate significant profits and are uncorrelated & persistent over time. Specific strategies such as dividend arbitrage, index addition and deletion, tax year end, capital raisings, among other strategies are used by the Fund. The Fund's initial focus is on investing in Australian and New Zealand markets. |
| Manager Comments | The Australian market suffered a large drawdown in June (-5.30%), and the net exposure of SQF also under-performed. The Tax Year End Effect did not work in May and June which was consistent with the poor performance of the momentum factor in Australia over the last 4 months. Capital Raisings outperformed and Alpha Capture under-performed slightly. Click the link below to view the latest Monthly Report. |
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21 Jul 2015 - Fund Review: Morphic Global Opportunities Fund June 2015
MORPHIC GLOBAL OPPORTUNITIES FUND
Attached is our most recently updated Fund Review on the Morphic Global Opportunities Fund.
Key points include:
- The Fund is a global equity long/short manager with a long bias and a macro-economic overlay. The mandate allows the Fund to short sell, use derivatives and invest in assets such as commodities & currencies.
- Morphic's philosophy is that only funds with flexible investment and hedging strategies will be able to deliver acceptable, steady, real, absolute returns over the investment cycle.
- The Fund is an early stage, boutique, Sydney-based fund established in 2012 with experienced CIO's, and an investment team of 6 including a risk manager.
- The Board has a majority of independent members with significant risk and investment experience.
For further details on the Fund, please do not hesitate to contact us.
21 Jul 2015 - Totus Alpha Fund
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| Fund Overview | The Fund is a long/short investment fund principally investing in listed entities, commodities, futures and options in Australia and internationally. The Fund is not a market neutral fund and accordingly may switch between net long positions and net short positions. The Fund may use short sales and derivatives. Gearing may be used to enhance returns and the Fund may be geared in excess of 100% of the Fund's Net Asset Value. There is a limit to net exposure of 150%. |
| Manager Comments | At the end of June, the fund had a net exposure of 13.90% and a gross exposure of 296.10%. The fund was diversified across a number investment themes and geographies with 113 positions (59 long and 54 short).Top contributors in June were the short position in Slater and Gordon +1.41% (Earnings Risk), long positions in Smartgroup +1.07% (Scarce Growth) and Adairs +0.65% (Scarce Growth). The biggest detractors were the long positions in Flight Centre -0.59% (Scarce Growth), Domino's -0.32% (Scarce Growth) and the short position in Sandfire -0.57% (Commodities). Click below to read the latest Fund's Monthly Report. |
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20 Jul 2015 - Bennelong Kardinia Absolute Return Fund
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| Fund Overview | The Fund's discretionary investment strategy commences with a macro view of the economy and direction to establish the portfolio's desired market exposure. Following this detailed sector and company research is gathered from knowledge of the individual stocks in the Fund's universe, with widespread use of broker research. Company visits, presentations and discussions with management at CEO and CFO level are used wherever possible to assess management quality across a range of criteria. Detailed analysis of company valuations using financial statements and forecasts, particularly focusing on free cash flow, is conducted. Technical analysis is used to validate the Manager's fundamental research and valuations and to manage market timing. A significant portion of the Fund's overall performance can be attributed to the attention and importance given to the macro economic outlook and the ability and willingness to adjust the Fund's market risk. |
| Manager Comments | The Fund's net equity market exposure (including derivatives) of the Fund was decreased to 39.1% (74.2% long and 35.1% short). A short position in Share Price Index Futures contracts (hedging longs), as well as long positions in Surfstitch and National Australia Bank were the major positive contributors. Long positions in Slater & Gordon, Transurban and Amcor were the largest detractors. Click below to read the June 2015 Fund Report. |
| More Information |
18 Jul 2015 - Hedge Clippings
Greek double somersault and pike, with a twist.
Markets recovered over the past week based on one of the more spectacular backflips in political history. One wonders what the Greek referendum was all about, given the man who having called it, recomended a NO vote, and then got his wish, seemed to ignore the result. Irrespective of whether one belives the Greeks should, or should not accept the medicine their northern neighbours, particularly the Germans were prescribing' hardly matters. No wonder that the 60% of the Greek population that voted no are less than happy, or even decidely grumpy.
What seems odd to fathom is how anyone thinks the so called solution will cure the underlying problems? Adding more new debt to cover that already in place, as any consumer with a bunch of maxed out credit cards in their wallet would, or should know, would seem to be simply kicking the can a further three years down the road. So look out for Grumpy Greeks for at least the next three years, and Grumpy Germans when it all returns to bite them in three years' time.
And so to China, which along with Greece seems to have been the major topic of Hedge Clippings for the past few weeks, as it has been for the mainstream financial press. Chinese quarterly GDP figures, once again delivered so swiftly that one has to assume they're fudged, came in at 7%, bang on target. What a wonderful co-incidence! Given Singapore's quarterly GDP declined sharply by 4% yoy, and a massive 14% annualised, in no small part as a result of reduced manufacturing and exports to China, it makes the Chinese GDP result even more questionable.
What makes the data so rubbery is that power comsumption in China grew by just 0.8% over the quarter yoy, well below expectations and one of the lowest rates of quarterly growth in the past 20 years. Crude steel and pig iron production fell 1.7% over the quarter, the first decline since records began in 1994, cement was down 20.5% yoy, and glass by 6.6%, while rail volumes declined by 9%. Even though the reported GDP growth was 7% for the quarter, this was still the lowest in six years, assuming you take them as gospel.
People in some quarters have been unkind enough to call me a cynic (amongst other things) but I can't imagine why.
Specific results received this week include the following PERFORMANCE UPDATES:
The Paragon Fund returned -3.80% versus the ASX 200 Total Return Index's -5.30%, for the month of June 2015. The Fund's annual return since inception has been 18.82% p.a. versus the Index's 7.46% p.a.
Morphic Global Opportunities Fund outperformed it's benchmark MSCI AC World Total Return in Australian Dollars by 0.31%.
FUND REVIEWS released this week: Monash Absolute Investment Fund; Optimal Australia Absolute Trust
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 $300to all investors and advisors using coupon codepromoFMon 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.
It's a while since "Now For Something Completely Different" featured one of our four legged friends, so this might bring a smile to your face.
And finally, best wishes for a happy and healthy week-end ahead,
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
Connect with me on LinkedIn Twitter Facebook
|
Registration to AFM is free and provides general information and performance data on Absolute Return, Hedge Funds and Alternative Investments. |
Fund Managers and paid Subscribers have access to details on Individual Managers and Funds, with historical results, key performance indicators, latest news and performance reports. |
Prism Select provides self-directed investors and their advisors with factual information, performance data and opportunity to apply for funds online using OLIVIA123. |
Tune into Sky Business on Foxtel every week on Monday at 2:15pm for AFM's weekly comment. |
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.
17 Jul 2015 - QATO Capital Market Neutral Long/Short Fund
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| Fund Overview | The fund targets a net market exposure of 0% to hedge broader market risks through 30 S&P/ASX-100 positions (15 long and 15 short equally weighted positions). The turnover is generally averaged around 30% of the total portfolio each month. The process is entirely systematic - stock selection and risk management are all employed in a rules based approach. The Market Neutral Long/Short Fund employs no financial leverage, no derivatives and no financial products to imitate leverage. The Investment Manager's three principal investment goals for the Fund are: 1. Market neutral long/short portfolio management with little correlation to equity markets; 2. Over a 3-5 year period, seeking to target annualised volatility of 15% per annum and annualised returns of 15-30% per annum above the Benchmark; Sharpe Ratio 1.0-2.0 and a negative beta to ASX listed equities; and 3. To provide investors with a co-investment opportunity alongside the founding members' investments in the Investment Manager's strategy. |
| Manager Comments | In June, the long book outperformed the market returning -3.88% for the month versus the Index's return of -5.30%. CBA was the third best S&P/ASX-100 position in June, being one of only four companies to finish positive for the month. The short book strongly outperformed in June. The Q-Score process selected the third and fifth worst S&P/ASX-100 positions for the month. Fortescue fell -19.39% for the month and Metcash fell -18.88%. Click below to read rest of the Fund Manager's latest commentary. |
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