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 large-caps from the ASX/S&P100 Index, with over fourteen-year track record and annualised returns of 17,80%.

• The consistent returns across the investment history indicate 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 1.08 (Index 0.29) and 1.83 (Index 0.31) respectively.

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

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - June 2016 (pdf format)

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 outperformance 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.

• Since inception, the Fund has an annualised return of 20.50% p.a., versus the Index's return of 5.86% p.a. 

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - June 2016 (pdf format)

What a mess - but we'd better just get used to it!

Political turmoil remains the order of the day, and as a result markets are likely to remain in limbo (at best). Of course this is not unique to Australia, given that the formerly Great Britain is undergoing massive turmoil with unknown outcomes. Meanwhile in the US could it really be possible that there will be a President Trump?                          

That thought was unthinkable just six months ago, but then so was Brexit, as was a tied vote in last week's Australian election. It is worth noting that while it looks as if the Liberals will scrape home with a semi workable majority, as of 2:20 this afternoon the Australian Electoral Commission's website showed that on a two-party preferred basis both the Labour and Liberal/National Coalition parties were both in a virtual dead heat at 50%, with just 8,288 votes separating them out of over 10.4 million counted.

As a result Bill Shorten is being hailed a hero by the faithful, concealing the fact that the Labour Party received its second lowest primary vote in almost 100 years. Meanwhile Malcolm Turnbull is having to face down his critics, who are conveniently ignoring the fact that Tony Abbott's primary vote fell by over 9%, indicating that had he remained PM he would have led the Liberals over the proverbial cliff which was Turnbull's justification for replacing him in the first place.

As such at least half population will be disappointed whichever way the result goes, but more importantly, assuming that Turnbull remains Prime Minister, will he be allowed to govern the way most voters wanted him to late last year when he took over? Alternatively, sadly, and most likely, he will be forced to compromise by the right-wing of his own party, and/or the minor parties on the cross benches.

So given Hedge Clippings is supposed to be an review on Absolute Return and hedge funds, why the political analysis? Quite simply because Standard and Poors have quickly announced that Australia is on credit watch, and that if the budget is not fixed we're likely to lose our coveted Triple-A rating.

The unfortunate thing is that there is simply no electoral will to fix the budget, and it seems no political will (or ability) to lead the electorate down the path needed to do so. On the expenditure side it seems too many people are hooked on government benefits, handouts, and concessions of one sort or another, on the income side no one wants to pay more tax or give up generous tax concessions on superannuation or negative gearing, while serious tax reform such as the GST and income shifting offshore are clearly in the too hard basket.

It is therefore difficult to imagine anything that is going to kick the market out of its current sideways trend, at least not in an upward direction. There is still the threat of a Royal Commission into the banking industry, while in the UK six retail UK property funds with $18 billion worth of assets have been frozen due to liquidity problems. Or should that be illiquidity problems?

Investors should therefore be careful. There may be a collective sigh of relief from the business sector that the Liberals will likely scrape home for the next three (difficult) years, but as the numbers above show a change of government is easily on the cards next time around.

Volatility in markets will continue to occur to match the lack of a clear political outcome both here and overseas. And in such markets investors need a hedge against volatility.

PERFORMANCE NEWS

Meme Australian Share Fund rose 0.61% in June, outperforming the ASX 200 Accumulation Index which returned -2.45%, by 3.06%.

Bennelong Long Short Equity Fund returned -1.04% in June and 24.05% over the last 12 months.

The Paragon Fund rose 6.30% after fees for the month of June, to take annualised return since inception to 24.06% p.a.

FUND REVIEWS released this week: Insync Global Titans Fund; Supervised Global Income 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.

SUPERVISED GLOBAL INCOME FUND

Attached is AFM's updated Fund Review on the Supervised Global Income Fund (SGIF).

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

• The Supervised Global Income Fund (previously Supervised High Yield Fund) 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 identifies 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 of 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 FILESAFM Fund Review - May 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's unit price increased by 6.3% in May. The performance was driven by positive contributions from the holdings in Microsoft, Medtronic, Zimmer Holdings, Comcast and Reckitt Benckiser. A small negative contribution came from the holding in Mead Johnson Nutrition.

• 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 - May 2016 (pdf format)

Uncertainty Rules!

The fallout from Brexit, which had only just hit the newswires when Hedge Clippings went to print last Friday, continues, and what a shambles it shows democracy to be at times.

Of course, it was Winston S. Churchill who famously said that "Democracy is the worst form of government, except for all the others" although I am not sure he wouldn't reconsider that opinion given the uncertainty that not only the UK and Europe but also the rest of the world now faces. Of course, it's unlikely that had Churchill still been around that England would have joined the EU in the first place. It is even less likely that he would have fallen into the trap of leaving such an important decision to mere voters, particularly given the U.K.'s non-compulsory voting system which allowed a little less than 36% of those eligible to vote to carry the day.

We can't imagine that David Cameron will go down as a great British PM, and now Boris has pulled out of the race who knows what the outcome will be? The only definitive outcome is ongoing uncertainty, and uncertainty is not a friend of financial markets or economic growth.

Depending on which newspaper one reads in Australia, tomorrow's local election result is either going to be a cliff-hanger, or a win to Malcolm Turnbull and the Liberal coalition. Either way the worst outcome, although one that is quite possible, is that neither party will have the clear run or majority in the Senate to implement their stated policies. If you're on the side of the losing party of course this is probably seen as a positive, but from the point of view of strong government, and economic growth it will just lead to further uncertainty.

Whatever the result we can't see economic growth being anything other than lukewarm at best for the next three years as Australia, like the rest the world, will be impacted to a degree by Europe. And that's even before the potential for Donald Trump to make it to the White House following November's US election.

If that outcome eventuates any uncertainty will become a certainty.

PERFORMANCE NEWS

Pengana PanAgora Absolute Return Global Equities Fund generated a positive 0.88% for the month of May. The Fund has a low systematic risk (beta) to the ASX200 and the MSCI World Indices of 0.07 and 0.08 respectively.

Insync Global Titans Fund  returned +6.30% in May, outperforming the MSCI All Country World ex-Australia Net Total Return Index in $A which returned 5.5%, by 0.80%.

KIS Asia Long Short Fund returned -0.25% for the month of May, to take annualised return since inception to 14.70% p.a.

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

And on that note, try to have a great weekend working out not only the strange ways of the democratic World, but also the Australian Senate voting paper.

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.

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.

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

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - May 2016 (pdf format)