NEWS
12 Jun 2015 - Hedge Clippings
That's not a bubble, This is a bubble! Or is it?
Hedge Clippings spent an interesting and informative morning this week at Money Management's Asset Allocation event. Apart from moderating a series of discussions covering retirement income amongst financial and wealth advisors, we were treated to a keynote presentation from Stephen van Eyk.
Stephen opened his address by stating that in preparing his presentation he had determined that he would try to put a positive view on his outlook for our collective financial outlook, but that having sifted through all the data and looked at the evidence, this would unfortunately not be possible. No matter which way one looked at it, Australia's low economic growth wasn't responding to interest rates of 2%, and weren't likely to, providing a headache for both the government and the RBA.
The event was wrapped up with a panel discussion entitled "What is the New Bubble", consisting of five leading fund managers, namely Alva Devoy from Fidelity, Tim Samway from Hyperion, Dr Phil Hofflin from Lazard, Anton Tagliaferro from IML, and Matthew Drennan from IOOF. Some interesting ideas, comments and statistics emerged with the usual varying degrees of optimism and pessimism, some of which I managed to recall after the event. Of course given the RBA's comments earlier in the week regarding Sydney house prices, and some typically insensitive, albeit obvious comments from the Treasurer, the discusion leaned towards a real estate bubble.
Anton noted that he did not expect a crash, as they only occurred when not expected, although he also noted the concentration risk within equity markets, and that in his opinion QE had resulted in one of the greatest examples of wealth transfer (from tax payers to financial markets) in history. His expectation was that low growth is set to continue.
Alva Devoy noted that we should get used to current conditions as the "new normal" and it was likely to be 10 years before interest rates returned to the old normal, and that as a result monetary policy would continue to support stretched equity valuations.
Phil Hofflin wondered if we were heading down the Japanese path of long term low growth in spite of central bank stimulation, and turning to the housing market warned of the 65/65 ratio: 65% of bank assets in Australia are in housing, which in turn is on a PE multiple of 65 times, and that the total value of Australia's housing market, if it does correct, is many times larger that the equity market.
Finally Matthew Drennan cautioned that traditional safe havens may not turn out to be so safe. All in all while some of the panel were more cautious than others, along with Stephen van Eyk, none were overly optimistic either.
Specific results received this week include the following PERFORMANCE UPDATES:
Monash Absolute Investment Fund returned -0.40% in May, taking annualised performance since inception in May 2012 to 15.35%.
The Bennelong Long Short Equity Fund performance in May was down 1.91% taking annualised performance since inception in January 2003 to 17.05%.
Allard Investment Fund returned 1.0% during May, with annualised performance since July 2003 of 9.99%.
FUND REVIEWS released this week: Insync Global Titans Fund; Monash Absolute Investment 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 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 finally best wishes for a happy and healthy week-end ahead,
Chris
CEO, AUSTRALIAN FUND MONITORS
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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 Subscribershave 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 2:15 pm 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.
12 Jun 2015 - Bennelong Long Short Equity Fund
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| Fund Overview | In a typical environment the Fund will hold around 70 stocks comprising 35 pairs. Each pair contains one long and one short position each of which will have been thoroughly researched and are selected from the same market sector. Whilst in an ideal environment each stock's position will make a positive return, it is the relative performance of the pair that is important. As a result the Fund can make positive returns when each stock moves in the same direction provided the long position outperforms the short one in relative terms. However, if neither side of the trade is profitable, strict controls are required to ensure losses are limited. The Fund uses no derivatives and has no currency exposure. The Fund has no hard stop loss limits, instead relying on the small average position size per stock (1.5%) and per pair (3%) to limit exposure. Where practical pairs are always held within the same sector to limit cross sector risk, and positions can be held for months or years. |
| Manager Comments | The short positions were more the driver of the Fund's under-performance than the long positions. A review of the key contributing loss-making shorts, has the Fund Manager confident it was not due to fundamental factors, more the noise associated short-term monthly measurement. The Fund activity for the month of May was modest with weightings revised for few pairs, with a new pair within the Financials sectors - long National Australia Bank / short Bendigo Bank. Click below to read the Fund Manager's complete commentary and future market outlook. |
| More Information |
11 Jun 2015 - Fund Review: Insync Global Titans Fund April 2015
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 decreaed by 0.40% during the month of April. The performance was driven by positive contributions from our holdings in Nestle, Reckitt Benckiser, Experian and Sanofi as well as the weaker Australian dollar. The main negative contributors were Time Warner Cable, Microsoft and Discover Financial Services. The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside.
- 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.
Insync Global Titans Fund AFM Fund Review April 2015 (pdf format)
11 Jun 2015 - 15th Annual Wraps, Platforms & Masterfunds Conference 2015
FEEDING FRENZY - SECURING MARKET SHARE IN A COMPETITIVE ENVIRONMENT
26-28 August 2015
Crowne Plaza, Hunter Valley
The evolving regulation and business of financial services, as well as the rapid growth of Fintech, have made the politics of distribution for financial products more competitive than in recent years. With the market swimming with new entrants, there has never been a better time to collaborate and to compete to achieve distribution success in a crowded ocean.
The 15th Annual Wraps, Platforms & Masterfunds Conference will provide solutions for succeeding in a distribution world of endless possibilities, showcasing strategies to help your business achieve the biggest bite of market share, use innovation to overcome problems and support opportunities.
With insights from Steve Baxter, entrepreneur, investor and 'Shark' from Network Ten's television series Shark Tank, this conference will provide a unique perspective on the feeding frenzy of new entrepreneurs keeping platforms alive.
Key topics and conference themes include:
- The Murray Inquiry and future of financial services
- The changing market dynamics of the financial advice industry
- Licensee negotiation and approved product list strategies
- What financial advisers want from technological service providers
- Developments in the fintech - opportunities and threats
- Overview of the dealer group market and
- What dealer heads want
- Marketing and product distribution strategies
- Adapting to changes in the dealer group market
- Strategies for attaining market share in competitive technology markets
Who should Attend?
The conference is a must-attend event for any financial services business or provider seeking to better understand the current market and opportunities for growth. Over 14 years the conference has delivered market intelligence, insights and opinions to:
- Platform providers
- Dealer group heads and other senior executives
- Investment researchers
- Fund managers
- Distribution heads and senior distribution managers
- Senior product and marketing managers
- Financial advisers
- Mortgage industry executives
- Other intermediary businesses seeking to diversify in the financial planning/advice sector
Contact
Registration enquiries
Craig Lynch
Phone: 02 8045 2020
Email: [email protected]
General enquiries
Jennifer Hardy
Phone: 02 8045 2067
Email:[email protected]
Sponsorship enquiries
John Briggs
Phone: 02 8045 2010
Mobile: 0418 694 292
Email: [email protected]
2015 wraps platforms conference agenda (pdf format)
10 Jun 2015 - Monash Absolute Investment Fund
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| Fund Overview | The fund seeks to identify opportunities in the share market to make positive returns (long and short) irrespective of market conditions. It is style agnostic, as compelling investment opportunities exist across all investment styles from time to time. The Fund places a high priority on capital preservation, and has an absolute return focus in accepting market risk. The Manager's experience across value, growth and discounted cash flow styles allows them to use a comprehensive approach to investment decisions that applies all three. They also have the patience to seek out only compelling opportunities, rather than settling for relative value. The portfolio is somewhat concentrated, looking to diversify across industries and themes, rather than by trying to stay near an index. The portfolio may at times have a large amount of cash or other protection. However once investments are made turnover may be relatively high in order to lock in gains and avoid losses. |
| Manager Comments | The fund continues to have a low Beta and a relatively weak correlation with the market. Over the last three months, the fund is up 0.75%, while the market is down. Most of the Fund's stocks had a good month, with the average returns from the Outlook Driven stocks and the Product Launch group positive. However the Fund had a weak result from the Event Trade stocks. Click the link below to the rest of the Fund Manager's Report. |
| More Information |
9 Jun 2015 - Fund Review: Supervised High Yield Fund April 2015
We would like to highlight the following aspects of the Fund:
- The Supervised High Yield Fund (SHYF) 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 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 identify 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 for 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.
5 Jun 2015 - Hedge Clippings
Volatile global bond markets unsettle markets
While equity markets usually grab the business headlines, it is the global bond market which really carries the punch. The past month has seen some extreme, and worrying moves on bond markets, with German 10 year bonds moving from 0.05% to 0.90% in an unprecendented period of volatility, in part driven by dwindling liquidity.
Other markets have followed suit, with the US 10 year rate moving from 1.80 to 2.30%, and Australia's from 2.30 to 3.05%.
The background for the situation has been created in part by central bank intervention which has pushed interest rates to unsustainably low levels on the back of QE, and in part by regulators forcing, or at least discouraging, banks from participating as market makers though legislation such as the Volker Rule contained in the Dodd Franks Act.
Expect to hear and feel much more of the outcome of these moves over the weeks to come, with bond markets reportedly 3 times the size of equities. As George Colman from Optimal notes in his monthly note "Beware the bonds: Central banks may just have lost control". Regular readers of Hedge Clippings will note we are prone to quoting George, who has been on the bearish side for some time, but having returned 2% for each of the past two months it is more than possible that his views are worth listening to.
Australia's situation is somewhat different, although no less worrying, in spite of Treasurer Hockey's describing those concerned about the economy as "clowns" for being negative. No sooner had he done so than flat retail sales figures for April were released, possibly indicating who was really wearing the clown's outfit.
Specific results received this week include the following LATEST PERFORMANCE UPDATES:
Supervised High Yield Fund rose 0.52% during April to bring the Fund's annual return since inception to 10.18% aganst the RBA Cash Rate return of 3.47%.
QATO Capital Market Neutral Long/Short Fund although down -2.96% in April has still returned 16.93% over the last 6 months.
The Insync Global Titans Fund fell -0.40% in April, with 12 month performance 19.27%.
Signature Quantitative Fund returned -2.10% for April, to bring the annual performance since inception to 13.11%.
The Cor Capital Fund was down 0.65% in April to bring annual performance since inception to 5.55% p.a., compared to the RBA cash rate of 2.68% p.a.
FUND REVIEWS released this week: Morphic Global Opportunities Fund and Aurora Fortitude Absolute Return Fund.
FUND IN FOCUS VIDEO released this week: Jack Lowenstein, the Joint CIO of the Morphic Global Opportunities Fund discusses the fund's positive return in May and his outlook for markets over the next quarter.
11 - 12 June 2015 - The 2nd Annual Asset Allocation Conference 2015
20 - 21 August 2015 - The 2nd Superannuation Fund Investment Operations Forum 2015
15 September 2015 - AIMA Australia Hedge Fund Forum 2015
And Now for Something Completely Different: One of Australia's larger than life characters of the past 40 or 50 years, Alan Bond, passed away earlier today. "Bondy" had his ups and downs, but always seemed to somehow bounce back from adversity, with an irrepressible attitude and belief.
In 1983 Alan Bond did what many, including the New York Yacht Club, thought was impossible, winning the America's Cup trophy when all before him had failed. Most Australians old enough to remember can still recall the moment on 26th September, 1983 when Australia ll came back from almost certain defeat, prompting wild celebrations even from people who would not have known port from starboard, bow from stern, or halyard from sheet.
You can re-live the final few minutes of the winning race here.
And on that note, Monday being a public holiday to celebrate the Queen's birthday, enjoy the long week-end.
Kind regards,
Chris
CEO
Connect with me on LinkedIn and Twitter
|
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 Foxtel's Sky Business every 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.
5 Jun 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 | In April, the Capital Raisings and Alpha Capture strategies continued their recent strong performance. The Dividend Arbitrage strategy under-performed, due to an exposure to the banking sector as well as the relative under-performance of dividend yield stocks. Click the link below to view the latest Monthly Report. |
| More Information |
4 Jun 2015 - Insync Global Titans Fund
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| Fund Overview | Insync employs four simple screens to narrow the universe of over 40,000 listed companies globally to a focus group of high quality companies that it believes have the potential to consistently grow their profits and dividends. These screens are size of the company, balance sheet performance, valuation and dividend quality. Companies that pass this due diligence process are then valued using dividend discount models, free cash flow yield and proprietary implied growth and expected return models. The end result is a high conviction portfolio of typically 15-30 stocks. The principal investments will be in shares of companies listed on international stock exchanges (including the US, Europe and Asia). The Fund may also hold cash, derivatives (for example futures, options and swaps), currency contracts, American Depository Receipts and Global Depository Receipts. The Fund may also invest in various types of international pooled investment vehicles. At times, Insync may consider holding higher levels of cash if valuations are full and it is difficult to find attractive investment opportunities. When Insync believes markets to be overvalued, it may hold part of its resources in cash, or use derivatives as a way of reducing its equity exposure. Insync may use options, futures and other derivatives to reduce risk or gain exposure to underlying physical investments. The Fund may purchase put options on market indices or specific stocks to hedge against losses caused by declines in the prices of stocks in its portfolio. |
| Manager Comments | The performance was driven by positive contributions from holdings in Microsoft, Publicis, BAT, Reckitt Benckiser and Nestle. The main negative contributors were McDonald's, Zimmer and Medtronic. The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside Click below to read the latest Fund Manager Report. |
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3 Jun 2015 - Supervised High Yield Fund
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| Fund Overview | The fund may also invest in interest rate swaps, options over authorized investments and exchange traded futures contracts. All these will be either listed or traded in a market where they can be independently valued. Fundamental to the investment procedure is the tenet that no debt security will qualify for investment unless it can repay 100% of its principal and interest in a worst case economic scenario. |
| Manager Comments | More than half of the portfolio's composition was in Residential Mortgage-Backed Securities (RMBS) at 60.36%. The rest of the portfolio was divided in the following sectors: US Corporate Loans at 26.67%, Cash at 9.11% and AUD Corporate Loans at 3.86%. Click below to view the latest Fund Manager Report. |
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