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 out-performance 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 18.90% p.a., versus the Index's return of 7.92% p.a. 

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - April 2016 (pdf format)

Sell in May and go away - at your peril!

We are never quite sure whether the above adage is simply a useful way to remind investors that markets quieten down over the northern summer, or a serious warning about potential market declines. In any event the rocky and volatile markets of the past 12 months, and the first quarter of 2016 in particular would certainly be encouraging many investors to hold fire from making serious investment decisions for the next few months.

While the worst of January and February's volatility would appear to be behind us, the rebound has not been kind to many fund managers when much of the bounce in some stocks has not been based on fundamentals. While there have only been a few funds report April numbers so far they are at least positive, alongside the ASX 200's accumulated return of 3.37%.

The big question facing most investors now is whether the rally of over 8% in March and April is sustainable, or whether it is merely a bounce from an oversold position based on oversold commodities, and overdone fear on China's outlook. They're still appear to be as many followers of the hard landing scenario as there are of the soft, and so many investors are left with the challenge of whether to hold their gains from the recent rally, or fold their cards and cash in their chips.

The past week has been a big one on a couple of fronts. The RBA cut interest rates by 0.25% just a few hours before Tuesday's federal budget to a historic low of 1.75%, a level not seen since the days of Capt Philip and the first Fleet (and doubtfully not even then). Admittedly this cut was driven more by exceptionally low (negative) inflation than low economic growth, but it now has the pundits wondering if there will be a further cut over the coming months.

Scott Morrison delivered his first budget which on the face of it seemed responsible, including changes to high-end superannuation entitlements, albeit that they were undeniably overly generous in the first place. However justified, making these changes retrospective would appear to be a dangerous precedent. That aside we are now expecting at any moment to officially be in election mode. Hence politics will not only dominate the airwaves, but are likely to dominate investor concerns and uncertainty for the next couple of months until July 2.

Overseas Donald Trump seems to have done what many thought was impossible just six or 12 months ago. Without being an expert on US politics, it would appear that winning the Republican Party nomination was one thing, getting enough people to vote him into the White House might be an altogether more difficult challenge given the multitude of voters who have been insulted or sidelined during the nomination process. The flow on effects of Trump's success so far are unknown, but are likely to be significant and damaging to the Republican Party, whether he makes it to the Oval Office or not.

Abraham Lincoln was quoted as saying that you can "fool some of the people all the time, or all of the people some of the time, but not all of the people all the time". We sincerely hope that is correct!

Meanwhile, the Australian share market returned+3.37% (ASX200 Accumulation Index) in April, assisted mostly by better commodity prices boosting major resource company shares.

Meme Australian Share Fund rose 8.60%, outperforming the ASX 200 Accumulation Index by 5.23%. Since inception, the Fund has an annualised return of 18.90% p.a.

Bennelong Long Short Equity Fund returned -2.30% for the month of April. The long term performance since inception, remains strong with annual returns of 17.51% p.a. over 14 years.

Clarity Multi Strategy Fund returned -8.82% for the month of March. Since inception, the Fund has achieved double-digit annualised returns of 23.43% p.a, which has been achieved with a volatility of 14.14% p.a.

Newgate Real Estate and Infrastructure Fund was flat (-0.06%) for the month of March to take annualised return since inception to 12.20% p.a.

FUND REVIEWS released this week: QATO Capital Market Neutral Long/Short Fund; Insync Global Titans Fund; Supervised High Yield Fund; 

And on that note, have a great week-end.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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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 HIGH YIELD FUND

Attached is AFM's updated Fund Review on the Supervised High Yield Fund.

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 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 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.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - March 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 decreased by 4.1% in March. The performance was driven by positive contributions from the holdings in Mead Johnson, Oracle Corp, Zimmer Holdings and Time Warner Inc. The main negative contributors were Sanofi, Roche, PayPal, 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.

• 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 - March 2016 (pdf format)

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 - March 2016 (pdf format)