Meme Australian Share Fund

25 Aug 2015 - Australian Fund Monitors

In July, the Meme Australian Share Fund returned 5.56%, outperforming the ASX200 Accumulation Index (4.40%) by 1.16%.

25 Aug 2015 - Meme Australian Share Fund

By: Australian Fund Monitors

Report Date	05 August 2015
Manager	Meme Capital Management Pty Ltd
Fund Name	Meme Australian Share Fund
Strategy	Equity Long
Latest Return Date	July 2015
Latest Return	5.56%
Latest 6 Months	11.70%
Latest 12 Months	17.83%
Latest 24 Months	40.43%
Annualised Since Inception	17.14%
Inception Date	01 July 2013
FUM (millions)	AU$2
Fund Overview	The Meme Australian Share Fund uses a robust and back-tested quantitative trend-following strategy to identify investment opportunities expected to provide both positive price appreciation and relative price outperformance over the medium to long term. The Fund invests on a long-only basis and does not use derivatives. Meme's investment philosophy is logically derived from addressing our prime investment objectives of creating and preserving wealth. The philosophy therefore comprises elements which separately address investment returns and investment risks while at the same time respecting the interplay between them. 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	In July, the Meme Australian Share Fund returned 5.56%, outperforming the ASX200 Accumulation Index (4.40%) by 1.16%. Since inception, the Fund has an annualised return of 17.14% p.a (Index 13.24% p.a.) with notable Sharpe and Sortino Ratios of 1.32 and 2.33 respectively. Number of new investment opportunities arose in July, allowing the Fund to reallocate the cash previously generated, such that the fund is fully invested at month end. Almost all of this new investment is in stocks which lie outside the ASX200. The largest sector increases in the fund were in the Consumer Discretionary, Consumer Staples and Information Technology sectors. The Fund's rolling 3 month (May to July 2015) return was +2.07% compared to the markets' -0.82%. Click below to read the latest Fund Manager's commentary on the Fund.
More Information	Fund Profile Manager's Report

Pengana Absolute Return Asia Pacific Fund

24 Aug 2015 - Australian Fund Monitors

The Pengana Absolute Return Asia Pacific finished -0.8% for the month of July, compared to the HFR Event Driven Index which closed -1.7%.

24 Aug 2015 - Pengana Absolute Return Asia Pacific Fund

By: Australian Fund Monitors

Report Date	19 August 2015
Manager	Pengana Capital
Fund Name	Pengana Absolute Return Asia Pacific Fund
Strategy	Equity Long/Short
Latest Return Date	July 2015
Latest Return	-0.80%
Latest 6 Months	2.72%
Latest 12 Months	6.87%
Latest 24 Months	15.45%
Annualised Since Inception	10.63%
Inception Date	01 September 2010
FUM (millions)	AU$88.71
Fund Overview	The Pengana Absolute Return Asia Pacific Fund employs an event-driven investment strategy that seeks to exploit the mispricing of securities of companies involved in corporate transactions within the Asian (including Japan, Australia and New Zealand) region. Event driven strategies involve investing in opportunities created by significant transactional events, such as mergers and acquisitions, earnings surprises, capital management initiatives, capital structure arbitrage and index changes, among others. The Fund believes that significant corporate events can often create inefficiency in a company's share price which the Fund then seeks to exploit. The Fund aims to generate consistently positive returns which have a low correlation to the Asian stock markets. The objective is to generate 10-20% pa with a standard deviation of 6-10%. 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	The Pengana Absolute Return Asia Pacific finished -0.8% for the month of July, compared to the HFR Event Driven Index which closed -1.7%. Asia Pacific markets also fell -2.9%,with the Shanghai Composite falling -14.4% and the Hang Seng China Enterprises Index (HSCEI) -14.3%. Since inception, the Fund has an annualised return of 10.63% p.a., and has achieved this with lower volatility of 5.84% (AFM Asia Pacific Index 11.85%), to give notable Sharpe and Sortino Ratios of 1.19 and 2.80 respectively. The deleveraging in China had a significant impact on the onshore equity markets which resulted in contagion into the region requiring state backed intervention in China to support prices. The Fund navigated the volatility by increasing short exposure to hedge their M&A positions exposed to China risk. The Fund ended the month with average net and gross exposure of 11% and 205% respectively. It was the Stubs and Index Futures strategies that contributed positively. However, the Capital Management Corp. and M&A strategies were the largest detractors. The country exposure as percentage (%) of NAV was most in Japan (60.8%), followed by Hong Kong/China (35.3%). Click below to read the complete Fund Manager's Report.
More Information	Fund Profile Manager's Report AFM Research Reports

Hedge Clippings

22 Aug 2015 - Australian Fund Monitors

When the going gets tough....

22 Aug 2015 - Hedge Clippings

By: Australian Fund Monitors

When the going gets tough....

Regular readers of Hedge Clippings will know that our commentary frequently varies from a focus on fund or industry returns. This week however, given the volatility in markets and the uncertainty that prevails, we will take a look at how actively managed funds as a whole have performed in recent times.

Prior to doing so however it's worth just reflecting on some of the factors disappointing markets. Firstly in Australia the reporting season has been less than stellar, with more disappointments evident than surprises to the upside. Elsewhere the overnight news from Greece was probably a surprise, but it's doubtful if anyone outside Greece is taking much notice any more.

China and the USA remain the big issues driving markets, with two big questions arising: Will the Chinese authorities have a Mario Draghi moment and actually come out and declare that they'll do "whatever it takes", or have they already indicated that they'll do so by their actions? Meanwhile in the US we are getting closer and closer to the day when interest rates will finally rise, and this week has shown that while most understand that, when it actually happens there will be a significant impact on the market.

And so back to the performance of absolute return and actively managed funds. There have been plenty of comments in the press over the past few years that as a whole active managers have not performed sufficiently to justify their fees. In somecases that may well have been the case, but it's difficult to outperform in a strongly rising market, while still protecting the downside.

However, it is evident that when markets begin to underperform, or become volatile, absolute return funds come into their own. Over the past 12 months to the end of July the ASX 200 Accumulation Index has risen 5.68%. When one considers that the index includes dividends, the ASX 200 (excluding dividends) has risen just 1.18%.

Over the same 12 month period equity-based funds in AFM's database have risen 13.43% on average, with 63% of funds outperforming the ASX 200 Accumulation Index. Taking June returns by themselves, when the market fell 5.3% funds significantly protected investors' downside, albeit that they also fell 1.88%. That's still an outperformance of almost 3.5 percent, with 85% of all funds outperforming the market.

Specific results received this week include the following PERFORMANCE UPDATES:

Allard Investment Fund (AIF) increased 2.70% during the month of July 2015 (MSCI Asia Pacific ex Japan A$ Index 0.3%).

The Bennelong Kardinia Absolute Return Fund rose 2.2% in July, to bring the Fund's annualised performance since inception to 12.84% (ASX200 Accumulation Index 5.37%).

Optimal Australia Absolute Trust reported a net return of +0.31 in July, to bring it's annualised performance since inception to 8.76% p.a.

For the month of July, the Aurora Fortitude Absolute Return Fund increased 0.50%.

QATO Capital Market Neutral Long/Short Fund decreased 2.26% in July, having returned 30.20% over the past 12 months.

FUND REVIEWS released this week: Monash Absolute Investment Fund; Morphic Global Opportunities Fund; Bennelong Long Short Equity 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. A ustralian Fund Monitors is pleased to offer a discount of $300 to all investors and advisors using coupon code promoFM on registration.

17 September 2015 - The 14th Annual Hedge Fund Rock and Australian Hedge Fund Awards 2015 as the industry lets its hair down with some drinks, music and great videos. All proceeds go to Redkite helping childern with cancer and their families.

And Now for Something Completely Different. Koala's are renowned for all sorts of things, but generally for being cute, cuddly and sleepy, I'm told becasue they're stoned on the gum leaves they munch all day. Not this one.

On that note, have a good week-end.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Tune into Sky Business on Foxtel every week on Monday at 2:15pm for AFM's weekly comment.

QATO Capital Market Neutral Long/Short Fund

21 Aug 2015 - Australian Fund Monitors

QATO Capital Market Neutral Long/Short Fund decreased 2.26% in July. The Fund's performance of 30.20%, over the latest 12 months has been strong.

21 Aug 2015 - QATO Capital Market Neutral Long/Short Fund

By: Australian Fund Monitors

Report Date	18 August 2015
Manager	QATO Capital
Fund Name	QATO Capital Market Neutral Long/Short Fund
Strategy	Equity Market Neutral
Latest Return Date	July 2015
Latest Return	-2.26%
Latest 6 Months	-4.99%
Latest 12 Months	30.20%
Latest 24 Months
Annualised Since Inception	30.20%
Inception Date	01 August 2014
FUM (millions)	AU$48
Fund Overview	QATO Capital's Market Neutral Long/Short Fund is managed via an objective, consistent and replicable process utilising proprietary 'Q-Score' methodology. The Q-score process is fundamentally based, evaluating improving and deteriorating fundamentals within each business from a variety of financial metrics such as valuation, growth, risk, quality, earnings and price. 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	QATO Capital Market Neutral Long/Short Fund decreased 2.26% in July. The Fund's performance of 30.20%, over the latest 12 months has been strong. Since inception (August 2014), the Fund has out-performed the ASX200 Accumulation Index, resulting in notable Sharpe and Sortino ratios of 1.93 (Index 0.31) and 4.53 (Index 0.37) respectively. In July, the Fund's benchmark, S&P/ASX-100 bounced back after a weak month in June, predominately driven by a strong beta rally in lower quality/higher beta companies. This proved challenging for the Fund's investment style, in particular the Fund's short positions. The long book however performed strongly as the Q-Score process selected a number of large outperformers to the S&P/ASX-100 Index. Click below to read the latest Fund Manager's commentary.
More Information	Fund Profile Manager's Report

Fund Review: Bennelong Long Short Equity Fund July 2015

21 Aug 2015 - Australian Fund Monitors

Fund Review available for Bennelong Long Short Equity Fund which has over 13 years track record and annualised returns of 17.97%.

Aurora Fortitude Absolute Return Fund

20 Aug 2015 - Australian Fund Monitors

The Aurora Fortitude Absolute Return Fund returned +0.50% for the month of July 2015.

20 Aug 2015 - Aurora Fortitude Absolute Return Fund

By: Australian Fund Monitors

Report Date	17 August 2015
Manager	Aurora Funds Management
Fund Name	Aurora Fortitude Absolute Return Fund
Strategy	Equity Market Neutral
Latest Return Date	July 2015
Latest Return	0.50%
Latest 6 Months	2.65%
Latest 12 Months	2.17%
Latest 24 Months	5.69%
Annualised Since Inception	7.22%
Inception Date	15 March 2005
FUM (millions)	AU$87
Fund Overview	Aurora Fortitude Absolute Return Fund is a multi-strategy market neutral fund specialising in ASX listed equities and derivatives. The core philosophy is the management of risk through a long volatility overlay incorporating listed equity and index derivatives. The multi-strategy approach includes M&A, Yield, Convergence and Long/Short strategies. The portfolio managers adopt an aggressive approach to managing downside risk whilst positioning the portfolio to benefit from positive alpha. The Fund aims to produce positive returns irrespective of the direction of the share market. For each investment the manager considers the risk, the timeline of that risk occurring and then the potential return. Low transaction costs and liquidity are other important factors in the success and implementation of the strategies.
Manager Comments	The Aurora Fortitude Absolute Return Fund returned +0.50% for the month of July 2015. The Fund's annual performance, since inception has been 7.22% p.a, which it has achieved with very low volatility of 2.64% (ASX 200 Accumulation Index 13.85%). The Fund has notable Sharpe and Sortino ratios of 1.07 (Index 0.29) and 2.12 (Index 0.30) respectively. It was the Yield (+0.27%), Convergence (+0.14%)and Long/Short (+0.11%) trading strategies that provided biggest positive contribution to the portfolio. The Options strategy (-0.07%) initially benefited from continued volatility across miners and banks. Volatility fell dramatically in the second half of the month with the Australian VIX falling -27% to 14.5 by the end of the month. This was an attractive level and the Fund added to volatility positions and increased exposure to this strategy at month end. Click below to read more on the Fund's performance.
More Information	Fund Profile Manager's Report AFM Research Reports

Fund Review: Morphic Global Opportunities Fund July 2015

19 Aug 2015 - Australian Fund Monitors

Read the July Fund Review for Morphic Global Opportunities Fund.

Optimal Australia Absolute Trust

19 Aug 2015 - Australian Fund Monitors

Optimal Australia Absolute Trust reported a net return of +0.31 in July.

19 Aug 2015 - Optimal Australia Absolute Trust

By: Australian Fund Monitors

Report Date	14 August 2015
Manager	Optimal Fund Management Australia
Fund Name	Optimal Australia Absolute Trust
Strategy	Equity Long/Short
Latest Return Date	July 2015
Latest Return	0.30%
Latest 6 Months	4.13%
Latest 12 Months	0.06%
Latest 24 Months	6.44%
Annualised Since Inception	8.76%
Inception Date	15 September 2008
FUM (millions)	AU$100
Fund Overview	The investment objective of the Fund is to seek to achieve above average returns in absolute terms, through investing in listed securities in Australia and New Zealand, subject to the overarching requirement of capital preservation. Investments will predominantly be in equity securities but may include fixed interest instruments, money market instruments, derivatives and foreign exchange contracts. The Fund's bias is likely to be net long under normal market conditions, with the core strategy being to construct a portfolio of listed equity securities priced at levels that do not adequately reflect their underlying value. The Fund will seek to boost returns and limit potential market downside by selective short selling of individual stocks which are priced at levels that are viewed as materially above their underlying value. The Fund will also use certain trading strategies both within its core portfolio (through rebalancing stock weights and overall market exposure in response to price movements) and in certain other situations (typically of a shorter-duration and/or opportunistic nature) with the objective of further increasing returns.
Manager Comments	Optimal Australia Absolute Trust reported a net return of +0.31 in July. The Fund's annualised return since inception was 8.76% p.a. (Index 6.10% p.a.), which has been achieved with a notably low volatility of 3.69% p.a. (Index 14.34% p.a). The Fund's long positions rose broadly in-line with the market - key performers included a number of financials (AMP, NAB, SUN and WFD) and general industrial. However the short positions were the largest detractors in such a strong market, which proved expensive as a means of heding portfolio risk. The Fund gross exposure was 121.1% and net exposure 2.1%. Click below to read the latest Fund Manager's commentary on the Fund and market outlook.
More Information	Fund Profile Manager's Report AFM Research Reports

Bennelong Kardinia Absolute Return Fund

18 Aug 2015 - Australian Fund Monitors

The Bennelong Kardinia Absolute Return Fund rose 2.2% in July, to bring the annualised performance since inception to 12.84% (ASX200 Accumulation Index 5.37%).

18 Aug 2015 - Bennelong Kardinia Absolute Return Fund

By: Australian Fund Monitors

Report Date	14 August 2015
Manager	Kardinia Capital, a Bennelong Funds Management boutique
Fund Name	Bennelong Kardinia Absolute Return Fund
Strategy	Equity Long/Short
Latest Return Date	July 2015
Latest Return	2.20%
Latest 6 Months	3.67%
Latest 12 Months	9.57%
Latest 24 Months	17.27%
Annualised Since Inception	12.84%
Inception Date	01 May 2006
FUM (millions)	AU$221.8
Fund Overview	The Fund consists of a concentrated long/short portfolio typically comprising 20 to 50 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. On average since inception the Fund's exposure has averaged 40% net long. There is a slight bias to large cap stocks on the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 5% to 10% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position. 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 Bennelong Kardinia Absolute Return Fund rose 2.2% in July, to bring the annualised performance since inception to 12.84% (ASX200 Accumulation Index 5.37%). The Fund has achieved this return with lower volatility (7.29%) than the Index (14.18%) to give notable Sharpe and Sortino ratio 1.13 (Index 0.11) and 2.16 (Index 0.06) respectively. The Fund's net equity market exposure (including derivatives) of the Fund was progressively increased post the Greek resolution and Chinese support measures to 55.7% (87.1% long and 31.4% short). Westpac, Ramsay Health Care, CSL and Aristocrat were the largest positive contributors, whilst Share Price Futures (hedging long exposures), Costa, Isentia and BHP Billiton were the largest detractors. Click below to read the June 2015 Fund Report.
More Information	Fund Profile Manager's Report AFM Research Reports

Fund Review: Monash Absolute Investment Fund July 2015

17 Aug 2015 - Australian Fund Monitors

Read the latest Fund Review with statistics since inception on Monash Absolute Investment Fund.

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25 Aug 2015 - Meme Australian Share Fund

24 Aug 2015 - Pengana Absolute Return Asia Pacific Fund

22 Aug 2015 - Hedge Clippings

21 Aug 2015 - QATO Capital Market Neutral Long/Short Fund

21 Aug 2015 - Fund Review: Bennelong Long Short Equity Fund July 2015

20 Aug 2015 - Aurora Fortitude Absolute Return Fund

19 Aug 2015 - Fund Review: Morphic Global Opportunities Fund July 2015

19 Aug 2015 - Optimal Australia Absolute Trust

18 Aug 2015 - Bennelong Kardinia Absolute Return Fund

17 Aug 2015 - Fund Review: Monash Absolute Investment Fund July 2015

MONASH ABSOLUTE INVESTMENT FUND

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