NEWS
2 Jul 2015 - Fund Review Pengana Absolute Return Asia Pacific Fund May 2015
PENGANA ABSOLUTE RETURN ASIA PACIFIC FUND
Attached is our most recently updated Fund Review on the Pengana Absolute Return Asia Pacific Fund.
- The Pengana Absolute Return Asia Pacific Fund ("PARAP") was established in 2008 by portfolio managers Antonio Meroni and Vikas Kumra. The Fund is a feeder fund into a Cayman Islands AUD share class fund.
- The Fund invests both long and short in Asia Pacific equities, including in Australian and New Zealand, after a stock specific "event" has either occurred or been announced and the portfolio aims to be uncorrelated to the underlying equity markets. A combination of the Manager's experience, thorough research and continuous back- testing identify the most attractive of these events.
- Risk controls include limits on individual positions as well as gross and net exposure. Limits are in place for option exposure and cash borrowing, with stop loss limits on individual positions. Overall the manager is looking to derive returns from the event strategies as opposed to any currency or market exposures.
- The Fund finished +1% for the month, compared to the HFR Event Driven Index which closed +0.5%. Since inception, the Fund has an annualised return of 11.45% compared to the AFM's Asia Pacific Index of 6.56%. The Fund has achieved this with lower volatility of 5.74% (Index 11.82%).
For further details on the Fund, please do not hesitate to contact us.
Pengana Absolute Return Asia Pacific Fund AFM Fund Review May 20151 Jul 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 our holdings in Time Warner Cable, Experian, Medtronic, eBay and Zimmer. The main negative contributors were Hugo Boss and Publicis. 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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30 Jun 2015 - Fund Review: Aurora Fortitude Absolute Return Fund May 2015
- The Aurora Fortitude Absolute Return Fund (AFARF) has a 10 year track record investing in ASX listed equities. A Market Neutral overlay is used across a multi strategy approach which allows for flexible asset allocation to maximise returns and minimise risk under a variety of market conditions and cycles.CIO John Corr has over 20 years financial market experience with a strong focus on risk.
- Significant use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. Risk statistics are impressive and shows the Funds risk philosophy; over 85% of monthly performances have been positive with no losing months in 2008, the Fund's largest drawdown is -2.09% and the Sharpe ratio 1.06.
- ASX listed Aurora Funds Limited was established on the merger of three existing fund management businesses, managing approx. $230m on behalf of more than 2,500 retail and wholesale investors.
30 Jun 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 May, the fund had a net exposure of 59.70% and a gross exposure of 295.0%. The fund was diversified across a number investment themes and geographies with 123 positions (53 long and 70 short). Top contributors in May were the long positions in Sirtex +1.23% (Scarce Growth),Macquarie +0.53% (Financial Services) and Flight Centre +0.49% (Scarce Growth). Biggest detractors were our long position in REA -1.10% (Online), and short positions in Orica -0.73% (Mining Capex) and Sirius -0.65% (Commodities). Click below to read the latest Fund's Monthly Report. |
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29 Jun 2015 - KIS Asia Long Short Fund
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| Fund Overview | Whilst the Fund's primary strategy is focused on long/short equities, the ability to retain discretionary powers to allocate across a number of other investment strategies is reserved. These strategies may include, but not be limited to: convertible bond investments, portfolio hedging, equity related arbitrage, special situations (e.g. merger arbitrage, rights offerings, participation in international public offerings and placements, etc.). The Fund's geographic focus is Asia excluding Japan, but including Australia). The Fund may invest outside of this region to the extent that: 1. The investment decision is driven from the Asian region or; 2. The exposure is intended to mitigate risk or enhance return from factors external to the Asian region. |
| Manager Comments | Majority of the month's return came from the Long Short Strategy, contributing 119bp. On a geographic basis, HK & China and Australia were the strongest contributors generating 107bp and 70bp respectively. The Fund had positive returns across all market caps: large-cap 33bp, mid-cap 39bp and small-cap 62bp. The Fund lost 15bp using indices to hedge the long biases of +5% of AUM in mid-caps and +21% of AUM in small-caps. Across all market cap segments including index, the Fund's average net bias over the month was +4% of AUM. Click below to read the Fund Manager's monthly commentary. |
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26 Jun 2015 - Hedge Clippings
The Game of Greek Chicken Continues
Last week's Clippings noted that Morphic's Jack Lowenstein thought that any Greek solution would (if any) be last minute, but not long lasting. He's certainly right on his first call, although it is too early to tell as yet if there will actually be a solution. We are not sure if they're playing a dangerous game of chicken or not, but it seems that those in the north of the EU are driving a hard bargain, and the Greek PM is between a rock (those in the North) and a hard place, namely the Greek electorate.
The Northerners want hard decisions made both on the revenue and expenditure side. That means increased taxes, and reduced spending. The electorate, who will decide new Greek PM Tsipras' fate at the end of the day, aren't too happy about that. One also has to remember that Tsipras, and his Finance Minister are or were both products of the Greek Communist Party, so fiscal discipline and economic management might not be their natural calling. In any event it seems that the Germans won't budge, and Tsipras has little room to move. For further background read this piece from Arminius Capital's Marcel von Pfyffer.
For what it's worth Marcel's view (he's Swiss Australian, in case you were wondering, not German) is that "Greece will, as sure as the sun sets, default on its debt."
Closer to home the revelations by Fairfax's Adele Ferguson last Saturday (and since) that there was a serious compliance issue at IOOF must have caused shudders in a number of quarters, including ASIC and the board of IOOF itself.
A brief read of IOOF's March 2015 quarterly report would have you beleive that compliance was front and centre in the board's minds. And inded it might have been, but between the board, the stated complaince policy covering 8 full pages, and what is alledged to have occured, there appears to be a significant gap.
This is obviously bad news, not only for IOOF, as it is a further nail in the coffin of much of the financial services sectors' reputation, coming after CBA, Macquarie and others' failings. Strangley in the Senate both sides of politics voted together to knock back a Royal Commission, but Clippings is not sure it would have proven, or changed much.
As Mike Mangan, quoted (loosely) in the AFR said on Monday there's not going to be a change of behaviour in the industry until some serious sanctions are brought to bear on the wrongdoers. By serious he means jail time, and as he so succinctly put it "the only thing that scares the shit out of white collar workers is jail time."
To be fair a few have gone to jail since 2008, but only a few, including the notable Maddoff in the US, and closer to home Astarra's Shawn Richards. But in the meantime the collective fines and penalties paid by (shareholders of) financial institutions and banks worldwide to cover their corporate and management sins between 2008 and 2014 exceeds $150 billion, enough to go somewhere towards paying off some Greek debt. The "victims" of those misdeeds meanwhile haven't received a cent, penny, centime or drachma!
Specific results received this week include the following PERFORMANCE UPDATES:
Avenir Value Fund had a strong performance of 4.50% during the month of May, compared to the ASX 200 Accumulation Index's 0.40%.
The Pengana Absolute Return Asia Pacific Fund finished +1% for the month, compared to the HFR Event Driven Index which closed +0.5%.
Since inception in August 2014, QATO Capital Market Neutral Long/Short Fund has returned 37.93%.
Freehold Absolute Return Fund has an annualised return of 17.48% p.a., compared to the ASX200 Accumulation Index's 15.15% p.a.
The Laminar Credit Opportunities Fund returned 0.65% over the month of Month, bringing its annual performance since inception to 18.96%.
FUND REVIEWS released this week: Bennelong Kardinia Absolute Return Fund; Optimal Australia Absolute Trust; 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 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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26 Jun 2015 - Freehold Absolute Return Fund
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| Fund Overview | The Fund's research use detailed analysis of the underlying assets integrated with financial analysis to determine a sustainable yield and fundamental DCF valuation for the security. Also the Fund believes in having a strong risk control framework. The Fund will also use trading strategies via rebalancing of core portfolio positions as well as taking advantage of shorter duration inefficiencies in markets caused by an imbalance in demand and supply for global REIT and Infrastructure securities. The Fund focuses on generating absolute returns after fees of 12 to 15% pa over the medium to long term. The long-short nature of the Fund combined with Freehold's rigorous investment process ensures returns generated by the Fund are largely independent of rising or falling markets. Freehold is focused on providing investment opportunities primarily within core, value-add, opportunistic and development sectors of direct property and across listed and unlisted real estate and infrastructure securities. |
| Manager Comments | The Fund returns were negatively impacted by the mild short position as well as a mean reversion in some of the positions that performed well over April. Some positive contributors in the portfolio were Bunnings Warehouse, Aurizon Group and APN Property Group. Negative contributors were Westfield Group, SCA Property Group and Goodman Group. In May, the Fund had 10-15 stock positions with estimated gross exposure of 80% and net position of 10%. Currently, the Fund is holding a slight short bias on the expectations of a mild correction on the back of sharply rising bond yields, generally a negative for the real estate and infrastructure sectors. Click below to read the latest Report on the Fund's performance. |
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26 Jun 2015 - Laminar Credit Opportunities Fund
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| Fund Overview | The Fund may also invest in derivatives for hedging purposes. The portfolio of the Fund comprises primarily Investment Grade holding of 75% of the Fund's assets. Benchmark allocations are Australasia 50% to 100%, North America 0% to 50% and Europe 0% to 50%. Currency hedging may take place depending on benefits to the Fund. |
| Manager Comments | The Fund believes that volatility in interest rates markets is likely to rise over the next couple of year as the US Federal Reserve starts to raise its cash rate. Funds with interest rate exposure will experience negative returns. The Fund which only has exposure to the credit markets (it has a credit duration of around 2 years) should avoid this volatility. Majority of the Fund's portfolio composition was in Residential Mortgage Backed Securities (RMBS) at 69% and Short-dated loans at 20%. Click on the link below to read the latest Fund Manager's Report. |
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25 Jun 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 | Continuing on from last month, market volatility continued to increase. The range of highs and lows on a month by month basis is also expanding. The market continued its theme from last month, with a further sell-off in large capitalisation quality Australian companies. May Performance was negatively impacted, in particular, by the underperforming banking sector. The Q-Score process continues to identify numerous examples of improving fundamentals. Ramsay Healthcare and Aristocrat reported strong first half profit growth that comfortably beat forecasts; and Qantas continued to benefit from an improving operating environment and encouraged investors with the possibility of capital returns or buybacks. Click below to the read the Fund Manager's latest commentary. |
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24 Jun 2015 - Fund Review: Morphic Global Opportunities Fund May 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.
Australian Fund Monitors
