OPTIMAL AUSTRALIA ABSOLUTE TRUST

AFM have released the most recently updated Fund Review on the Optimal Australia Absolute Trust.

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

• Optimal Australia is a specialist Australian equity investment manager and the Fund has a long/short equity strategy typically with a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200. 

• The investment team comprising George Colman, Peter Whiting supported by Stephen Nicholls and Justin Hay have over 100 years combined experience in equity markets.

• In September, the Fund outperformed the ASX200 Accumulation Index by 9.05%. The Fund's approach to risk is shown by the Sharpe ratio of 1.46 (Index 0.13), Sortino ratio of 3.26 (Index 0.07), both of which are well above the ASX 200 Accumulation Index and has recorded 80% positive months.

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

Australian Fund Monitors

ATTACHED FILESOptimal Australia Absolute Trust AFM Fund Review September 2015 (pdf format)

Only Performance is Reality

As you might have noticed Hedge Clippings has been off the air (no comments please) for a few weeks. In a case of either poor timing (or bad management) Clippings has been in the UK, leaving for home just as the RWC was getting under way, and missing the Wallabies' winning performance against England. One swallow doth not a summer make, but there was an improved air of confidence notable both on and off the field.

Which leads of course to the change of PM which also took place in my absence. Having been both vocal and critical over the past few years regarding the performance of a succession of Prime Ministers and their Treasurers of various persuasions, I can only say "welcome" and let's move ahead. Although only three or four weeks has passed since Malcolm Turnbull became PM there seems to a new mood, and once again an improved air of confidence amongst both business and consumers.

Tony Abbott may not be happy, but only performance is reality. Of course the biggest potential loser is probably Bill Shorten.

Enough of politics!  Talking of performance and reality, economies globally have taken a beating as China's inevitable slowdown has taken its toll on markets. The extreme volatility has seen the ASX200 Accumulation Index fall almost 13% from its February high to the end of September, with the September quarter falling 6.6%, although month to date half of that loss has been recovered.

In that volatile environment absolute return and hedge funds have once again proven themselves to be risk averse as opposed to risky. YTD the average equity fund is up 7.31%, an outperformance of 10% vs the market, and over 12 months they're up 9.68%, again 10% better than the ASX200 Accumulation Index. Over 12 months 81% of the funds in AFM's database have outperformed the index, and YTD that number rises to almost 92%.

Of course these are averages, with the best doing considerably better than that. Over 12 months: Totus Capital, up over 30%; Bennelong Long Short, up 27%; QATO, up 24%, to name just a few.

In spite of this there remains a small section of the media, probably prompted either by lack of hard facts, and passive index funds, driven by vested interests that continue to sing the "risky and expensive" tune, although in times like these as above, Only Performance is Reality.

FUND REVIEWS released this week: Totus Alpha Fund; Supervised High Yield Fund; Meme Australian Share Fund; APN Asian REIT Fund; QATO Capital Market Neutral Long/Short Fund; 

And now (and about time) for something completely different: Malcolm Turnbull!

And on that note I wish you an enjoyable week-end. It's good to be back, and Go! The Wallabies against Wales at Twickenham!

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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• 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.

ATTACHED FILESQato Capital AFM Fund Review August 2015 (pdf format)

• APN is an ASX-listed fund manager specialising in property investment, with an investment team of six. Established in 1996, APN now has FUM of $A2.1bn including four REIT (Real Estate Investment Trust) funds.
• The APN Asian REIT Fund (Fund) is a property securities fund that invests in a quality portfolio of Asian REITs, listed on the securities exchanges of the Asian Region, with the ability to hold some cash and fixed interest investments. 
• The Fund aims to deliver a competitive yield with lower risk than the market. The underlying stocks are selected based on a highly disciplined investment approach that focuses on the fundamentals and number of valuation approaches. The universe can include new IPO's, other corporate actions take place and / or corporate governance improvements at country or REIT level bring new stocks into focus.
• The Fund provides access to a wide spread of property-based revenue streams that are specifically analysed, selected and weighted with the aim of delivering strong and sustainable income returns. The Fund is an unhedged product.
• APN's Asian REIT Fund invests in a portfolio of 25-40 listed Asian REITs with a core philosophy of investing in properties with a sustainable rental income streams.
• The Fund has delivered an annalised return of 17.67% p.a., since inception in July 2011 with standard deviation of 9.25% p.a. The Sharpe and Sortino ratios are 1.49 and 2.85 respectively.

ATTACHED FILESAPN Asian REIT Fund - AFM Review August 2015 (pdf format)

• 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.

• Over the past 12 months, the Fund returned positive 18.00%, versus the Index's negative 0.68% return. 

ATTACHED FILESMeme Australian Share Fund - AFM Fund Review Sept 2015 (pdf format)