OPTIMAL AUSTRALIA ABSOLUTE TRUST

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

CPD Points are now available for all AFM Fund Reviews. Read the review and answer 5 questions to earn half a point toward your continuing professional development.

We would like to highlight the following:

• 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.

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

Sean Webster
Research and Database Manager
Australian Fund Monitors

ATTACHED FILESOptimal Australia Absolute Trust - July 2014 (pdf format)

AARIA ROUND TABLE 2014

Tuesday 26 August 2014 in Melbourne

We operate in the area of "real returns" and are eager to help our network of IFA's that operate outside the traditional static buy and hold methodology. This has led me to meeting the Association of Real Return Investment Advisers (ARRIA).

The Group has been established as a not-for-profit entity run by advisers for advisers. ARRIA is an initiative based on feedback and insights from advisers regarding the challenges that they face in using Real Return investment strategies, which they believe are able to deliver tangible solutions to meet their client's objectives.

ARRIA is hosting a round table discussion on Tuesday 26^th August, from 12pm to 4.30pm, in Melbourne and offers a valuable opportunity to meet with likeminded advisers. The agenda for the round table is as follows:

Round Table 1: Agenda

• What are the implications of developing Real Return outcomes for PI and the regulators?
• Panel discussion - which alternative "strategies" work when?
• Panel discussion - what are the new investment opportunities, "access" methods (e.g. LICs), strategies, asset classes and investment flavours?
• Tool time
• Open Forum

Click here to register for the Round Table event, or if you would like more information please contact:

Philip Reid   |   General Manager
Association of Real Return Investment Advisers Limited (ARRIA)
ABN 82 99 168 267 623
GPO Box 5025, Sydney NSW 2001
T 0411-828 097   E [email protected]

The next Round Table event to be held in Melbourne will be on Tuesday 25 November 2014.

As an association ARRIA aims to:

• assist in setting and maintaining a higher level of professional standards for all Real Return Investment Advisers and all relevant Stakeholders in the real return investment industry.
• create an environment where all Real Return Investment Advisers and all relevant Stakeholders can network in appropriate forums to advance the exchange of information, best-practice and compliance issues;
• create an environment where all Real Return Investment Advisers and all relevant Stakeholders can leverage industry resources;
• assist with the gathering and dissemination of resources in order to help facilitate:
• the collation and provision of information of interest or relevance;
• the development and / or access of appropriate tools;
• access to and sourcing of relevant and appropriate expertise;
• liaise and co-ordinate communications with government, regulatory bodies, other relevant industry associations and general service providers in the real return investment industry;
• whether undertaken with or without other participants; to promote, organise, conduct and/or participate in meetings, lectures, seminars, study groups, conferences, education, training and counselling courses for the purposes of increasing and advancing the knowledge and understanding of all facets and issues affecting or related to Real Return Investment Advisers and all relevant Stakeholders in the real return investment industry;

The operations of ARRIA are overseen by a Board, under the direction of the associations' corporate constitution and guidance of the directors. Both Directors and the Board are elected by the members on a rotation policy.

ATTACHED FILESARRIA Round Table (pdf format)

We are pleased to announce the release of our latest products, Prism Select and OLIVIA123.

Australian Fund Monitors launches Prism Select and OLIVIA123 as an alternative to ASX'S mFUND SERVICE.

Australian Fund Monitors Pty Limited (AFM), a specialist provider of research on actively managed, absolute return and hedge funds, has thrown down the gauntlet to the Australian Securities Exchange's new mFund service.

AFM has launched the new Prism Select portal for self-directed investors or their advisors to enable them to research and apply for unlisted managed funds, and providing a superior research service to the ASX.

Prism Select has launched with comprehensive information and performance on a range of 14 boutique funds, enabling investors to compare and research each one.

AFM believes Prism Select's research offering is superior to mFund's, as it includes a number of wholesale funds not available through the mFunds service, contains a significantly greater depth of information and detail on each fund, and finally provides the ability to apply and deal directly with their chosen fund without having to contact a stockbroker.

AFM was established in Sydney in 2006 and is a specialist provider of research and information on actively managed funds, including hedge and absolute return funds, maintaining a database (www.fundmonitors.com) that contains over 300 funds either managed from or available in Australia.

Going forward it is expected many of these funds will sign up to Prism Select, and AFM's new online application process, OLIVIA123, which cuts down the time taken and mistakes made when applying for managed funds.

AFM believes that mFund is a welcome industry advance, but is mainly directed at retail investors, with only basic information provided on each fund. The investor is then referred to a limited group of five stockbrokers, with which they have to establish an account, before placing their order. While it has the convenience of the ASX settlement service, the range of funds remains limited to 12 Managers and 44 funds at this stage, while the information on each fund, and its strategy and performance metrics is minimal.

Like mFund, Prism Select does not provide financial advice, but it does provide investors with comprehensive, verifiable and in-depth information, along with up to date performance and risk data on each fund, assisting investors and their advisors to make informed and well-considered investment decisions.

All funds available on Prism Select are contained in their own "kiosk" each containing a wide range of factual and qualitative information, including the fund manager's details, the fund's investment strategy, its performance history, advanced analytics, and investment terms and fees, all in one place.

Users of Prism Select can also download and view copies of the managers' recent performance reports and offer documents, which coupled with AFM's own Fund Reviews provide investors with a powerful research and information tool.

OLIVIA123 - on line applications as easy as one, two, three.

Prism Select also provides access to each fund's offer documents and application forms through OLIVIA123, an online application service developed by AFM which provides a customised and interactive application form for each fund, reducing the time and frustration often experienced by investors when completing paper based application forms, and cutting the errors and omissions which often delay the processing of their applications.

OLIVIA123 consists of three modules - Data Collection, Identity Verification (AML&KYC), and Online Execution - assisting fund managers and their administrators by reducing the time and costs of processing paper based applications, including compliance with new anti-money laundering legislation.

OLIVIA123's online, interactive system is estimated to cut the time taken to complete and process a paper based application by up to 70 per cent.

Both Prism Select and OLIVIA123 will be rolled out progressively as additional funds are added to the portal, which will also provide "white labeling" and licensing functions for advisors, fund managers and fund administrators.

There is no cost to the user for access to Prism Select. Each Fund Manager pays a monthly fee covering a range of hosting services and research, and contributes a fixed portion of their management fee for transactions processed through OLIVIA123.

For further information visit www.prismselect.com or email [email protected].

Chris Gosselin
CEO, AUSTRALIAN FUND MONITORS

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MICROEQUITIES DEEP VALUE FUND

Attached is our most recently updated Fund Review on the Microequities Deep Value Fund.

• The Microequities Deep Value Fund has a 5 year track record investing in ASX listed equities.  The Fund is a fundamental, research-driven Fund investing in equities with a market cap below $250m. The Fund uses a value philosophy based on the view that microcaps are often under-researched and under-valued.CIO Carlos Gil has over 15 years financial market experience across a broad range of equities.
• The Fund does not short, use derivatives or borrow i.e., it is long  only and is concentrated; usually with 15 to 20 companies across industrial sectors.
• Resource stocks are avoided.

If you have any questions in relation to the Fund Review or the CPD points, please do not hesitate to contact us.

ATTACHED FILESMicroequities Deep Value Microcap Fund Review July (pdf format)

This week Hedge Clippings attended the ARRIA Round Table in Sydney. ARRIA, for those not aware of the organisation, stands for the Association of Real Return Investment Advisors and acts as a resource for independent financial advisors looking for ways to improve returns and diversify risk for their clients.

It was the third such ARRIA Round Table event we have attended, and it was pleasing to note the expanding numbers of attendees, and as a result the level and depth of discussion and debate that ensued.

The points we tried to make at the meeting were twofold:

Firstly, what's in a name? It doesn't really matter what they're called - real return, absolute return, alternatives, or hedge funds - the end objective of each is to provide an attractive risk adjusted return, and appropriate diversification to underlying markets or asset classes.

The second point was that there's no silver bullet when choosing the ideal asset class, strategy or product as the universe is infinitely variable, and certainly not homogenous, as are the end investors' needs and objectives. Having said that we do believe that research, research and more research is the key to understanding any investment product's strategy and performance, rather than some simplistic rating or label applied to a product for marketing and distribution purposes.

Inevitably the subject of fees raised its head, as it so often does, with the usual opinions and concerns. Tim Farrelly, probably quite correctly, claimed that over the past half century or so the wealth management industry (and specifically hedge funds) had done more to improve the wealth of those in the industry than the wealth of the investors for whom they were investing.

In our opinion that misses the point about research and manager selection. There are undoubtedly fund managers that don't deliver value, just as there are some who deliver excellent value. Bundling them into one basket and avoiding them all risks reverting to index or ETF type products that provide long term market returns, complete with the market's volatility, albeit at very low fees. The solution comes from doing the research, both quantitatively on performance and risk, and qualitatively on the product, manager, strategy and processes.

Following on from last week's Hedge Clippings, we referred to fund manager Jonathan Rochford's article "The Great Fee Debate - Resetting Manager and Investor Expectations". What did occur to us in this debate is the structure and alignment of interest that fees can create - or for that matter obscure - depending on the strategy, structure and size of the fund involved.

There is a strong argument that funds with assets under management (AUM) well into the multi billions do not require management fees of over 1% in addition to a performance fee of 10% or 20%. Without necessarily singling them out, in Magellan's results announced today, they indicated that the total capacity of their combined funds was potentially $50 billion. Whilst Magellan's average management fee might well be lower than their stated 1.35%, this plays into Tim Farrelly's argument pretty easily.

It is encouraging to note that some smaller managers, such as Monash Investors, are proposing to lower their management fee as AUM increases, and will achieve their alignment of interest with investors through co-investment and performance incentives.

There's a myriad of why's and where fore's in the great fee debate, including the fees on LIC's, structure and others, not forgetting of course that if the manager is performing to expectations, why shouldn't they benefit from the successful business they've built? There are few complaints about the profits made in other industries, with the exception perhaps of banking, but let's not go there.

Specific results received this week include the following PERFORMANCE UPDATES:

Bennelong Kardinia Absolute Return Fund returned 1.07% during July bringing annual performance to 7.02% with a volatility of 4.29%.

Returning a performance result of 12.50% in July (Index 4.40%), the Paragon Fund brings annual returns to 43.65% (Index 16.54%).

The Optimal Australia Absolute Trust returned 1.03% during July and 6.37% for the previous twelve months with a standard deviation of 1.69%.

AFM are now accredited by the Financial Planning Association of Australia to issue CPD points for FUND REVIEWS.
This week's updated reviews include:

Supervised High Yield Fund, Alpha Beta Asian Fund and also Monash Absolute Investment Fund

Read the most recent Fund Review for any of our research clients, and then answer 5 straightforward questions, these are presented in multiple choice format. An 80% or more success score will provide 0.5 CPD points, with a certificate provided as proof of completion. There is no charge for this service.

UPCOMING EVENTS:

Wednesday 27 - Friday 29 August Money Management's Platforms and Wraps conference in the beautiful Hunter Valley, NSW. Covers the latest industry trends and innovation, while also exploring technology iniatives, client segmentation, data ownership, analytics, marketing and distribution, regulatory reform and consolidation. Pre-conference golf and wine tour of Hope Estate included. Special rate for fundmonitors.com members.

Tuesday 26 August in Melbourne and also Tuesday 9 September in Brisbane , from 12pm to 4.30pm - ARRIA is hosting a further round table discussion, providing a valuable opportunity to meet with like-minded advisers. Free to Financial Advisors.

If you would like your Event listed in our calendar, please contact us.

This week's Now For Something Completely Different we say a sad farewell to Robin Williams, who made us laugh, he made us cry and bought so much joy to the world. Now go out and make your life spectacular, like he did.

Best wishes,

Chris
CEO, AUSTRALIAN FUND MONITORS

Connect with me on LinkedIn Twitter Facebook

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.