NEWS
13 Aug 2015 - The Paragon Fund
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| Fund Overview | Paragon believes that markets are not always efficient, exhibiting a common tendency to price securities well outside of their intrinsic value over the medium term. This market characteristic provides the opportunity for Paragon, an active manager with a flexible mandate, to generate superior investment returns over the longer term. Paragon believes that it is critical to understand both the companies and the industries in which they operate, in order to fully comprehend each investment opportunity. Accordingly, a fundamental approach to company research is taken. Assessing the potential downside is also paramount in framing the risk/reward trade-off for potential investments. |
| Manager Comments | Key positive contributors for July included Yowie Group, Henderson Group, Orora, Mayne Pharma and Senetas. The portfolio had the most net exposure in Industrials at 52.7%, followed by Financials at 21.90%. At the end of the month the Fund had 30 long positions and 15 short positions. Click below to read the latest Fund Manager's commentary. |
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12 Aug 2015 - Bennelong Long Short Equity Fund
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| Fund Overview | In a typical environment the Fund will hold around 70 stocks comprising 35 pairs. Each pair contains one long and one short position each of which will have been thoroughly researched and are selected from the same market sector. Whilst in an ideal environment each stock's position will make a positive return, it is the relative performance of the pair that is important. As a result the Fund can make positive returns when each stock moves in the same direction provided the long position outperforms the short one in relative terms. However, if neither side of the trade is profitable, strict controls are required to ensure losses are limited. The Fund uses no derivatives and has no currency exposure. The Fund has no hard stop loss limits, instead relying on the small average position size per stock (1.5%) and per pair (3%) to limit exposure. Where practical pairs are always held within the same sector to limit cross sector risk, and positions can be held for months or years. |
| Manager Comments | Performance were spread across a broad range of pairs with 19 out of 30 pairs making a positive contribution. Within those 19 pairs, returns were quite evenly spread. Healthcare was the strongest sector with two of the shorts, Primary Healthcare and Sonic Healthcare, both guiding profits lower. Click below to read the Fund Manager's complete commentary and future market outlook. |
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11 Aug 2015 - Fund Review: Supervised High Yield Fund June 2015
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 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.
10 Aug 2015 - Monash Absolute Investment Fund
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| Fund Overview | The fund seeks to identify opportunities in the share market to make positive returns (long and short) irrespective of market conditions. It is style agnostic, as compelling investment opportunities exist across all investment styles from time to time. The Fund places a high priority on capital preservation, and has an absolute return focus in accepting market risk. The Manager's experience across value, growth and discounted cash flow styles allows them to use a comprehensive approach to investment decisions that applies all three. They also have the patience to seek out only compelling opportunities, rather than settling for relative value. The portfolio is somewhat concentrated, looking to diversify across industries and themes, rather than by trying to stay near an index. The portfolio may at times have a large amount of cash or other protection. However once investments are made turnover may be relatively high in order to lock in gains and avoid losses. |
| Manager Comments | The month's result was mainly driven by the reassessing of some of their smaller company exposures following positive news, but contributions to the return came from across the whole portfolio. Some of the strong positive contributors were 1-Page, Catapult, Impedimed and Yowie. Click below to read the July Performance Report. |
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8 Aug 2015 - Hedge Clippings
The 4.4% bounce in Australia's equity markets in July would have been welcome news to investors, providing the first positive month since February, with the market making up most, but not all of June's fall of 5.3%. The reality however is that the market is jumping up and down on the same spot, and has been doing so for the past year, with 12 month performance of the ASX200 just 1.18% to the end of July, or 5.68% on a total return basis.
At least the resulting 4.5% in dividend yield looks attractive against 2% in the bank, but it certainly doesn't pay for the risk and volatility of the market.
Across the Pacific in the US the market's a little better, but not much, with Calendar YTD returns of 2.18%, or 3.35% on a total return basis. Research out of the US based on analysis by Factset of company reports suggest there remain a number of recurring concerns, including Greece, China, (with the Shanghai market falling 14% in July, adding to June's drop of 7%), and the strength of the US Currency. Somewhat surprisingly the spectre of increasing interest rates didn't feature.
In Australia the concerns are China, Resources (each linked at the hip), and to a lesser degree Greece (which seems to have slipped off the risk radar somewhat).
The major issue locally is the generally poor outlook for consumer and business confidence. Yesterday's employment numbers were a double edged sword, with the participation rate offsetting the actual increase in employment. The elephant in the room from a business confidence perspective would appear to be the ongoing lack of vision coming from either side in Canberra, and the recent focus on the front pages of the shenanigans (a kind term for it) with "entitlements" haven't helped.
As the August reporting season moves into full swing the risk will probably increase, with the general theme of limited earnings' growth (or in the case of resources, negative earnings' growth of around 30%) as the economy remains limp at best.
As Richard Fish from Bennelong Long Short Asset Management (having notched up a return of 8.85% for the month) noted in their July performance report "unless the market is overcome with good results in coming weeks and upbeat outlook statements (which is hard to reconcile with economic data and the direction of recent earnings revisions), it's most probable that the market remains range bound over the balance of this calendar year".
Specific results received this week include the following PERFORMANCE UPDATES:
FUND REVIEWS released this week: Aurora Fortitude Absolute Return Fund; Insync Global Titans 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 $300 to all investors and advisors using coupon code promoFM on registration.
17 September 2015 - The 14th Annual Hedge Fund Rock and Australian Hedge Fund Awards 2015 as the industry lets its hair down with some drinks, music and great videos. All proceeds go to Redkite helping childern with cancer and their families.
On that note, have a good week-end.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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7 Aug 2015 - Fund In Focus - Morphic Global Opportunities Fund
Chad Slater, the Joint CIO of the Morphic Global Opportunities Fund discusses the markets and the August monthly outlook.
Watch AFM's other videos.
7 Aug 2015 - Fund Review: Insync Global Titans Fund June 2015
INSYNC GLOBAL TITANS FUND
Attached is our most recently updated Fund Review on the Insync Global Titans Fund.
We would like to highlight the following:
- The Fund outperformed its benchmark MSCI All Country World ex-Australia Net Total Return Index ($A) by 0.50%, in June. The Fund's performance was driven by positive contributions from holdings in Comcast, Disney and Baxter. The main negative contributors were Oracle, Nestle and Microsoft. The Fund continues to have no foreign currency hedging in place as Insync considers 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.
Insync Global Titans Fund AFM Fund Review June 2015 (pdf format)
6 Aug 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 | The Fund reduced most of their exposure to the Chinese listed A shares but were still effected by the moves in Hong Kong. Majority of the month's return came from the Special Situations Strategy, contributing 47bp. However, the Long Short Strategy did not perform, losing the Fund 187bp, specifically on their long position in Sirius Resources (SIR.AX) and in Vocation Ltd (VET.AX). To read more, click the Manager's Report icon. |
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6 Aug 2015 - Hedge Funds Rock & The Australian Hedge Fund Awards
14th Annual Hedge Funds Rock and Australian Hedge Fund Awards 2015
17 September 2015 at the Ivy Ballroom, Sydney, Australia
The Hedge Fund industry lets its hair down with some drinks, music and great videos at the 14th Annual Hedge Funds Rock and Australian Hedge Fund Awards.
All proceeds to go to Redkite helping children with cancer and their families
We look forward to seeing you at the event.
For more details and ticket bookings please contact:
5 Aug 2015 - Supervised High Yield Fund
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| Fund Overview | The fund may also invest in interest rate swaps, options over authorized investments and exchange traded futures contracts. All these will be either listed or traded in a market where they can be independently valued. Fundamental to the investment procedure is the tenet that no debt security will qualify for investment unless it can repay 100% of its principal and interest in a worst case economic scenario. |
| Manager Comments | More than half of the portfolio's composition was in Residential Mortgage-Backed Securities (RMBS) at 65.50%. The rest of the portfolio was divided in the following sectors: US Corporate Loans at 21.70%, Cash at 8.70% and AUD Corporate Loans at 4.10%. Click below to view the latest Fund Manager Report. |
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