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

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. 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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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.

MORPHIC GLOBAL OPPORTUNITIES FUND

ATTACHED FILESFund Review: Morphic Global Opportunities Fund May 2015 (pdf format)

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.

• The Fund's approach to risk is shown by the Sharpe ratio of 1.46, Sortino ratio of 3.33, 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 FILESFund Review: Optimal Australia Absolute Trust May 2015 (pdf format)