Fund Review: Optimal Australia Absolute Trust Sept 2014

16 Oct 2014 - Australian Fund Monitors

AFM's updated Fund Review for September was positive in a negative month for equities and the Fund has a very low annual volatility of 1.71%. CPD Points available.

Microequities Deep Value Microcap Fund

16 Oct 2014 - Australian Fund Monitors

In a weak month for domestic equities the Microequities Fund returned -2.59% bringing 12 month performance to 16.31% with volatility of 7.40%.

16 Oct 2014 - Microequities Deep Value Microcap Fund

By: Australian Fund Monitors

Report Date	14 October 2014
Manager	Microequities
Fund Name	Microequities Deep Value Microcap Fund
Strategy	Equity Long
Latest Return Date	September 2014
Latest Return	-2.59%
Latest 6 Months	3.39%
Latest 12 Months	16.31%
Latest 24 Months	59.67%
Annualised Since Inception	28.60%
Inception Date	06 March 2009
FUM (millions)	AU$51.7
Fund Overview	The Microequities Deep Value Microcap Fund, launched in March 2009, is an open-ended unregistered Managed Investment Scheme designed for the Australian wholesale market. The objective of the Fund is to identify undervalued Microcap companies, invest in them and, through a medium to long term commitment, attempt to deliver superior investment returns. The Fund invests primarily in ASX listed Microcap companies, which at the time of initial investment are generally below a market capitalisation of A$250 million. The Fund may also invest in companies with a higher market capitalisation, but these will be limited to no more than 20% of the assets of the Fund. At times the Fund may invest in pre-IPO securities that are due to be listed on the ASX within 3-6 months, and have lodged a prospectus with ASIC. These investments will also be limited to no more than 10% of the assets of the Fund. The Fund will be limited to investing no more than 20% of the Fund's assets in any one security or company. The Fund will make investments with a medium to long term time horizon of between 3-5+ years. The Fund will not speculate in derivatives. It will be permitted to hold other securities that are directly associated with a particular investment such as options granted with a specific company issue etc. The Fund will not engage in short selling or stock lending. The Fund will not hold financial debt of any kind.
Manager Comments	In a weak month for domestic equities the Microequities Fund returned -2.59% bringing 12 month performance to 16.31% with volatility of 7.40%. The Sharpe and Sortino ratios were well above that of the ASX 200 Acc Index at 1.76 and 4.01 respectively. Since inception (March 2009) performance is 29.60% pa (Index 13.51%) and a Sharpe ratio of 1.53. The Manager's monthly report comments on their approach to market timing. Our approach to market timing is rather simple, we don't have an approach to market timing. We don't take market timing into consideration. This might sound like a recalcitrant or flippant approach to those that are unacquainted with our investment process. But it is a position based on an understanding that proficient market timing expertise is analogous to a broken watch telling you the correct time, it only happens once a day and the reliability and causality of the correctness has nothing to do with accuracy or reliability of the time piece. Our portfolio of business partnerships in either of our open ended funds are not a microcosm of the Australian equity market, they are not a proxy for the Australian economy nor the world economy. They are an array of special profitable businesses that we believe have long term growth pathways managed by competent management teams that carry out their office in the shareholders best interest.
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Morphic Global Opportunities Fund

15 Oct 2014 - Australian Fund Monitors

Morphic Global Opportunities Fund returned 3.20% in September and 17.93% for the prior 12 months with a volatility of 8.39%.

15 Oct 2014 - Morphic Global Opportunities Fund

By: Australian Fund Monitors

Report Date	14 October 2014
Manager	Morphic Asset Management
Fund Name	Morphic Global Opportunities Fund
Strategy	Equity Long/Short
Latest Return Date	September 2014
Latest Return	3.20%
Latest 6 Months	9.79%
Latest 12 Months	17.93%
Latest 24 Months	53.20%
Annualised Since Inception	25.75%
Inception Date	02 August 2012
FUM (millions)	AU$55
Fund Overview	The Fund will primarily consist of Global listed shares, and will generally have at least 50% of its net assets invested in these. It may also have short positions in shares that the Manager believes are over-valued, and likely to fall in price, as well as long and short positions in index futures and other derivatives, fixed interest instruments, commodities, credit instruments and currencies.
Manager Comments	Morphic Global Opportunities Fund returned 3.20% in September and 17.93% for the prior 12 months with a volatility of 8.39%. The Sharpe and Sortino ratios were 1.73 and 3.88 respectively. The Fund's main win again came from its oldest thematic holding - the Japanese drugstore chain basket. The long positions in national store chain Welcia and regional player Kusuri no Aoki were increased, but Sundrug and a short position in Sugi were closed. A short position in a highly priced regional player and the long position in national chain Tsuruha were maintained. The other main stock contributor was Japanese automotive manufacturer Mitsubishi Motors. The Fund remains positioned for a continuing bull market, though somewhat more tentatively than in recent months. Nevertheless the Fund remains close to fully invested. For the equity bull market that began in 2009 to end now, before the first rate increase in the cycle, with a backdrop of good economic data and earnings, would be to believe that "this time is different" - and whilst the Manager is always open these possibilities, it is not our base case for now. All assets remain unhedged to the Australian Dollar.
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Monash Absolute Investment Fund

14 Oct 2014 - Australian Fund Monitors

Monash Absolute Investment Fund returned -4.30% during September, a very weak month for domestic equities, which fell 5.4%. The Fund's annual return was 8.27%.

14 Oct 2014 - Monash Absolute Investment Fund

By: Australian Fund Monitors

Report Date	10 October 2014
Manager	Monash Investors Pty Limited
Fund Name	Monash Absolute Investment Fund
Strategy	Equity Long/Short
Latest Return Date	September 2014
Latest Return	-4.30%
Latest 6 Months	-1.88%
Latest 12 Months	8.27%
Latest 24 Months	46.98%
Annualised Since Inception	18.72%
Inception Date	30 May 2012
FUM (millions)	AU$45
Fund Overview	The Monash Absolute Investment Fund is a long/short equity fund, with a home bias to investing in Australia. It invests in shares as a source of specific opportunity, not to go up and down with the market. 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 Fund was awarded the the Best Emerging Fund award at the recent Australian Hedge Fund awards. Monash Absolute Investment Fund returned -4.0% during September, a very weak month for domestic equities, which fell 5.4%. The Fund's annual return was 8.27% (ASX 200 Accum 5.93%). Volatility was 8.32% as compared to 10.17% for the Index. The negative return was not due to any bad news associated with our stocks, nor due to exposure to sectors perceived to be stretched, such as high yield financials and resources. It was primarily because our market exposure was relatively high in a falling market. While the market has had a decent recovery over the last couple of years, it has not been pushed by investor euphoria. We do not see the market as being particularly expensive. Before this month, it was merely on the expensive side of fair and now it is around fair value.
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Optimal Australia Absolute Trust

10 Oct 2014 - Australian Fund Monitors

Optimal Australia Absolute Trust returned 0.64% during September, a very difficult month in which the ASX 200 fell -5.38%, with the 12 month return at 6.51%.

10 Oct 2014 - Optimal Australia Absolute Trust

By: Australian Fund Monitors

Report Date	09 October 2014
Manager	Optimal Fund Management Australia
Fund Name	Optimal Australia Absolute Trust
Strategy	Equity Long/Short
Latest Return Date	September 2014
Latest Return	0.64%
Latest 6 Months	4.40%
Latest 12 Months	6.51%
Latest 24 Months	9.47%
Annualised Since Inception	10.13%
Inception Date	15 September 2008
FUM (millions)	AU$120
Fund Overview	The investment objective of the Fund is to seek to achieve above average returns in absolute terms, through investing in listed securities in Australia and New Zealand, subject to the overarching requirement of capital preservation. Investments will predominantly be in equity securities but may include fixed interest instruments, money market instruments, derivatives and foreign exchange contracts. The Fund's bias is likely to be net long under normal market conditions, with the core strategy being to construct a portfolio of listed equity securities priced at levels that do not adequately reflect their underlying value. The Fund will seek to boost returns and limit potential market downside by selective short selling of individual stocks which are priced at levels that are viewed as materially above their underlying value. The Fund will also use certain trading strategies both within its core portfolio (through rebalancing stock weights and overall market exposure in response to price movements) and in certain other situations (typically of a shorter-duration and/or opportunistic nature) with the objective of further increasing returns.
Manager Comments	Optimal Australia Absolute Trust returned 0.64% during September, a very difficult month in which the ASX 200 fell -5.5%, with the 12 month return at 6.51%. Volatility over that time was very low at 1.71% as compared to the Index at 10.17%. The Fund has a Sharpe ratio of 2.26 (Index 0.38) and Sortino of 5.08 (Index 0.48) with the Up and Down Capture ratio of 0.27 and -0.12 respectively. Interestingly, since inception, the Fund was up in 79% of months that the ASX recorded a negative return. Our long portfolio performed better than the market, with negative attribution of -2.35% on average long market exposure at 46.6% of fund NAV. Our short positions did well, with positive attribution of +3.2% on average short exposure at 59% of NAV. Our short portfolio included a number of financial and defensive yield stocks which, difficult as these positions have been to put on in the face of financial repression and the associated over-reach for coupon income, proved highly effective in hedging market risk.
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Bennelong Alpha 200 Fund

9 Oct 2014 - Australian Fund Monitors

Bennelong Alpha 200 Fund returned 0.56% during September, a very weak month for domestic equities with the ASX 200 Accum Index down 5.38%.

9 Oct 2014 - Bennelong Alpha 200 Fund

By: Australian Fund Monitors

Report Date	08 October 2014
Manager	Bennelong Long Short Equity Management, a Bennelong Funds Management boutique
Fund Name	Bennelong Alpha 200 Fund
Strategy	Equity Market Neutral
Latest Return Date	September 2014
Latest Return	0.56%
Latest 6 Months	-1.90%
Latest 12 Months
Latest 24 Months
Annualised Since Inception	-0.10%
Inception Date	02 December 2013
FUM (millions)	AU$394.1
Fund Overview	The Fund aims to achieve consistent absolute returns regardless of market conditions by applying fundamental research to identify pairs of securities that are over and undervalued. The investment strategy seeks to limit the portfolio exposure to market risk by utilising a dollar neutral long/short strategy with the tactical capability to take long or short net exposure up to 20% of gross assets. Excess returns are generated by 'bottom up' fundamental company research. The core investment strategy of the Fund consists of the active selection of a series of paired long/short investments in Australian listed equities based upon the Investment Manager's fundamental research. The strategy seeks to capture stock Alpha whilst limiting portfolio exposure to market risk by adopting a dollar neutral portfolio market exposure position with the tactical capability to take net exposure of up to +/- 20% of gross assets. Stock selection is based on fundamental analysis to derive a view of a pair of individual stocks. The Investment Manager is style neutral in determining the stock's positioning. This primary 'pairs' strategy may be enhanced by other complementary strategies, including event driven, security and takeover arbitrage, thematic and momentum trading. The paired stock positions comprise long and short correlated securities that are in most cases simultaneously opened. A portfolio of approximately 30-100 stocks will be selected and actively managed in 15-50 pairs to comprise the core minimum (60%) of the Gross Asset Value. Up to a maximum of 40% of the portfolio's Gross Asset Value may be invested in uncorrelated securities and/or uncovered (long and/or short) positions. These 'satellite' positions are intended to enhance returns and to balance overall portfolio risk. In this regard, the Investment Manager recognises that it is not always possible to achieve a suitable paired proﬁle within the S&P/ASX 200, and that a high conviction long or short stock idea might not always have a suitable pair.
Manager Comments	Bennelong Alpha 200 Fund returned 0.56% during September, a very weak month for domestic equities with the ASX 200 Accum Index down 5.38%. At month-end the Fund was levered 2.6 times with long/short exposure at 51.6/48.4% respectively. The Fund just managed to keep its head above water due to the contribution from the short book. Among the best contributor's two stocks; Isentia and Austal, delivered good financial results towards the end of reporting season leading to upgrades and relatively strong performance in September.
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Fund Review: Totus Alpha Fund August 2014

8 Oct 2014 - Australian Fund Monitors

Totus Alpha Fund returned 2.02% performance for August, read the latest Fund Review with statistics since inception. CPD Points also available.

8 Oct 2014 - Fund Review: Totus Alpha Fund August 2014

By: Australian Fund Monitors

TOTUS ALPHA FUND

Attached is our most recently updated Fund Review on the Totus Alpha Fund.

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 aspects of the Fund;

Totus Capital is a Sydney based long short fund manager established in 2012 by Ben McGarry which aims to place equal emphasis on performance and capital preservation. The Fund invests mainly in Australia, but also in other developed economies, with a primary exposure to equity markets.
The Totus Alpha Fund?s investment strategy is to identify structural themes, and then seek to drive performance by investing in securities that have concentrated exposure to those themes. Single stock short positions are used to generate alpha, frequently in under researched parts of the market such as the small and mid-cap space. Index derivatives are used to hedge the portfolio?s market risk.
McGarry qualified as a Chartered Accountant with PWC in 1999 and has 14 years market experience, commencing his career covering European building materials and construction sectors at Morgan Stanley in London. Previous experience included analytical roles at Ausbil, a Sydney based $10bn+ long-only manager, and sell side emerging companies experience at UBS. McGarry?s emerging company research with UBS included exposure to a range of sectors including energy, materials, industrials, tech, financials, retail and telecommunications.
The Fund has delivered an annalised return of 26.92% since inception in March 2012 as compared to 16.37% for the ASX 200 Accumulation Index. The standard deviation has been higher than the Index at 13.64% as compared to 10.47% and the Sharpe ratio is 1.62.

Sean Webster

Research and Database Manager
Australian Fund Monitors

ATTACHED FILES

Totus Alpha Fund AFM Report August 2014 (pdf format)

Fund Review: Morphic Global Opportunities Fund August 2014

8 Oct 2014 - Australian Fund Monitors

August Fund Review shows performance at 1.28% for the Morphic Global Opportunities Fund. CPD Points available.

Fund Review: Aurora Fortitude Absolute Return Fund August 2014

8 Oct 2014 - Australian Fund Monitors

Latest fund review now available for the Aurora Fortitude Absolute Return Fund, which has one of the most risk averse Key Performance Statistics of any fund in AFM's database. CPD Points available.

Supervised High Yield Fund

7 Oct 2014 - Australian Fund Monitors

Supervised High Yield Fund returned 0.54% during August and 6.95% for the year (RBA Cash Rate ave 2.5%) with a volatility of 0.70%.

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16 Oct 2014 - Fund Review: Optimal Australia Absolute Trust Sept 2014

OPTIMAL AUSTRALIA ABSOLUTE TRUST

16 Oct 2014 - Microequities Deep Value Microcap Fund

15 Oct 2014 - Morphic Global Opportunities Fund

14 Oct 2014 - Monash Absolute Investment Fund

10 Oct 2014 - Optimal Australia Absolute Trust

9 Oct 2014 - Bennelong Alpha 200 Fund

8 Oct 2014 - Fund Review: Totus Alpha Fund August 2014

8 Oct 2014 - Fund Review: Morphic Global Opportunities Fund August 2014

8 Oct 2014 - Fund Review: Aurora Fortitude Absolute Return Fund August 2014

7 Oct 2014 - Supervised High Yield Fund

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