There is now sufficient July performance data in from fund managers to be able to make some meaningful comments regarding performance not only for July but also year-to-date and over the past 12 months.

The ASX 200 Accumulation Index rose 4.4% in July to take YTD performance to 7.57%, more than the first six months of the year put together. Against that, with 74% of results in to date, equity base funds rose 2.14% in July to take year-to-date returns to 4.44% which in the current environment is a reasonably significant underperformance.

Over 12 months the performance differential is not so stark, with equity based funds returning 13.82% against the ASX 200 Accumulation Index which has risen 16.54%. Before the disbelievers jump on these numbers as proof that absolute return and active managers fail to justify their fees, it's worth looking at the distribution of returns both within individual funds and between various strategies.

Taking individual funds first, in July the best performing fund across all strategies (Paragon) rose 12.5%, while the worst fell 8.8%. Year-to-date the best performing fund has returned 37%, and the worst -34%. Over 12 months the best performing fund has returned 101%, and the worst -24%.

While only 10% of funds in the AFM database outperformed the ASX 200 in July, that figure rises to 16% year-to-date and just over 30% over the past 12 months.

Returns by strategy are less diverse, with funds within the Equity 130/30 group averaging 3.57% in July, 10.22% year-to-date and 26.64% over the past 12 months to be the top performing strategy overall three periods. On the negative side Global Macro funds which have been struggling for some time on the back of government intervention fell 1.13% in July, while managed futures trailed the pack at -2.27% year-to-date, and currency funds the worst of the 12 months at -2.07%.

While Equity 130/30 has certainly been the standout there remains a significant spread of distribution between the underlying funds within the strategy, indicated by 12 month performances with the best up 50%, while even the poorest managed a pretty impressive 23%.

All this goes to prove what a diverse group of underlying assets, managers, funds, strategies and skills go to make up what some still choose to lump into an overall category of "alternatives".

Obviously research is an essential key to the puzzle, although as I heard at a presentation from a fund manager this week "you can't buy last years returns". However as we've seen in the media even the best research can come unstuck as shown by the problems with Van Eyk's Blueprint Funds, four of which have had redemptions frozen.

Hedge Clippings has to admit to not being across the details, why's and wherefores in this case, but they will  no doubt emerge over time. However it does indicate that conflicts of interest in the financial services sector, whether tested or not, are not restricted to the well published retail advisory space. Rightly, or or probably wrongly, the whole sector suffers from potential conflicts at every turn,, and it will be interesting to see if the final report of David Murray's Financial System Inquiry will come up with a any solutions to the problem.

Personally we doubt it. The system is too entrenched, leaving it to a combination of regulation, and personal ethics to resolve the problem.

Specific results received this week include the following PERFORMANCE UPDATES:

The Forager Australian Shares Fund recorded an out-performance of the Index 2.30% (Fund 6.70%) during July and 13.73% for the previous 12 months.

Totus Alpha Fund returned 3.55% during July with an annual return of 37.86% and a volatility of 15.62%.

With a standard deviation of 8.64%, the Morphic Global Opportunities Fund returned 11.34% over the prior 12 months.

The Alpha Beta Asian Fund returned 1.02% during July and 10.61% for the previous 12 months with a volatility of 4.18%.

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

Microequities Deep Value Microcap Fund, Bennelong Kardinia Absolute Return Fund, Optimal Australia Absolute Trust and also Insync Global Titans 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:

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.

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 16 September in Sydney AIMA Australia's Hedge Fund Forum - and event by the Industry for the industry featuring quality Australian and international speakers.

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

This week's Now For Something Completely Different is a gentle reminder that today is Daffodil Day. Every dollar raised goes into cancer research, something that touches us all.

Best wishes for a happy and healthy weekend,

On that note, have a good weekend.

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.

INSYNC GLOBAL TITANS FUND

ATTACHED FILESInsync Global Titans Fund July 2014 (pdf format)

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

Connect with me on LinkedIn Twitter Facebook