NEWS
26 Jul 2013 - Fund Review: Insync Global Titans Fund
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 aspects of the Fund:
- Boutique Sydney-based fund manager established in 2009 with an investment team of 3, with additional input from the CEO who is responsible for all operational, risk and compliance management.
- The Global Titans Fund invests in a concentrated portfolio of 15-25 stocks, targeting exceptional, large cap global companies with a strong focus on valuation 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 through extensive company research, the ability to hold cash and long protective index put options.
- Strong track record of above MSCI ($A) benchmark performance with limited drawdowns.
Research and Database Manager
Australian Fund Monitors
Fund Review: Insync Global Titans Fund (pdf format)
25 Jul 2013 - BlackRock Australian Equity Market Neutral Fund
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| Fund Overview | The Fund's portfolio primarily consists of long and short Australian equity positions. The Fund may also invest in other funds managed by BlackRock. Derivative securities, such as futures, forwards, swaps and options, can be used to manage risk and return Key insights into the investment process include: Analyst Expectations, Relative Valuation, Earnings Quality, Market Signals and Timing. Short-Term return enhancing opportunities including: Dividend reinvestment plans, Manging index changes, Managing cash flows and Arbitrage, Initial public offerings and Seasoned Equity Offerings and Off Market Buybacks. |
| Manager Comments | The portfolio benefited from the declines in resource stocks over the quarter, with shorts in small cap base metal and gold miners adding value in April and June. The sell down of yield stocks did not have a significant direct effect on portfolio performance, although the associated outperformance of other industrials and USD earners was a negative for the portfolio. Positive stock selection amongst healthcare and retail stocks was a significant positive contributor to the quarter's performance. |
| More Information | » View detailed profile of this fund |
24 Jul 2013 - Pengana Asia Special Events (Onshore) Fund
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| Fund Overview | The Fund seeks to profit from trading securities which are primarily subject to corporate events or from trading-related securities which the Investment Manager believes are mispriced by the market. The Fund invests in securities that are listed on Asian stock markets and other markets where related securities may be listed and in securities which are listed on markets outside of Asia where more than 70% (by assets or earnings) of the underlying business originates from an Asian country. The Fund aims to generate consistently positive returns which have a low correlation to the Asian stock markets. The objective is to generate 10-20% pa with a standard deviation of 6-10% |
| Manager Comments | Paramount to achieving this goal was the Fund's stringent risk management overlay and the Alpha-/Event opportunities that the Fund was exploiting despite volatile market conditions. In April, a fall in commodity prices, led by the unexpected collapse of gold prices, resulted in significant volatility in the resource stocks during the month. None of the risk arbitrage spreads the Fund was involved in, were affected by the unprecedented collapse of gold prices. In May and June, volatility across all asset classes spiked and equity markets reacted negatively to digest expected tapering of quantitative easing in the US, slowing growth in China and resulting flight of capital from emerging markets. The Fund's negative performance in June can be primarily attributed to our gross exposure allocation within capital management and earnings surprises sub-strategies which have a relatively higher volatility profile during market dislocations. The Fund also observed temporary dislocation of certain M&A spreads which we expect to self-correct in the coming months as the transactions near completion. Tactically, the Fund used the market dislocation to align the portfolio towards ideas which have extremely low downside potential, while eliminating positions which have a "softer" event profile. The Fund maintained a healthy average gross exposure of 167%, which reflects the vast opportunity set across Asian Events, whilst keeping a very low net exposure (market risk) averaging 10.3%. |
| More Information | » View detailed profile of this fund |
23 Jul 2013 - Aurora Fortitude Absolute Return Fund
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| Fund Overview | The Fund aims to produce positive returns irrespective of the direction of the share market. For each investment the manager considers the risk, the timeline of that risk occurring and then the potential return. Low transaction costs and liquidity are other important factors in the success and implementation of the strategies. |
| Manager Comments | The Fund's risk profile is notable with an annualised standard deviation of 2.81% pa as compared to the benchmark S&P/ASX 200 Acc with 14.42% pa. The since inception (May 2005) Sharpe ratio of 1.16 and Sortino of 2.35 are also high compared to the equity benchmark ratios of 0.16 and 0.12 respectively. As expected in this type of environment the Fund's Option portfolio was a significant contributor (+0.20%). ASX Limited's renounceable rights issue provided some profitable trading opportunities. The Fund actively traded the de-merger of News Corporation into New Newscorp and Twenty‐First Century Fox and expects to continue to generate positive returns. The Convergence strategy (+0.30%) also benefited from an improvement in the relative value of Wesfarmers Partly Protected Shares over Wesfarmers Ordinary Shares. This position remains the Fund's largest exposure. |
| More Information | » View detailed profile of this fund |
22 Jul 2013 - Pengana Australian Equities Market Neutral Fund
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| Fund Overview | The manager's investment approach is premised on the belief that fundamental factors (such as earnings, cash flow and profit growth) affect stock prices, but that the adoption of quantitative techniques (i.e. computer based models) provides an advantage in assimilating and analysing this information, and building an efficient portfolio. The Fund's portfolio is constructed to be market neutral i.e. it aims to have little or no overall exposure to movements in the equity market. The aim of low exposure to market movements is to enhance the consistency of the portfolio's performance and to provide diversification from other market oriented investments. |
| Manager Comments | This has been achieved with low volatility (as measured by standard deviation) of 8.1% p.a., around half the volatility of the equity market. In addition, the Fund has recorded no correlation (-0.03) to equities. The four fundamental investment factors in our stock selection model, namely Revisions, Value, Quality and Momentum all had positive returns over the quarter. While the Revisions factor provided consistent performance over the quarter, April was largely driven by the Momentum factor which has been the dominant investment theme for the most of this year. While the market paid little attention to our Value and Quality factors in May, these reasserted themselves in June. |
| More Information | » View detailed profile of this fund |
19 Jul 2013 - Hedge Clippings
Last week the SEC, the US regulator announced a lifting of the ban on hedge funds being able to advertise. The news was greeted with horror in some quarters, with predictions that the move would lead to unscrupulous fund managers and promoters setting out to fleece unsophisticated investors.
In Australia there's been no such ban, and while not perfect, in its place is a much more manageable and effective licensing regime by the local regulator, ASIC. In reality there's no surefire way to prevent those intending to dupe investors from doing so, as shown by Bernie Madoff in the US, or Trio's Astarra in Australia. However, a combination of the widespread dissemination of information, standardised reporting, transparency, and the education of investors and advisors all go a long way to limiting, if not preventing the problem.
So while the cynics might say that the art or science of advertising is to persuade consumers to purchase products or services they might otherwise not have done, advertising does at least open up the industry, or the advertiser to increased scrutiny. Our opinion has always been that the greater a fund's transparency the better, particularly for the less sophisticated investor.
That's not to say that there isn't a need for investor education or advisor knowledge, or the availability of more objective, in depth and better quality research. However, without transparency none of those will be achieved. For the record the transparency of Australian funds, with very few exceptions, is excellent, and investors are generally (or should be) the better for it.
Some more specific results received this week include the following Performance and News Updates:
The Totus Alpha Fund returned a sound 7.21% during June with a net exposure at June 30 of 24%.
Monash Absolute Investment Fund recorded +1.1% after fees in June despite another negative month for the market. Over the Fund's first 12 months, to 30 June, the return was +18.6%.
The Pengana Australian Equities Fund returned -2.50% during June and 12.88% pa over the last five years, against the average RBA cash rate over the same period of 4.1% pa, and the All Ordinaries Accum Index return of 2.2% p.a.
Auscap Long Short Australian Equities Fund returned a solid 8.32% during June with an average net exposure over the month of 116.8%.
Australian hedge funds don't always fit the global mould - commentary on the never ending stream of negative headlines.
Fund Reviews updated this week include:
BlackRock Multi Opportunity Fund is an Australian domiciled multi strategy fund of funds which allocates investors' capital into underlying BlackRock funds at the discretion of the Sydney based investment team. The Fund offers broad diversification across asset classes including equities, fixed income, currencies and commodities with an attractive risk profile, having provided double digit returns since 2009 with low volatility.
The Bennelong Long Short Equity Fund is research driven, market and sector neutral, "pairs" trading strategy investing primarily in large cap stocks from the ASX/S&P100 Index, with a ten year track record and annualised net returns of 20.97% since inception. The Fund's Investment history commenced in January 2002 and has positive annual returns each year, including an 11.95% return in 2008 and 20.6% in 2011, both of which were negative years for the ASX200. A consistent return across the investment history indicates the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market.
AFM Prism Active Equity Fund comprises a portfolio of 5 to 10 underlying Australian absolute return managers each investing in ASX listed equities. The Fund's objective is to achieve double-digit annualised returns with significantly lower volatility than the underlying equity markets, with a focus on capital protection. Fund selection is made based on a combination of quantitative analysis of past performance and risk, coupled with extensive analysis and due diligence of the underlying manager's processes and pedigree. The Prism Active Equity Fund had a sound month, with a return of 1.66% compared to the market decline of 4.5% for the ASX 200 Accumulation Index.
The Optimal Australia Absolute Trust is a long/short equity strategy portfolio typically has a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200. The Trust has recorded consistent out-performance of the market with approximately 83 % of monthly performances have been positive with a largest drawdown of -1.38%.
Bennelong Kardinia Absolute Return Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with a seven year track record and an annualised return of 14.10% net of fees. Consistent top decile long short equity sector performance, with sound risk statistics indicate an attractive risk/reward profile, and a strong focus on capital protection in negative markets.
And finally, for something completely different - and you thought our lot in Canberra were a rabble.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
19 Jul 2013 - Auscap Long Short Australian Equities Fund
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| Fund Overview | The Fund focuses on fundamental long and short investments. The Fund may utilise a multi-strategy approach if short term opportunities to increase returns, hedge the portfolio, protect capital or minimise volatility are found. The Fund is a high conviction fund and the combined portfolio will typically have 25-45 positions, investing primarily in stocks in the ASX200. The Fund may be net long, short or neutral depending on the strategies employed at the time. The Fund may hold cash so that it is in a position to take advantage of market volatility and compelling investment opportunities as and when they arise. The Fund may be geared up to 200% gross long or short and up to 150% net long or short. |
| Manager Comments | Average gross capital employed by the Fund was 172.5% long and 55.7% short. At the end of the month the Fund had 25 long positions and 15 short positions. The Fund's biggest exposures at month end were spread across the consumer discretionary, financials, healthcare, telecommunications, utilities and materials sectors. |
| More Information | » View detailed profile of this fund |
19 Jul 2013 - Fund Review: Bennelong Kardinia Absolute Return Fund
BENNELONG KARDINIA ABSOLUTE RETURN FUND
Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile.
Key points regarding the Fund are:
- Kardinia is a boutique Australian based Fund Manager established in August 2011 in conjunction with the Bennelong Group to continue the management of the Herschel Absolute Return Fund.
- Long biased, research driven, active equity long/short strategy investing in listed ASX companies with a six year track record and an annualised return of 14.10% net of fees.
- Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while the Bennelong Group provide infrastructure, operational, compliance and distribution capabilities.
- Consistent top decile long short equity sector performance with Key Performance and Risk Statistics indicating an attractive risk/reward profile. There is a strong focus on capital protection in negative markets.
Research and Database Manager
Australian Fund Monitors
Fund Review: Bennelong Kardinia Absolute Return Fund (pdf format)
18 Jul 2013 - Fund Review: Optimal Australia Absolute Trust
OPTIMAL AUSTRALIA ABSOLUTE FUND
Attached is our most recently updated Fund Review on the Optimal Australia Absolute Fund.
We would like to highlight the following aspects of the Fund:
- Optimal Australia is a specialist Australian equity investment manager established in 2008.
- The Fund's long/short equity strategy portfolio typically has a low but variable net market exposure comprising 40 to 65 stock broadly selected from within the ASX200.
- The investment team comprising George Colman, Peter Whiting and Stephen Nicholls have close to 90 years combined experience in equity markets.
- Consistent out-performance of the market: Approximately 84 % of monthly performances have been positive with a largest drawdown of -1.38%.
Research and Database Manager
Australian Fund Monitors
Fund Review: Optimal Australia Absolute Trust (pdf format)
17 Jul 2013 - Australian hedge funds don't always fit the global mould
The seemingly never-ending stream of negative headlines relating to global hedge funds is at odds with the reality of the Australian hedge fund sector. This not only relates to performance and risk (surely the most important measures for any investor) but also to size, liquidity, availability and fees.
Most recently there have been reports that this underperformance will lead to the age of multibillion-dollar hedge funds drawing to a close. The reality is that there are very few multibillion-dollar hedge funds in Australia, and while performance varies significantly from fund to fund, as a whole their performance has been in line with expectations.
According to a report by Goldman Sachs, global hedge fund performance lagged the S&P 500 by approximately 10% over the past year, and as at the end of June hedge funds had gained just 1.4% in 2013. By comparison, Australian based funds investing in global equities returned 16.52% (net of fees) in the 12 months to June, against the S&P 500 which returned 17.58%. That's a marginal underperformance of 1%, but achieved with a much lower volatility.
Hedge funds are continually reported as being illiquid, with redemption terms frequently running between three months and one year. By comparison over 95% of all Australian-based funds have liquidity of one month or less, and 50% of those have daily liquidity.
Most recently there has been considerable comment, much of it negative, regarding the SEC's decision to permit US hedge funds to advertise to the general public. In Australia all funds have to be registered or licensed with ASIC, increasingly offering better transparency and investor reporting than many traditional "long only" funds.
Hedge funds might not be suitable for all investors, and their depth and breadth of strategies and risks certainly require additional research, understanding, and due diligence. Once that's done however, the best funds provide outstanding performance with significantly lower volatility than traditional managed funds.
Chris
CEO, AUSTRALIAN FUND MONITORS
