Research and Database Manager
Australian Fund Monitors

ATTACHED FILESAurora Fortitude Absolute Return Fund (pdf format)

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:

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 Fund has recorded out-performance of the market since inception in September 2008 with approximately 84% of monthly performances having positive returns and the largest drawdown -1.38% 

The investment team comprising George Colman, Peter Whiting and Stephen Nicholls have close to 90 years combined experience in equity markets.

Research and Database Manager
Australian Fund Monitors

ATTACHED FILESFund Review: Optimal Australia Absolute Trust (pdf format)

BENNELONG KARDINIA ABSOLUTE RETURN FUND

Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile. 

The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with a seven year track record. Consistent top decile long short equity sector performance with a since inception (May 2006) return of 14.11% pa (ASX Accumulation Index 4.18% pa) and a standard deviation of 7.89% pa (Index 14.86%) indicate the Fund's ability to generate strong risk-adjusted returns. The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while the Bennelong Group provide infrastructure, operational, compliance and distribution capabilities.

Sean Webster

Research and Database Manager
Australian Fund Monitors

ATTACHED FILESBennelong Kardinia Absolute Return Fund (pdf format)

Last week's hope for a clear mandate for the new government in both houses has not come to pass, but it's still too early to tell if incoming PM Tony Abbott will be able to cobble together a working relationship with the rag tag group of independents in the Senate. Anyway, enough of politics. I'm just thankful the electioneering is over for the moment.

This was Hedge Fund Week in Australia, with a range of events and the inevitable post event socialising testing my stamina. AIMA Australia put on an excellent and well attended "by the industry, for the industry" one day seminar in Sydney on Tuesday, which had it not clashed with a commercially sponsored event in Melbourne targeting the same audience would have made it standing room only.

One senior AIMA committee member admitted that they even surprised themselves with the professionalism of the day's proceedings. Certainly the quality of the speakers and panelists, with AIMA Australia's Chairman Paul Chadwick's armchair chat with Sir Michael Hintze from CQS a standout, kept the audience's attention through to the end of the day.

Also on stage was ASIC's deputy commissioner Greg Tanzer who delivered the outcome of ASIC's review of the potential systemic risk of the largest local hedge funds to Australia's financial markets. In what would have been a disappointment to some of the gloom merchants in the media who love to love hating hedge funds, ASIC's findings were that they posed no or little risk. Amongst ASIC's findings were that out of the total funds surveyed, the largest 12, each with greater than $500 million in FUM and representing 42% of the total, held just 0.4% of the ASX All Ords' market capitalisation.

However that's not to suggest that there's no risk, just that they pose no systemic risk to the system in the way that LTCM or Amaranth did in the past.

Last night saw the annual Australian Hedge Fund Awards supporting the Cure Our Kids Foundation. Congratulations to all the finalists, to the evenual winner Chris Black from the Laminar Credit Opportunities Fund, and to John Corr who took out the well deserved "Contribution to the Industry" Award.

EVENTS

An upcoming event that may be of interest for Superannuation member administration and investment operation service providers is the Superannuation Fund Back Office conference coming up on 21-22 October. Visit the International Business Review Conferences website for more details.

The Asset Allocation Conference is also coming up from 30th October to 1 November 2013 at the Grace hotel in Sydney. Details are here.

Specific results received this week include the following PERFORMANCE and NEWS UPDATES:

Bennelong Kardinia Absolute Return Fund returned 0.96% over August with a net equity market exposure of 24.7% (49.2% long and 24.4% short). The Fund's since inception (May 2006) return is 14.11% pa (ASX Accumulation Index 4.18% pa) with a standard deviation of 7.89% pa (Index 14.86%).

The Optimal Australia Absolute Trust returned 0.14% for August with a net risk exposure of 9.2% and gross risk exposure of 61.2%.  The Fund is characterised by low risk with a Sortino Ratio of 5.39 (ASX Accumulation Index 0.06) and high reward-to-risk with a Sharpe Ratio of 1.81 (Index 0.12). All data is since the Fund inception in September 2008.

Morphic Global Opportunities Fund returned -1.57% over August with net leverage of 88%. The Fund's lower risk is evidenced by a downside deviation of 1.87% (ASX 200 Accum 5.70%). The Sortino ratio of 14.88% as compared to 3.37% (Index) and the Sharpe ratio of 3.10 compared to 1.87 (Index) demonstrate the Fund's strong risk-adjusted returns.

The Aurora Fortitude Absolute Return Fund returned 0.18% for August bringing the Fund's percentage of positive months to 87% since March 2005.  Sentiment towards China appears to have turned with the materials index posting a solid 3.7% gain for the month. US Macro data continued to impress, however September does bring a large number of Macro risks to the table including the Tapering debate; Fed Chairman continuity; US Debt Ceiling; German Elections and ongoing tensions in Syria.

Pengana Australian Equities Fund returned 2.27% for August with a cash holding of 26% at month-end. The largest positive contributors to the month's performance were McMillan Shakespeare (validating the Fund's decision to acquire additional shares during the strong reaction to the proposed regulatory change), Seven West Media, Resmed, Woolworths and Ainsworth Gaming.

Updated AFM Fund Reviews were also completed on the following funds this week:

The Bennelong Long Short Equity Fund is a 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 over 20%. Since inception in January 2002 the Fund has had 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. The consistent returns across the investment history indicates the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market. 

For something completely different -  things you need to know when you are in leadership.

On that note, enjoy the week-end!

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

Connect with me on LinkedIn Twitter Facebook

BENNELONG LONG SHORT EQUITY FUND

Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.  

The Fund is a 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 over 20%. Since inception in January 2002 the Fund has had 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. The consistent returns across the investment history indicates the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market.

Sean Webster

Research and Database Manager
Australian Fund Monitors

ATTACHED FILESFund Review: Bennelong Long Short Equity Fund (pdf format)

ASIC has released the finding of its 2012 survey of the potential for hedge funds in Australia to pose a systemic risk to financial markets, with the conclusion that there appears to be no such risk at the present time.

The survey also found that the largest funds (those with over $500 million in assets) had relatively low levels of borrowing and leverage.

However it should be noted that the survey only covered a small number of funds based on the $500m cutoff in assets, and that these represented just 42% of the total assets in the sector as at September 2012.

ASIC's survey estimated that over half of Australia's hedge funds manage less than $50 million, and only 8% manage more than the $500 million cutoff. Furthermore the sector as a whole represented just 3% of the total $2.13 trillion managed by the Australian funds management industry.

ASIC's full report is available here.
 

ATTACHED FILESASIC Report 370 (pdf format)