NEWS
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
17 Jul 2013 - Pengana Australian Equities Fund
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| Manager Comments | The top five holdings by value were: DUET Group, ANZ Bank, Telstra, Resmed and Tatts. The largest positive contributors to the quarter's performance included Fox Group (formerly News Corporation), ANZ Bank, Ainsworth Gaming and our holdings in US Dollars. There were several large detractors including ANZ Bank, NAB, Seven Group Holdings, DUET Group, Woolworths, Mermaid Marine and Telstra. The Fund acquired two new holdings, namely the global plasma fractionator CSL and a NZ-based aged care company, Summerset. In addition, the Fund took advantage of the lower prices to add to existing holdings in Mermaid Marine, Caltex, Woolworths, DUET Group and Telstra. The Fund's exposure to non-Australian dollar earnings streams (inclusive of companies with global earnings profiles such as Resmed and Fox Group, NZ based companies and US dollar exposure) stands at 20%. The Fund disposed of its holding in Fairfax and AMP and took advantage of higher prices to lighten its exposure to Seven Group, Ainsworth Gaming, and McMillan Shakespeare. |
| More Information | » View detailed profile of this fund |
17 Jul 2013 - Fund Review: AFM Prism Active Equity Fund
AFM PRISM ACTIVE EQUITY FUND
Attached is our most recently updated Fund Review on the AFM Prism Active Equity Fund.
We would like to highlight the following aspects of the Fund:
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The Prism Active Equity Fund ("PAEF" or "Prism") comprises a portfolio of 5 to 10 underlying Australian absolute return managers each investing in ASX listed equities.
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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.
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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.
Research and Database Manager
Australian Fund Monitors
AFM Prism Active Equity Fund - May 2013 (pdf format)
16 Jul 2013 - Fund Review: Bennelong Long Short Equity Fund
BENNELONG LONG SHORT EQUITY FUND
Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.
We would like to highlight the following aspects of the Fund:
- 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% .
- Portfolio Manager Richard Fish has over 25 years market experience, while Bennelong Funds Management, who have over $4.5 billion in FUM across various funds, provide infrastructure, operational and compliance functions.
- 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.
- 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.
Research and Database Manager
Australian Fund Monitors
Fund Review: Bennelong Long Short Equity Fund (pdf format)
15 Jul 2013 - Totus Alpha Fund
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| Fund Overview | The Fund is a long/short investment fund principally investing in listed entities, commodities, futures and options in Australia and internationally. The Fund is not a market neutral fund and accordingly may switch between net long positions and net short positions. The Fund may use short sales and derivatives as determined by Totus Capital. Gearing may be used to enhance returns and the Fund may be geared in excess of 100% of the Fund's Net Asset Value. There is a limit to net exposure of 150%. |
| Manager Comments | Markets remained volatile in June with a number of asset classes (e.g. gold, bonds) reacting violently to news that the US Federal Reserve was considering \'tapering\' its program of quantitative easing (QE). That trend has continued into July with markets reacting just as violently to news this week that the Fed may not be \'tapering\' after all. This kind of volatility can present opportunities for a nimble absolute return fund. The Manager is sticking to their general investment road-map which is as follows: •Global growth remains subdued, an environment that should suit \'big and boring\' companies (long positions) over \'small and sexy\' ones (short positions). • Even if QE is not ending it may be reaching the limits of its effectiveness in some regions. • The mining boom in Australia is over and as such so is the era of a high Aussie dollar and Australia's (relatively) high interest rates. • Gaining exposure to the US economy and the US$ (at least in a relative sense). |
| More Information | » View detailed profile of this fund |
15 Jul 2013 - Monash Absolute Investment Fund
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| Fund Overview | The Fund places a high priority on capital preservation, and have an absolute return focus in accepting market risk. The Manager employs a comprehensive approach to making investment decisions utilising value, growth and discounted cash flow styles. The portfolio is somewhat concentrated and the manager looks to diversify the portfolio across industries and themes rather than staying near an index. The portfolio may at times have a large amount of cash or other protection. |
| Manager Comments | Over the Fund's first 12 months, to 30 June, the return was +18.6%. This is above the Manager's target of 12-15% pa over a full cycle and, as intended, it was achieved while limiting the Fund's risk exposure. Net exposure to the market averaged only 65% over the year and the standard deviation of monthly returns was approximately half that of the ASX200 Acc Index. |
| More Information | » View detailed profile of this fund |
15 Jul 2013 - Fund Review: BlackRock Multi Opportunity Fund
BLACKROCK MULTI OPPORTUNITY FUND
Attached is our most recently updated Fund Review on the BlackRock Multi Opportunity Fund.
We would like to highlight the following aspects of the Fund:
- BlackRock is the world's largest fund management group. Since being established in 1988 it has grown organically and by acquisition to manage US$3.56 trillion as of July 2012.
- Operations cover 27 countries including Australia (where BlackRock has A$45 billion in FUM) managing a broad range of strategies across a variety of asset classes.
- The 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.
Research and Database Manager
Australian Fund Monitors
Blackrock Multi Opportunity Fund (pdf format)
12 Jul 2013 - Hedge Clippings
Bernanke can't seem to decide which pedal to push
Ben Bernanke's comments overnight certainly set the US market alight, no doubt much to the delight of investors around the globe. However they seem at odds with the comments he made just a few weeks ago that tapering of QE could be expected in the not too distant future.
His previous comments put the skids under the equity market, pushed up bond yields along with the US dollar, and as a result further weakened the $A. However the tapering scenario didn't seem too illogical even if somehow it took many market participants by surprise, which in itself was surprising given most must recognise that QE can't continue forever.
The difficulty for investors of course is to know whether Ben Bernanke's next remarks are going to have the equivalent effect of him hitting the brakes, or the gas. I'm sure he's not doing this intentionally, and after all he should be the person with all the data at his fingertips, but having started the difficult process of weaning markets off QE, putting them back on again would seem to be not only sending mixed messages, but also delaying the inevitable.
The situation in both Europe and China is not helping. Parts of Southern Europe remain what is best termed economically as basket cases, with politics (or politicians being re-elected) having as much influence on economies and markets as anything else. Meanwhile in China there seems ongoing confirmation that the glory days are over, even if hopefully growth will continue at more sustainable levels.
All this highlights the rising market volatility, as noted by George Colman from Optimal Funds Management in his most recent report to investors, when he pointed out that the typical ASX daily trading range since 2000 has been around 0.9%. More recently daily trading ranges of plus or minus double that figure have become almost frequent, making investment decisions difficult to say the least.
In spite of this, albeit with just under 50% of fund returns for June to hand, returns have been significantly better than the market, even if the average return of equity based funds has been negative at 0.90%. To date, 72% of returns have outperformed the ASX 200 Accumulation Index (which fell 2.32%), and 29% provided positive returns. A full breakdown can be found here.
Some more specific results received this week include the following Performance and News Updates:
The Optimal Australia Absolute Trust returned -0.18% in June as the ASX200 Accumulation Index suffered its second successive monthly loss as investors continued to sell AUD risk assets. The Manager particularly noted the increasing equity market volatility, with recent daily trading ranges of over 2% significantly higher than the typical range since 2000 of around 0.9%, and the distortion on valuations created by QE policies which they believe may persist for years.
Insync Global Titans Fund returned 0.91% in June as bond yields rose on the prospect of a tapering of QE. The Fund's return was assisted by holdings in companies driven by consumer spending such as BSkyB, Macdonald's, Reckitt Benckiser, Nestle and Roche.
The Bennelong Kardinia Absolute Return Fund returned -0.46% during June (for only it's second negative month in the past 2 years) with a net equity exposure at month end of 35.5% including derivatives (46.7% long and 11.3% short).
Morphic Global Opportunities Fund returned 1.84% during June. The Fund's top stock contributors this month came from individual stocks in a variety of countries, plus a few successful macro-economic tilts based on the Manager's belief that US government bond rates would rise, and the Australian dollar would continue to fall.
And finally, for something completely different, a clever shadow theatre act brings a tear to the eye.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
