Morphic Global Opportunities Fund

12 Jul 2013 - Australian Fund Monitors

The Morphic Global Opportunities Fund recorded 1.84% during June driven by stock holdings in a number of countries as well as macro-economic tilts.

Bennelong Kardinia Absolute Return Fund

11 Jul 2013 - Australian Fund Monitors

The Bennelong Kardinia Absolute Return Fund returned -0.46% during June with a net equity exposure at month end of 35.5%.

11 Jul 2013 - Bennelong Kardinia Absolute Return Fund

By: Australian Fund Monitors

Report Date	10 July 2013
Manager	Kardinia Capital, a Bennelong Funds Management boutique
Fund Name	Bennelong Kardinia Absolute Return Fund
Strategy	Equity Long/Short
Latest Return Date	June 2013
Latest Return	-0.46%
Latest 6 Months	7.46%
Latest 12 Months	16.33%
Latest 24 Months	18.19%
Annualised Since Inception	14.10%
Inception Date	01 May 2006
FUM (millions)	AU$113.4
Fund Overview	The Bennelong Kardinia Absolute Return Fund is an Australian domiciled equity long/short fund investing in ASX listed securities. The Fund uses some exchange traded call options and there is limited use of SPI futures contracts to hedge overall market risk. The Fund consists of a concentrated long/short portfolio typically comprising 30 to 40 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. There is a slight bias to large cap stocks in the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 10 to 15% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position.
Manager Comments	The Bennelong Kardinia Absolute Return Fund returned -0.46% during June with a net equity exposure at month end of 35.5%. The Australian equity market remained under pressure in June, with the All Ordinaries Accumulation Index falling 2.62%. Potential near term QE3 withdrawal and concerns over liquidity conditions in China increased the volatility of financial markets. US economic data signaled a continued recovery with indicators of US business investment and manufacturing generally stronger. Despite disappointing domestic economic data and further falls in commodity prices, the Reserve Bank of Australia left the official cash rate unchanged at 2.75%. Defensive sectors continued to outperform cyclicals, whilst large caps (-1.9%) significantly outperformed small caps (-7.5%). Long positions in EBOS (New Zealand listed), JB Hi-Fi, CSL and a short position in Share Price Index Futures contracts (hedging long positions) were the largest positive contributors, whilst long positions in Henderson Group, NAB and Suncorp were the largest detractors. Net equity market exposure remained relatively steady at 35.5% including derivatives (46.7% long and 11.3% short).
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Insync Global Titans Fund

10 Jul 2013 - Australian Fund Monitors

Insync's Global Titans Fund returns 0.91% in June as stocks driven by Consumer spending performed, a falling A$ and the SPI index hedge both assisted, offset by holdings in the IT sector.

Optimal Australia Absolute Trust

8 Jul 2013 - Australian Fund Monitors

Optimal Australia's long/short trust returns -0.18% in June vs. the ASX200 Accumulation's loss of -2.32% whilst keeping net risk exposure at just 3%.

8 Jul 2013 - Optimal Australia Absolute Trust

By: Australian Fund Monitors

Report Date	07 July 2013
Manager	Optimal Fund Management Australia
Fund Name	Optimal Australia Absolute Trust
Strategy	Equity Long/Short
Latest Return Date	June 2013
Latest Return	-0.18%
Latest 6 Months	0.23%
Latest 12 Months	1.85%
Latest 24 Months	9.88%
Annualised Since Inception	11.23%
Inception Date	15 September 2008
FUM (millions)	AU$160
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's 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, particularly resources and commodities, as evidenced by the All Resources Index falling a further 10% in June. 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. The Fund's exposure at month end was 34% long and 31% short (including derivatives) for a net exposure of just 3%, and gross of 65%, indicating the manager's favouring a low net exposure and hedged approach to managing risk. On past performance this has served the Fund's investors well, as shown by a Sharpe Ratio since inception of 1.82, a maximum drawdown of just 1.38%, and a record of 80% positive monthly performances (Average +0.73%) when the market (average -3.88%) has fallen.
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Hedge Clippings

5 Jul 2013 - Australian Fund Monitors

Weekly commentary and opinion from AFM's CEO, Chris Gosselin. This week, Chris touches on the perceived risk of Hedge Funds and minimum investment opportunities for retail investors.

5 Jul 2013 - Hedge Clippings

By: Australian Fund Monitors

Focus on the Facts

May's performance data is behind us, but reflecting on it will serve to show the risk averse nature of absolute return funds in general. Against the ASX 200 accumulation index which fell 4.5%, (cutting year-to-date performance to just 5.4%) AFM's index of all funds rose by 0.36%.

Drilling down through this data on a regional basis is not quite as compelling, with funds investing domestically in Australia losing an average of -1.53%, although still an outperformance of 3% above the index. However it does bear out our previous view that with the A$ falling out of favour, local investors would benefit by looking for funds investing offshore.

Although just 7% of June fund returns are to hand, June performance is not looking as positive, with an average fall of 0.91% against the ASX 200 accumulation index fall of 2.32%. However it again indicates the potential defensive nature of the sector.

With that in mind we are always surprised that hedge funds are typified as risky. Certainly there are some that have shown significant risk, while there are others that have performed in line with expectations, and some outstandingly. Over 12 months fund returns in AFM's index have ranged from -59% through to +66%.

Recently to overcome the misconception that that there was limited choice of funds for retail investors we analysed the performance of funds with minimum investments of $50,000 or less on behalf of Alan Kohler's Eureka Report. The facts are that over 50% of the funds in AFM's database have minimum investments of $50,000 or less, and of those three quarters have minimum subscriptions of $25,000 or less. Full details of the analysis are available here.

The issue for retail investors therefore is not so much availability, as suitability, with the more complex investment strategies demanding greater understanding by investors, and therefore additional research and due diligence. Unfortunately the quality of some research recommendations available to retail investors has in our opinion been lacking, and in some cases out of date.

Guaranteeing or even predicting the future performance of managed funds is difficult, if not impossible. Analysis of their past performance, and in-depth analysis of processes and systems, while easier, provides some indications, but still requires a critical and quantitative approach. On the occasion of the Guardian newspaper's 100th anniversary in 1921 the editor C P Scott wrote "comment is free, but facts are sacred", a tag line the newspaper retains to this day.

Unfortunately some research on managed funds focuses excessively on comment (and opinion), and insufficiently on the facts.

Performance and News Updates on www.fundmonitors.com this week:

8IP Asia Pacific Partners Fund returned -1.36% during May and 18.58% for the last twelve months. The Fund's exposure in Australia and Japan detracted from performance as the small resource stock exposure continued to suffer and the Japanese financials experienced profit-taking.

The BlackRock Multi Opportunity Fund returned -0.16% during May and 8.98% since inception. The fund delivered a small negative performance in May with Global Equity Market Neutral, European equity long/short, and International Alpha Transport strategies adding value. Australian Equity Market Neutral, Global Macro, and Fixed Income Global Alpha strategies detracted.

AFM Prism Active Equity Fund returned 1.66% during May with the ASX 200 Accumulation Index down 4.5% over the same time. Of the five underlying funds, three had a positive month in May, and two had negative returns. One of the funds delivered a remarkable performance of 9.49% and this was the major contributor to the fund's performance.

The Bennelong Long Short Equity Fund returned 1.1% during May bringing it's since inception (Feb 2002) return to 21.03%. The Manager expects recent volatility to persist as markets and investors grapple with a potential change in ultra-loose monetary policy which has been in place for so long now.

You may also like to watch this most recent episode of Opalesque.TV, discussing Australian Hedge Fund Strategies, attractive liquidity terms and investors.

Now for something completely different, an unruly dog creates havoc in Richmond Park, sparking a host of parodys around the globe.

On that note I wish you a happy and healthy weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Self directed superannuation funds

4 Jul 2013 - Australian Fund Monitors

Chris Gosselin's Australian Fund Monitors aims to be the "eyes and ears" on the ground for offshore investors researching Australian hedge funds.

Bennelong Long Short Equity Fund

4 Jul 2013 - Australian Fund Monitors

The Bennelong Long Short Equity Fund returned 1.1% during May bringing it's since inception return to 21.03%.

AFM Prism Active Equity Fund

3 Jul 2013 - Australian Fund Monitors

The AFM Prism Active Equity Fund returned 1.66% during May.

3 Jul 2013 - AFM Prism Active Equity Fund

By: Australian Fund Monitors

Report Date	02 July 2013
Manager	AFM Prism Asset Management
Fund Name	AFM Prism Active Equity Fund
Strategy
Latest Return Date	May 2013
Latest Return	1.66%
Latest 6 Months	1.46%
Latest 12 Months
Latest 24 Months
Annualised Since Inception	4.21%
Inception Date	01 October 2012
FUM (millions)	AU$3
Fund Overview	AFM Prism Asset Management employs an active, consistent and disciplined approach to the ongoing management and governance of the Fund in order to optimise performance and minimise volatility. The Fund will invest in a portfolio consisting of a group of underlying managed funds which focus on investing in ASX listed companies. The Fund will not directly invest in equity markets or derivatives, but the underlying funds may use short selling or invest in derivatives to improve performance or reduce risk. The underlying managers and funds will be selected from Absolute Return Funds managed in Australia. This reduces the risk of currency fluctuations, facilitates due diligence and ensures that each underlying fund manager is licensed by the Australian Securities Investments Commission (ASIC). A combination of quantitative performance analysis and qualitative operational due diligence is used to create a portfolio of five to ten 'best of breed' funds. AFM's research has shown that selecting a relatively small group of funds results in better risk adjusted performance than that of a larger, more diversified group. Significant research from Australia and overseas shows that the performance of boutique funds, (particularly those where the principals remain actively involved in the day to day investment decisions) and smaller managers can provide more attractive returns than larger or more established managers. As a result the Fund may invest in funds managed by boutique fund managers where the principals invest alongside outside investors, creating an attractive alignment of interests. In addition the Fund may also invest in funds managed by early stage managers with less than three years history, but only where the principals concerned have a demonstrated track record of prior performance in a similar role, and where AFM has been able to conduct thorough due diligence on the management company and its operations. The underlying funds are monitored each month by AFM Prism Asset Management and AFM to ensure each fund's strategy and risk limits remain appropriate for current market conditions. The returns of each underlying fund are also analysed to ensure the original basis for inclusion in the portfolio remains relevant, and to allow new or additional funds to be added to enhance overall performance.
Manager Comments	The AFM Prism Active Equity Fund returned 1.66% during May with the ASX 200 Accumulation Index down 4.5% over the same time. May was the month that the search for yield came to an end as investors rotated away from the stocks that had enjoyed strong performances over the last twelve months. Banks fell 11.3% and Telco's 4.9% as did consumer staples, -9.0% and discretionary retail, -10.1%. Of the five underlying funds, three had a positive month in May, and two had negative returns. One of the funds delivered a remarkable performance of 9.49% and this was the major contributor to Prism's performance. On the flip side one of the managers had a weak month losing 2.37%. However with this fund's allocation in the portfolio at 2%, the loss had a minimal impact on Prism's May performance. The Manager continues to conduct research on new managers for investment, but balancing caution remains an important factor given the market's recent activity.
More Information	» View detailed profile of this fund

BlackRock Multi Opportunity Fund

2 Jul 2013 - Australian Fund Monitors

The BlackRock Multi Opportunity Fund returned -0.16% during May and 8.98% since inception.

2 Jul 2013 - BlackRock Multi Opportunity Fund

By: Australian Fund Monitors

Report Date	01 July 2013
Manager	BlackRock Asset Management Australia Limited
Fund Name	BlackRock Multi Opportunity Fund
Strategy	Multi Strategy
Latest Return Date	May 2013
Latest Return	-0.16%
Latest 6 Months	4.14%
Latest 12 Months	9.88%
Latest 24 Months	26.42%
Annualised Since Inception	8.98%
Inception Date	30 July 2004
FUM (millions)	AU$570.01
Fund Overview	The BlackRock Multi Opportunity Fund (the Fund) is a multi-strategy fund that seeks to benefit from BlackRock's ability to systematically exploit inefficiencies across a broad range of global investment markets. The Fund harnesses BlackRock's best research ideas that are based on sound economic principles which are implemented via a systematic investment process and combined into one investment vehicle. The Fund gains exposure to a diversified group of absolute return strategies which currently include: - Australian and International Equity Long/Short - Global Fixed Income Long/Short - Global Macro - Commodity Alpha - Alpha Transport The Fund's goal is to provide investors with a source of consistent, risk-controlled, absolute returns that are over time, expected to have low correlations with the returns of major asset classes. The Fund aims to achieve a return of 8% p.a. before fees, above the RBA Cash Rate Target over rolling 3 year periods. In order to achieve its expected return objective, the Fund will target a total expected risk of between 4-6% p.a. over the same rolling 3 year period.
Manager Comments	The BlackRock Multi Opportunity Fund returned -0.16% during May and 8.98% since inception. The Multi Opportunity Fund delivered a small negative performance in May with Global Equity Market Neutral, European equity long/short, and International Alpha Transport strategies adding value. Australian Equity Market Neutral, Global Macro, and Fixed Income Global Alpha strategies detracted. The Australian equity market fell -5.1% in May as investors rotated out of yield stocks and into resources. The leading sector for the month was Information Technology, led by Computershare, which benefited from its USD exposure. Materials and Energy also enjoyed positive returns, led by some smaller energy stocks, and companies in base metals and coal. Performance of the Australian equity long/short strategy was hurt by the rebound in small/mid cap resources which had been sold down heavily in April, by the out-performance of USD exposed stocks, and by several significant stock specific profit warnings. Our short positions accounted for most of the under-performance with mineral sands miner Iluka Resources and uranium miner Paladin Energy among the biggest detractors.
More Information	» View detailed profile of this fund

8IP Asia Pacific Partners Fund

1 Jul 2013 - Australian Fund Monitors

The 8IP Asia Pacific Partners Fund returned -1.36% during May and 18.58% for the last twelve months.

1 Jul 2013 - 8IP Asia Pacific Partners Fund

By: Australian Fund Monitors

Report Date	30 June 2013
Manager	Eight Investment Partners Pty Ltd
Fund Name	8IP Asia Pacific Partners Fund
Strategy	Equity Long/Short
Latest Return Date	May 2013
Latest Return	-1.36%
Latest 6 Months	13.05%
Latest 12 Months	18.58%
Latest 24 Months	-29.63%
Annualised Since Inception	-3.64%
Inception Date	22 February 2010
FUM (millions)	AU$10
Fund Overview	The 8IP Asia Pacific Partners Fund aims to provide high capital growth over the long term from a portfolio of Asia Pacific Equities. Typically, the Fund will hold between 10 and 20 investments in Asia Pacific equities. The maximum limit is 30 holdings. The level of concentration reflects the high conviction nature of the Fund. There is a relatively low number of individual securities in the Fund which may result in periods of high volatility. Ideally, investments should be made for a minimum of five years so that short term volatility may be offset by high capital growth over time. Companies are chosen using an active, bottom-up approach with particular attention paid to valuation and the sustainability of return on equity. The Fund takes a long term view when investing. Companies of all sizes are considered for inclusion in the Fund. The Fund invests in a mix of both developed and emerging markets. Investments in emerging markets may carry risk associated with delivery difficulties, failed or late settlement of market transactions and the registration and custody of securities is more complex. The lack of liquidity and efficiency in these markets may mean that from time to time the Fund may experience more difficulty in purchasing or selling securities than it would in a more developed market.
Manager Comments	The 8IP Asia Pacific Partners Fund returned -1.36% during May and 18.58% for the last twelve months. In US dollar terms, Asia Pacific share-markets fell nearly 5% but this was more than offset by a sharp fall in the Australian dollar. We decided to remove the AUD/USD hedge during the month at an average rate of 97.6c. Having initiated the hedge at around 90c in February 2010 and received a positive interest rate carry ever since, the decision to hedge has been a benefit to the Fund. Going forward, the Fund will benefit from any further decline in the Australian dollar. The Fund's exposure in Australia and Japan detracted from performance as the small resource stock exposure continued to suffer and the Japanese financials experienced profit-taking.
More Information	» View detailed profile of this fund

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12 Jul 2013 - Morphic Global Opportunities Fund

11 Jul 2013 - Bennelong Kardinia Absolute Return Fund

10 Jul 2013 - Insync Global Titans Fund

8 Jul 2013 - Optimal Australia Absolute Trust

5 Jul 2013 - Hedge Clippings

4 Jul 2013 - Self directed superannuation funds

4 Jul 2013 - Bennelong Long Short Equity Fund

3 Jul 2013 - AFM Prism Active Equity Fund

2 Jul 2013 - BlackRock Multi Opportunity Fund

1 Jul 2013 - 8IP Asia Pacific Partners Fund

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