NEWS
11 Mar 2010 - Questions for Astarra and AIOFP
Questions for Astarra and AIOFP
The Astarra/Trio debacle continues although claim and counterclaim seems to be adding to the overall confusion, and no doubt distress, of their hapless investors. This seems to be extraordinarily complicated, with more twists, turns, offshore entities and faceless people than a paperback thriller and all seemingly being played out in the media, and not as yet in the courts - although the case is due back there on March 23rd and 24th.
For those not aware, the Astarra Strategic Fund was an Australian based Fund of Funds and had approximately A$120m reportedly invested both local and offshore underlying managers. The Strategic Fund was part of the Trio group of companies.
When concerns about the whereabouts or security of the underlying investments were raised last October, ASIC stepped in and froze all of Astarra's/Trio's funds and assets. The Astarra Strategic Fund's manager, Shawn Richard, has assured the media he's confident the assets of the Strategic Fund will be recovered, but seems unable, or unwilling, to provide details exactly where or with which underlying managers they were invested with, or what the current status is.
It appears that the funds were allocated to a third (possibly related) party offshore who was then responsible for allocating to underlying funds.
Meanwhile it appears that the main distribution channel for the Astarra Strategic Fund was the AIOFP, (Association of Independently Owned Financial Planners) and there have been reports and allegations relating to both the relationship, and commissions or other incentives that may have existed between the Astarra and some of AIOFP's members.
It was also reported last week in the trade press that the chairman of AIOFP's so called Independent Research Committee, Rob McGregor, was also a consultant to Astarra.
This sounds like a significant conflict of interest.
As initially observed, details are limited at this stage, but the situation certainly looks murky to say the least. However leaving the legal details aside for the lawyers to ponder, there seem to be some basic and straight forward issues, and questions to be asked.
For a fund of funds to invest offshore in underlying single funds is not out of the ordinary as that is exactly what most of them do quite legitimately.
However, for a Fund of Fund manager to invest via a third party, and presumably not to have done his own due diligence on the underlying managers or not to know the exact and detailed knowledge of the funds is simply unforgivable.
Everyone is asking where the missing portion of the funds are, and no one really seems to know, although to be fair some has been invested in local, reputable managers to our knowledge.
But the questions we'd like to ask, and have answered are:
1. Fund of funds charge an extra layer of fees, supposedly for researching and selecting underlying managers, and then monitoring them on behalf of their investors. Why then can't the underlying funds be traced and valued immediately?
2. Did Shawn Richards or any other senior person at Astarra do proper, or any, due diligence on the underlying managers with whom the funds were invested, and what ongoing reporting, checks and controls were in place?
3. Alternatively did they just hand the investors money over to a third or related party offshore to invest as they sought fit in various underlying managers, and if so, WHY?
4. What was the relationship between the AIOFP, Astarra and their common consultant, Rob McGregor, and did he complete full and proper due diligence on the Astarra Strategic Fund on behalf of the AIOFP?
We'd love to get a response, even if we don't like the answers.
10 Mar 2010 - Performance Report: Optimal Australia Absolute Trust
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Fund Overview | 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's philosophy as a manager is to avoid event risk (particularly with reference to earnings) except where the work necessary to have high convictions in their estimates has been done. Net equity market exposure for the fund ranged from 15% to 25% during the month as the manager is of the view that market visibility remains low with choppy conditions. |
More Information | » View detailed profile of this fund |
10 Mar 2010 - Performance Report: Prodigal Equity RV Fund
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Manager Comments | Geographic exposure of the fund's assets during the month shifted from a heavy weighting in Japan to heavier weightings in Korea and Singapore, while finishing the month in a very low risk position with long exposure totalling less than 50% of capital. |
More Information | » View detailed profile of this fund |
8 Mar 2010 - Performance Report: Austral Equity Fund
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Manager Comments | During January the fund maintained a long equity bias due to improving corporate fundamentals but also increased its exposure to interest rate securities in order to take advantage of the yield differential over the return earned on the fund's cash holdings. |
More Information | » View detailed profile of this fund |
3 Mar 2010 - February absolute return and hedge fund review
Volatility returned to global markets in January, as President Obama foreshadowed controls on banks' prop trading activities and ownership of hedge funds, China issued a warning on credit growth, and Greece shook the confidence of markets with revelations of massive sovereign debt problems.
Markets around the world, including equities and commodities took note, with Australia affected to a greater degree than most. Local hedge fund managers were not immune, and AFM's index of over 200 funds managed from Australia recorded their first decline since February 2009 with an average loss of -1.43%.
For detailed analysis of performance for each strategy, industry comment and ranking tables, please open the attached .pdf file.
25 Feb 2010 - Performance Report: Excalibur Absolute Return Fund
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More Information | » View detailed profile of this fund |
23 Feb 2010 - Performance Report: Optimal Japan Absolute Long Fund
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Manager Comments | The manager believes that Japanese companies have taken steps to improve their cash flow in order to justify loans from weakened banks or raise fresh equity from markets. Returns on capital bottomed in 1995 and had been improving until the disruption of the 2008-09 economic crisis. Therefore Optimal is of the opinion that returns could be heading higher on a sustained basis with the forecasts from many Japanese companies showing profits recovering to their March 2008 peak levels in the year ending March 2012. |
More Information | » View detailed profile of this fund |
23 Feb 2010 - Performance Report: Ascalon Income Fund
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Manager Comments | During the month the fund increased its buy and write positions in the Commonwealth Bank and Woolworths. Positions in WBC and NCM were reduced through the exercise of option positions delivering the maximum return under the buy and write strategy. |
More Information | » View detailed profile of this fund |
23 Feb 2010 - Performance Report: Argus Dynamic Multi-strategy Program
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Manager Comments | Over the past two years this strategy has seen the fund return 42%, however in January the fund was overweight in three impacted markets - Soybean Oil, Crude Palm Oil, and a grouping of minor European stock indices. All of these suffered significant price reversals at various times throughout January which resulted in a larger than expected loss for the month. The manager expects that over time allocating to more independently performing markets is an appropriate strategy, even though over shorter time periods there may be occasional underperformance relative to other CTA's. |
More Information | » View detailed profile of this fund |
23 Feb 2010 - Performance Report: Prodigal Equity RV Fund
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Manager Comments | The manager says that this behaviour was as predicted in their last newsletter, supporting the mean reversion and correlation assumptions that should see normal mean reversion processes recover the temporary losses of December, when the fund dropped 2.87%. |
More Information | » View detailed profile of this fund |