News
Performance Report: Paragon Australian Long Short Fund
7 Jul 2020 - Australian Fund Monitors
The Paragon Australian Long Short Fund rose +5.9% in June, outperforming the ASX200 Accumulation Index by +3.29% and taking annualised performance since inception in March 2013 to +10.27% versus the Index's +6.43%.
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7 Jul 2020 - Performance Report: Paragon Australian Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Paragon's unique investment style, comprising thematic led idea generation followed with an in depth research effort, results in a concentrated portfolio of high conviction stocks. Conviction in bottom up analysis drives the investment case and ultimate position sizing: * Both quantitative analysis - probability weighted high/low/base case valuations - and qualitative analysis - company meetings, assessing management, the business model, balance sheet strength and likely direction of returns - collectively form Paragon's overall view for each investment case. * Paragon will then allocate weighting to each investment opportunity based on a risk/reward profile, capped to defined investment parameters by market cap, which are continually monitored as part of Paragon's overall risk management framework. The objective of the Paragon Fund is to produce absolute returns in excess of 10% p.a. over a 3-5 year time horizon with a low correlation to the Australian equities market. |
| Manager Comments | The Paragon Australian Long Short Fund rose +5.9% in June, outperforming the ASX200 Accumulation Index by +3.29% and taking annualised performance since inception in March 2013 to +10.27% versus the Index's +6.43%. The Fund's down-capture ratio for performance since inception of 68.74% indicates that, on average, the Fund has outperformed during the market's negative months. |
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Performance Report: Delft Partners Global High Conviction
1 Jul 2020 - Australian Fund Monitors
The Delft Global High Conviction Strategy has returned +14.78% with a volatility of +11.84% on an annualised basis since inception in August 2011. Over the same period, AFM's Global Equity Index has risen +13.50% p.a. with an annualised...
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1 Jul 2020 - Performance Report: Delft Partners Global High Conviction
By: Australian Fund Monitors
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| Fund Overview | The quantitative model is proprietary and designed in-house. The critical elements are Valuation, Momentum, and Quality (VMQ) and every stock in the global universe is scored and ranked. Verification of the quant model scores is then cross checked by fundamental analysis in which a company's Accounting policies, Governance, and Strategic positioning is evaluated. The manager believes strategy is suited to investors seeking returns from investing in global companies, diversification away from Australia and a risk aware approach to global investing. It should be noted that this is a strategy in an IMA format and is not offered as a fund. An IMA solution can be a more cost and tax effective solution, for clients who wish to own fewer stocks in a long only strategy. |
| Manager Comments | The Strategy has achieved an average positive monthly return of +3.26% against the Index's +2.96%. The Strategy's Sharpe and Sortino ratios for performance since inception are 1.05 and 1.87. With respect to the Index's 10 best and worst months since the Strategy's inception, the Strategy outperformed in 6 out of 10 of the Index's worst months and 9 out of 10 of the index's best months. |
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Performance Report: Touchstone Index Unaware Fund
1 Jul 2020 - Australian Fund Monitors
The Touchstone Index Unaware Fund rose +4.93% in May, taking annualised performance since inception in April 2016 to +6.09% with an annualised volatility of 16.18%.
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1 Jul 2020 - Performance Report: Touchstone Index Unaware Fund
By: Australian Fund Monitors
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| Fund Overview | The portfolio is constructed using Touchstone's Quality-At-a-Reasonable-Price ('QARP') investment process. QARP is a fundamental bottom-up process, however, it also incorporates a top-down risk management framework designed to successfully manage the portfolio during varying market conditions and economic cycles. The Touchstone Fund is concentrated, typically holding between 15-20 stocks. No individual stock will ever make up more than 10% of the portfolio at any one time. The Investment Manager may temporarily exceed the exposure limits of the Fund occasionally, particularly during periods of market volatility, to allow for holdings in excess of this 10% limit where the increase in value of the underlying security is due to market movement. The Fund may also hold between 0-50% of the portfolio in cash. The Fund has a high level of associated risk, therefore, the minimum suggested investment time-frame is 5 years. |
| Manager Comments | At month-end, the Fund held 21 stocks with a median position size of 4.4%. The portfolio's holdings had an average forward year price/earnings of 20.8, forward-year tangible ROE of 9.8% and forward-year dividend yield of 2.6%. The Fund ended the month with a cash weighting of 10.5%, up from 7.4% at the end of April. |
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Performance Report: Insync Global Quality Equity Fund
30 Jun 2020 - Australian Fund Monitors
The Insync Global Quality Equity Fund rose +7.39% in May, outperforming AFM's Global Equity Index by +5.29% and taking annualised performance since inception in October 2009 to +13.91% versus the Index's +10.70%. The Fund has returned...
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30 Jun 2020 - Performance Report: Insync Global Quality Equity Fund
By: Australian Fund Monitors
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| Fund Overview | Insync employs four simple screens to narrow the universe of over 40,000 listed companies globally to a focus group of high-quality companies that it believes have the potential to consistently grow their profits and dividends. These screens are: size of the company, balance sheet performance, valuation and dividend quality. Companies that pass this due diligence process are then valued using dividend discount models, free cash flow yield and proprietary implied growth and expected return models. The end result is a high conviction portfolio typically of 15-30 stocks. The principal investments will be in shares of companies listed on international stock exchanges (including the US, Europe and Asia). The Fund may also hold cash, derivatives (for example futures, options and swaps), currency contracts, American Depository Receipts and Global Depository Receipts. The Fund may also invest in various types of international pooled investment vehicles. |
| Manager Comments | Insync noted they continue to hold companies exposed to Megatrends which they believe will deliver sustainable profitable growth in a post-pandemic environment. Their view is that COVID-19 simply brought forward the demise of many businesses that were already in structural decline. The top three Megatrends in the portfolio by weighting as at the end of May were the 'Age Related Health Solutions' megatrend (15%), the 'Digitisation' megatrend (13%), and the 'Cashless Society' megatrend (10%). The Fund's top 5 holdings at month-end were PayPal, Adobe, JD Sports Fashion, S&P Global and Dominos. |
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Performance Report: Quay Global Real Estate Fund
29 Jun 2020 - Australian Fund Monitors
The Quay Global Real Estate Fund has returned +5.78% p.a. with an annualised volatility of 12.22% since inception in January 2016. In May the Fund returned -1.0% with currency providing a -1.4% drag.
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29 Jun 2020 - Performance Report: Quay Global Real Estate Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund will invest in a number of global listed real estate companies, groups or funds. The investment strategy is to make investments in real estate securities at a price that will deliver a real, after inflation, total return of 5% per annum (before costs and fees), inclusive of distributions over a longer-term period. The Investment Strategy is indifferent to the constraints of any index benchmarks and is relatively concentrated in its number of investments. The Fund is expected to own between 20 and 40 securities, and from time to time up to 20% of the portfolio maybe invested in cash. The Fund is $A un-hedged. |
| Manager Comments | Quay noted that, considering global real estate has lagged the general equity market recovery, and given that the operating environment was generally better than expected, they saw an opportunity to redeploy cash across their preferred names, as well as top up on sectors that had been hit hardest (Healthcare and Retail). For long-term investors, Quay's view is that valuations look very attractive at current levels, however, their biggest concern remains access to capital and rent collection. To date these concerns have been allayed as more companies reported over the month. |
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Performance Report: Frazis Fund
29 Jun 2020 - Australian Fund Monitors
The Frazis Fund rose +16.7% in May, outperforming AFM's Global Equity Index by +14.6% and taking 12-month performance to +12.85% versus the Index's +9.83%. CYTD the Fund has returned +9.97% against the Index's -4.25%.
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29 Jun 2020 - Performance Report: Frazis Fund
By: Australian Fund Monitors
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| Fund Overview | The manager follows a disciplined, process-driven, and thematic strategy focused on five core investment strategies: 1) Growth stocks that are really value stocks; 2) Traditional deep value; 3) The life sciences; 4) Miners and drillers expanding production into supply deficits; 5) Global special situations; The manager uses a macro overlay to manage exposure, hedging in three ways: 1) Direct shorts 2) Upside exposure to the VIX index 3) Index optionality |
| Manager Comments | Frazis have continued reducing their holdings in software firms that have doubled or tripled from the lows and are reinvesting the proceeds into areas they think are next most likely to benefit, such as renewables. At the end of May, the Fund held significantly more cash than usual at over 15% of the portfolio. Frazis' base case remains that economic activity is depressed around the world on average, with pockets of the world, such as the technology sectors, experiencing a true boom. They Fund has remained invested in over 35 stocks across the manager's core thematics: software, e-commerce, digital health, life sciences, renewable energy, and companies changing the way people live. |
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Performance Report: Surrey Australian Equities Fund
26 Jun 2020 - Australian Fund Monitors
The Surrey Australian Equities Fund rose +11.30% in May, outperforming the ASX200 Accumulation Index by +6.94% and taking annualised performance since inception in June 2018 to +3.05% versus the Index's +1.81%. The Fund has outperformed...
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26 Jun 2020 - Performance Report: Surrey Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Investment Manager follows a defined investment process which is underpinned by detailed bottom up fundamental analysis, overlayed with sectoral and macroeconomic research. This is combined with an extensive company visitation program where we endeavour to meet with company management and with other stakeholders such as suppliers, customers and industry bodies to improve our information set. Surrey Asset Management defines its investment process as Qualitative, Quantitative and Value Latencies (QQV). In essence, the Investment Manager thoroughly researches an investment's qualitative and quantitative characteristics in an attempt to find value latencies not yet reflected in the share price and then clearly defines a roadmap to realisation of those latencies. Developing this roadmap is a key step in the investment process. By articulating a clear pathway as to how and when an investment can realise what the Investment Manager sees as latent value, defines the investment proposition and lessens the impact of cognitive dissonance. This is undertaken with a philosophical underpinning of fact-based investing, transparency, authenticity and accountability. |
| Manager Comments | Given the large number of company meetings Surrey have had and the insights gained into how businesses are dealing with and recovering from the COVID-19 crisis, coupled with record low interest rates, Surrey maintain an outlook of cautious optimism. In addition to management meetings, there were also a number of company announcements throughout the month. For companies such as Xero, Appen, Service Stream and Austal, these are discussed in Surrey's latest report. The Fund's top holdings at month-end included Appen (APX), Omni Bridgeway (OBL), Opticom (OPC), Saracen Mineral (SAR) and Xero Limited (XRO). By sector, the Fund was most heavily weighted towards the Industrials and IT sectors. |
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Performance Report: DS Capital Growth Fund
26 Jun 2020 - Australian Fund Monitors
The DS Capital Growth Fund rose +8.65% in May, outperforming the ASX200 Accumulation Index by +4.29% and taking annualised performance since inception in December 2012 to +14.15% versus the Index's +7.82%.
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26 Jun 2020 - Performance Report: DS Capital Growth Fund
By: Australian Fund Monitors
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| Fund Overview | The investment team looks for industrial businesses that are simple to understand; they generally avoid large caps, pure mining, biotech and start-ups. They also look for: - Access to management; - Businesses with a competitive edge; - Profitable companies with good margins, organic growth prospects, strong market position and a track record of healthy dividend growth; - Sectors with structural advantage and barriers to entry; - 15% p.a. pre-tax compound return on each holding; and - A history of stable and predictable cash flows that DS Capital can understand and value. |
| Manager Comments | The Fund's capacity to achieve superior risk adjusted returns whilst avoiding the market's downside is highlighted by the following statistics (since inception): Sharpe ratio of 1.06 vs the Index's 0.49, Sortino ratio of 1.52 vs the Index's 0.55, and down-capture ratio of 45.22%. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
26 Jun 2020 - Australian Fund Monitors
The Gyrostat Absolute Return Income Equity Fund has returned +10.15% over the past 12 months and +5.07% p.a. with an annualised volatility of 4.22% since inception in December 2010. Since inception, the Fund has had no quarterly NAV...
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26 Jun 2020 - Performance Report: Gyrostat Absolute Return Income Equity Fund
By: Australian Fund Monitors
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| Fund Overview | The investment objective is to deliver regular and stable income stream (from ASX20 dividends) in a low interest rate environment with capital security - a 'highly-defensive' asset class. Gyrostat has operated for 37 consecutive quarters within a 'hard' pre-defined risk parameter (no more than 3% capital at risk with the Fund's maximum draw-down 2.2% in any circumstances) always in place, delivering regular income by passing through ASX-20 dividends, and meeting returns guidance based upon market conditions (demonstrating increasing returns with market volatility). The Fund buys and holds ASX-20 and international assets with lowest cost protection always in place with upside. It is a conservative asset allocation. Note that Gyrostat have expanded their international assets within the Fund to include SP500, FANGS, Nikkei, Hang Seng, MSCI China, MSCI Developed and Developing markets. Advances in investment risk management enable cost-effective protection to always be in place for a 'hard' defined risk parameter (say no more than 3% capital at risk). Returns are designed to increase as volatility levels increase, as this provides more opportunities to lower protection costs. Investment Objectives: - Returns: 6% - 8% pa in trending markets, greater than 8% pa in volatile markets, BBSW90 + 3% in stable markets - Income: Minimum cash rate + 3% paid semi-annually (currently 4.0% p.a.) from dividends and franking credits - Protection: No quarterly NAV draw-downs exceeding 3% Also includes a 'tail hedge' for gains on large market falls. |
| Manager Comments | Market conditions in May enabled Gyrostat to enter additional positions, allowing the Fund to achieve more elevated returns on any future uplift in market volatility. The Fund's strategy allows for up to 15% of assets to be invested in international assets, with positions in the S&P500, NASDAQ, Hang Seng, MSCI Developed and emerging markets (among others). Gyrostat anticipate increasing levels of 'late cycle' market volatility given elevated geopolitical tensions, historically high debt levels and elevated valuations. |
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Performance Report: Bennelong Twenty20 Australian Equities Fund
25 Jun 2020 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund rose +6.58% in May, outperforming the ASX200 Accumulation Index by +2.22%. Since inception in November 2009, the Fund has returned +9.27% p.a. versus the Index's +6.58%.
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25 Jun 2020 - Performance Report: Bennelong Twenty20 Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund is managed as one portfolio but comprises and combines two separately managed exposures: 1. An investment in the top 20 stocks of the markets, which the Fund achieves by taking an indexed position in the S&P/ASX 20 Index; and 2. An investment in the stocks beyond the S&P/ASX 20 Index. This exposure is managed on an active basis using a fundamental core approach. The Fund may also invest in securities expected to be listed on the ASX, securities listed or expected to be listed on other exchanges where such securities relate to ASX-listed securities.Derivative instruments may be used to replicate underlying positions and hedge market and company specific risks. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Accumulation Index. The Fund typically holds between 40-55 stocks and thus is considered to be highly concentrated. This means that investors should expect to see high short-term volatility. The Fund seeks to achieve growth over the long-term, therefore the minimum suggested investment timeframe is 5 years. |
| Manager Comments | As at the end of May, the portfolio's weightings had been increased in the Discretionary, Industrials, Communications and IT sectors, and decreased in the Materials, Consumer Staples, Health Care and Financials sectors. The portfolio's weightings in the Energy and REIT's sectors remained unchanged at 1.2% and 3.4% respectively. Bennelong believe it is more difficult to outperform when investing in the top 20 stocks on the ASX given that they are well known, heavily researched and have more broker and media coverage. They believe there is more opportunity to outperform when investing in ex-20 stocks, which they note tend to be priced less efficiently. At month-end, indexed positions in the top 20 stocks made up 56% of the portfolio while the other 44% comprised active positions in stocks outside of the top 20. |
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