News
Performance Report: Frazis Fund
18 Dec 2019 - Australian Fund Monitors
The Frazis Fund rose +7.5% in November, outperforming AFM's Global Equity Index by +3.1%. This follows from the Fund's October return of +7.6% and takes CYTD performance to +29.35% versus the Index's +27.55%.
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18 Dec 2019 - 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 | The Frazis Fund rose +7.5% in November, outperforming AFM's Global Equity Index by +3.1%. This follows from the Fund's October return of +7.6% and takes CYTD performance to +29.35% versus the Index's +27.55%. The Fund benefited from strong contributions from Carvana and Amarin during November. Amarin is a US biotech company marketing pure EPA, a component of fish oil. Frazis noted research results released in Japan and also by Amarin both showed EPA to be capable of reducing the risk of heart attack on a similar order of magnitude as statins. Frazis remain excited about this opportunity. This month Frazis have also released an Insights article, 'A blood test for cancer', in which they discuss their views on Guardant Health, a new company in the portfolio developing a blood test for cancer. Frazis Capital Partners are pleased with how the fundamentals underlying the Fund's long-term investments are progressing. These are in companies they've discussed in previous months' performance reports, including Afterpay, Carvana, Pinduoduo, Amarin, Pointsbet, diagnostics and US software. They noted that, after a long period of investment over the past year, they are hoping to reap the rewards of these investments over the next few years and are also optimistic the Fund's good fortune in the life sciences will continue. |
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Performance Report: Bennelong Australian Equities Fund
17 Dec 2019 - Australian Fund Monitors
The Bennelong Australian Equities Fund rose +5.82% in November, outperforming the ASX200 Accumulation Index by +2.54% and taking annualised performance since inception in February 2009 to +14.20% versus the Index's +11.13%.
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17 Dec 2019 - Performance Report: Bennelong Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Bennelong Australian Equities Fund seeks quality investment opportunities which are under-appreciated and have the potential to deliver positive earnings. The investment process combines bottom-up fundamental analysis with proprietary investment tools that are used to build and maintain high quality portfolios that are risk aware. The investment team manages an extensive company/industry contact program which helps identify and verify various investment opportunities. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to the ASX-listed securities. The Fund typically holds between 25-60 stocks with a maximum net targeted position of an individual stock of 6%. |
| Manager Comments | The Bennelong Australian Equities Fund rose +5.82% in November, outperforming the ASX200 Accumulation Index by +2.54% and taking annualised performance since inception in February 2009 to +14.20% versus the Index's +11.13%. The Fund's up-capture and down-capture ratios, 121.6% and 95.6% respectively, indicate that, on average, the Fund has outperformed in both rising and falling markets since inception. As at the end of November, the Fund's weightings had been increased in the Discretionary, Health Care, Consumer Staples and Materials sectors, and decreased in the IT, Communication, Industrials, REIT's and Financials sectors. The Fund's top holdings included CSL, BHP Billiton and James Hardie Industries PLC. The Fund aims to invest in high quality companies with strong growth outlooks and underestimated earnings momentum. The Fund's portfolio characteristics, as detailed in the latest report, indicate that the Fund is in line with the manager's investment objective. |
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Performance Report: Datt Capital Absolute Return Fund
17 Dec 2019 - Australian Fund Monitors
The Datt Capital Absolute Return Fund rose +1.31% in November, taking 12-month performance to +13.15% and annualised performance since inception in August 2018 to +9.62%.
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17 Dec 2019 - Performance Report: Datt Capital Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | Our investment objectives are: 1) To minimise the risk of permanent capital loss 2) Generate a net return of 10% through the economic cycle An unconstrained, concentrated approach focused on superior risk-adjusted returns. The investment strategy: - targets long-term capital growth in a prudent manner, with an emphasis on capital preservation and low volatility in returns - aims to outperform in markets where equities are down - diversifies investments across asset classes and duration to reduce risk while maintaining relatively concentrated exposure to attractive investment opportunities - is an application of the Manager's investment process, that has no institutional constraints and is completely benchmark unaware |
| Manager Comments | As at the end of November, the Fund comprised 38% CRE debt, 52% equities and 10% cash. During the month Datt Capital increased the Fund's position in Adriatic Metals which they believe is chronically undervalued due to an over exaggerated perception of sovereign risk. Top equity performers included Adriatic Metals and Afterpay, while Lynas and Alice Queen were the main equity detractors. Datt Capital believe they are well positioned leading into the new year given the Fund's cash holdings and the portfolio's skew towards opportunities which the manager considers ripe for consolidation. They noted all of their holdings hold high quality and desirable assets which the manager feels reduces their potential downside over time and provides them positive leverage in instances where a sector may be in decline overall. |
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Performance Report: Bennelong Kardinia Absolute Return Fund
16 Dec 2019 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund rose +2.04% in November, taking annualised performance since inception in May 2006 to +9.03% with an annualised volatility of 6.99%. By contrast the ASX200 Accumulation Index has returned +6.55%...
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16 Dec 2019 - Performance Report: Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund's discretionary investment strategy commences with a macro view of the economy and direction to establish the portfolio's desired market exposure. Following this detailed sector and company research is gathered from knowledge of the individual stocks in the Fund's universe, with widespread use of broker research. Company visits, presentations and discussions with management at CEO and CFO level are used wherever possible to assess management quality across a range of criteria. Detailed analysis of company valuations using financial statements and forecasts, particularly focusing on free cash flow, is conducted. Technical analysis is used to validate the Manager's fundamental research and valuations and to manage market timing. A significant portion of the Fund's overall performance can be attributed to the attention and importance given to the macro economic outlook and the ability and willingness to adjust the Fund's market risk. |
| Manager Comments | The Fund's November return was driven by IT and Health care stocks. Top contributors included EML Payments, James Hardie, CSL, Pointsbet and Paradigm. Key detractors included SPI Futures, Rhipe, Polynovo, Nivel Mines and West African. Kardinia increased the Fund's net equity market exposure from 49.6% to 74.3% (86.1% long and 11.8% short), with the key changes being new positions in Commonwealth Bank, BHP and Resmed, increased weightings in James Hardie, EML Payments, CSL, Aristocrat, Pointsbet and Macquarie, partially offset by the sale of Nickel Mines, Polynovo and Rhipe. |
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Performance Report: NWQ Fiduciary Fund
16 Dec 2019 - Australian Fund Monitors
The NWQ Fiduciary Fund rose +0.39% in November, taking 12-month performance to +5.62% and annualised performance since inception in May 2013 to +5.53% with an annualised volatility of 4.79%.
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16 Dec 2019 - Performance Report: NWQ Fiduciary Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund aims to produce returns, after management fees and expenses of between 8% to 11% p.a. over rolling five-year periods. Furthermore, the Fund aims to achieve these returns with volatility that is a fraction of the Australian equity market, in order to smooth returns for investors. |
| Manager Comments | NWQ noted there continued to be a high degree of dispersion in the returns of the underlying managers during the month. This trend continued from the previous month. NWQ believe the Fund's overall positive return demonstrates the benefits of adopting a multi-manager approach when allocating to long/short managers. The Fund's Alpha managers (+0.26%) and Beta managers (+0.21%) both contributed positively to overall performance. |
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Performance Report: Loftus Peak Global Disruption Fund
13 Dec 2019 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund rose +7.63% in November, outperforming AFM's Global Equity Benchmark by 3.23% and taking annualised performance since inception in November 2016 to +22.58% versus the Benchmark's +16.53%.
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13 Dec 2019 - Performance Report: Loftus Peak Global Disruption Fund
By: Australian Fund Monitors
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| Fund Overview | The investment process involves a combination of top-down analysis with fundamental bottom-up qualitative and quantitative research to derive a risk-adjusted discounted cash flow (DCF) valuation of companies in the target universe. The investment team will generally buy stocks from the pool of securities that are trading below Loftus Peaks' valuation and sell them when they are trading above Loftus Peak's valuation. The approach allows for both fundamental accounting information as well as market-oriented inputs to be factored into the portfolio construction process. Loftus Peak's model typically does not rely on leverage to deliver investment returns and specifically takes into account risk in the valuation process. Capital preservation can be managed by holding up to 50% cash. Index and currency options and futures may also be used to manage risk. |
| Manager Comments | November was a very strong month for the Fund. Loftus Peak noted markets were encouraged by the toning down of the tit-for-tat rhetoric by the US administration which was focused on other pressing issues (impeachment), however most of the Fund's return came as key themes in which Loftus Peak have invested play out. Their decision to deploy cash in October on weakness in key names was rewarded. Top contributors included Alibaba, Apple, Alphabet, Netflix, Microsoft and Xilinx. There were no detractors for the month. The Australian dollar depreciated -1.8% over the month against the US dollar which meant the value of the Fund's US dollar positions increased. As at 30 November 2019, the Fund carried a foreign currency exposure of 97%. The Fund was 93% invested in 20 holdings with the balance in cash at month end. |
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Performance Report: Bennelong Long Short Equity Fund
12 Dec 2019 - Australian Fund Monitors
The Bennelong Long Short Equity Fund rose +2.84% in November, taking annualised performance since inception in February 2002 to +15.47% p.a. with an annualised volatility of 12.39%.
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12 Dec 2019 - Performance Report: Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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| Fund Overview | In a typical environment the Fund will hold around 70 stocks comprising 35 pairs. Each pair contains one long and one short position each of which will have been thoroughly researched and are selected from the same market sector. Whilst in an ideal environment each stock's position will make a positive return, it is the relative performance of the pair that is important. As a result the Fund can make positive returns when each stock moves in the same direction provided the long position outperforms the short one in relative terms. However, if neither side of the trade is profitable, strict controls are required to ensure losses are limited. The Fund uses no derivatives and has no currency exposure. The Fund has no hard stop loss limits, instead relying on the small average position size per stock (1.5%) and per pair (3%) to limit exposure. Where practical pairs are always held within the same sector to limit cross sector risk, and positions can be held for months or years. The Bennelong Market Neutral Fund, with same strategy and liquidity is available for retail investors as a Listed Investment Company (LIC) on the ASX. |
| Manager Comments | In November, the number of positive and negative pairs was equal, however none of the negative pairs made a significant return. The dominant sector contribution was Industrials, with Healthcare a distant second. The Fund's top pair was ALS (ALQ) / Aurison (AZJ). ALS reported their September half results with the highest improved and above forecast margins in the Life Sciences division. The second best pair was Qantas (QAN) / Flight Centre (FLT), with Qantas disclosing bullish long-term financial targets in their investor day presentation. Third best was Macquarie (MQG) / Bendigo Bank (BEN) with Macquarie's September half result slightly ahead of estimates. |
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Performance Report: Paragon Australian Long Short Fund
11 Dec 2019 - Australian Fund Monitors
The Paragon Australian Long Short Fund has risen +17.13% over the past 12 months as returned +9.98% p.a. since inception in March 2013.
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11 Dec 2019 - 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 has risen +17.13% over the past 12 months as returned +9.98% p.a. since inception in March 2013. By contrast, the ASX200 Accumulation Index has returned +9.12% p.a. since the fund began. The Fund's down-capture ratio of 42.2% indicates that, on average, the Fund has significantly outperformed during the months the market has fallen since inception. The Fund returned +0.2% in November. Positive contributors included Adriatic, Alacer Gold, Xero and PoistBet. These were offset by declines in Agrimin, Atrum and Alkane. The Fund ended the month with 26 long positions and 6 short position. Paragon discuss their views on Adriatic Metals (ADT) in depth in their latest monthly report. Adriatic Metals is one of the Fund's key long positions. Paragon noted ADT released an outstanding scoping study for its high-grade polymetallic Vares project during the month. They believe that, despite the stock breaking all-time highs, there remains considerable upside. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
10 Dec 2019 - Australian Fund Monitors
The Gyrostat Absolute Return Income Fund has risen +6.37% over the past 12 months and returned +4.35% p.a. with an annualised volatility if 3.76% since inception in December 2010.
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10 Dec 2019 - 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 - an 'alternative - defensive' asset class. Gyrostat has for 34 consecutive quarters operated within a 'hard' defined risk parameter (no more than 3% capital at risk with our maximum draw-down 2.2% in any circumstances) always in place, delivered regular income at a minimum BBSW90 + 3% by passing through ASX-20 dividends, and met returns guidance based upon market conditions (demonstrating increasing returns with market volatility). The fund buys and holds ASX-20 shares with lowest cost protection always in place with upside. It is an 'alternative - defensive' conservative asset allocation. 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 4.2% 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 | The Fund is a solution for falling interest rates. It has a 'conservative' asset allocation and has for 35 consecutive quarters since inception operated with a 'hard' defined risk parameter (no quarterly NAV drawdowns exceeding 3%), delivered regular equity income (by passing through ASX20 dividends), and has provided superior returns during periods of heightened market volatility due to the Fund's tail hedge on large gains for large market falls. Gyrostat noted they anticipate increasing levels of 'late cycle' market volatility with geopolitical tensions elevated, historically high debt levels and elevated valuations. |
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Performance Report: Surrey Australian Equities Fund
9 Dec 2019 - Australian Fund Monitors
The Surrey Australian Equities Fund returned +3.1% in November, taking 12-month performance to +17.99% and annualised performance since inception in June 2018 to +6.23%.
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9 Dec 2019 - 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 | The Fund's November performance was driven by a range of different companies, highlighting the Fund's diversity. Surrey have been lifting their position in Catapult (CAT) on the back of a strengthened management team, strong product offering, growing cashflows and valuation. Similarly, the Fund's weightings in Xero (XRO) and Pointsbet (PBH) have been increasing and have been of benefit. Negative contributors included Smart Group (SIQ) and Sezzle (SZL). Surrey remain confident in the long-term prospects of both companies. Surrey noted they remain positive on the outlook for local and global equity markets. They encourage investors to continue watching the US 10-year bond yield which they believe is providing a very positive relative valuation benchmark for stocks |
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