News
2 May 2019 - Performance Report: Bennelong Emerging Companies Fund
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Fund Overview | The Fund may invest in securities expected to be listed on the ASX within 12 months. The Fund may also invest in securities listed, or expected to be listed, on other exchanged where such securities relate to ASX-listed securities |
Manager Comments | Over the quarter the Fund returned over 21% (after fees). Bennelong noted that, even though performance was assisted by the market's strong rally, the Fund did exceptionally well in its stock selection. The biggest contributors over the quarter were some of the Fund's largest holdings - Nearmap, Audinate, Jumbo Interactive and Bravura Solutions. They added that these companies all continued to report very strong profit results. |
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2 May 2019 - Performance Report: Harvest Lane Asset Management Absolute Return Fund
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Fund Overview | Harvest Lane Asset Management employs a conservative, highly selective and opportunistic approach. Using their extensive knowledge in the area of corporate actions, the Fund's managers assess each opportunity based on a thoughtful, diligent and disciplined process and invest where they believe an opportunity exists to generate above average investment returns relative to the risk incurred. Investment decisions are made without speculating on market direction, with rigid risk controls enforced to minimise the risk of large losses of investor capital. The Fund invests in securities that are predominantly listed on the ASX and occasionally in those listed in other developed markets. Equity swaps and other derivatives may be used at times to reduce risk. The fund typically holds high levels of cash in the absence of sufficiently attractive opportunities to deploy investor capital in accordance with its objectives. |
Manager Comments | After a strong start to 2019, the portfolio lost some ground in March returning -2.01%. Harvest Lane say the loss came from a rare deal break in Eclipx Group (ECX.ASX). The remainder of the portfolio largely traded in line with expectations as the positions matured across their respective transactions. Harvest lane noted March saw yet another month of strong deal flow which underpins their expectations that the portfolio can keep achieving new highs before long. Five new positions were added during the month. Some positions were entered on the back of entirely new transactions being announced whereas others reflected prior monitored opportunities that simply offered better entry points on a risk-adjusted return basis. |
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2 May 2019 - Performance Report: Touchstone Index Unaware Fund
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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 | As at the end of March, the Fund held 21 stocks with a median position size of 4.5%. The portfolio's holdings had an average forward year price/earnings of 15.9, forward year EPS growth of 5.3%, forward year tangible ROE of 28.4% and forward year dividend yield of 4.5%. The Fund's cash weighting had increased to 5.0% from 4.8% at the end of February. The Fund primarily seeks to select stocks from the ASX300 Index, typically holding between 10-30 stocks. The Fund seeks to invest in reasonably priced, good quality companies with a significant share of expected returns coming from sustainable dividends. |
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2 May 2019 - Performance Report: Frazis Fund
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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 +2.9% in March, outperforming AFM's Global Equity Index by +1.67% and taking quarterly performance to +18.94% versus the Index's +11.50%. |
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1 May 2019 - Performance Report: Wheelhouse Global Equities Income Fund
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Fund Overview | To pursue this objective, the Investment Manager is responsible for actively managing, monitoring and tailoring the integration of derivative contracts alongside the Morningstar Portfolio, while taking into account changing market and stock specific conditions. The Investment Manager is responsible for maximising the structural benefits of short option positions (lowered Volatility, improved capital preservation, higher income generation), whilst mitigating, minimising and monitoring the structural negatives (variable market exposure, option expiries, collateral management and asymmetric return profiles). In addition, long derivatives positions are also used to enhance the capital preservation characteristics of the Fund in more extreme market movements. As a consequence of the integration of Derivatives, returns of the strategy, intra-cycle, are expected to vary from the underlying Morningstar Portfolio due to these characteristics. For example in weak markets, or in extended sideways markets, the Fund is expected to outperform relative to the Morningstar Portfolio. Conversely in strong positive markets the Fund is expected to underperform. |
Manager Comments | Top contributors included Amazon, Unilever, Guidewire Software, Microsoft and Novartis. Detractors included Biogen, EssilorLuxottica, Jones Lang Lasalle, Charles Schwab and John Wiley & Sons. The Fund is designed to deliver equity returns with higher income generation and active downside protection. The strategy's high income generation and active tail risk program are designed to lower risk and deliver equity returns with a smoother, more retiree-friendly return profile. As a result, Wheelhouse intend for returns to add relative value in weak and low-growth markets and to drag in more positive markets. |
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30 Apr 2019 - Performance Report: Quay Global Real Estate Fund
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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 | Top contributors in March included LEG Immobilien (German residential), Scentre Group (Australian retail) and Stag Industrial (US Industrial). Detractors were dominated by the Fund's UK exposures due to ongoing Brexit concerns; Empiric (UK student accommodation) and Safestore (UK and European storage). Quay noted there was very little news regarding their investees and they remain comfortable with their current exposure, risk profile and outlook. There were no changes to the Fund during the month, however they've kept 6% of the portfolio in cash in order to take advantage of any risk-off event in Europe relating to Brexit. |
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29 Apr 2019 - Performance Report: NWQ Fiduciary Fund
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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 | The Fund returned -0.58% in March. NWQ noted the adoption of a more dovish tone by central banks in March stoked fears of a global slowdown and that there now seems to be unanimous agreement that global growth is under pressure. This sparked a broad rally in developed market government bonds which saw the yield curve invert, thereby signalling that investors see weaker growth on the horizon. NWQ added that this shift in market sentiment produced mixed results from the Fund's underlying managers. Should this move extend and they see a contraction of price/earnings multiples then this, they expect, will open up more opportunities for those underlying managers with long/short strategies (currently 85% of the portfolio). |
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26 Apr 2019 - Performance Report: Bennelong Concentrated Australian Equities Fund
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Fund Overview | The overriding objective of the Concentrated Australian Equities Fund is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings, while satisfying our stringent quality criteria. Bennelong's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The portfolio typically consists of 20-35 high-conviction stocks from the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to ASX-listed securities. Derivative instruments are mainly used to replicate underlying positions and hedge market and company specific risks. |
Manager Comments | Over the quarter the Fund rose +8.67%. Top contributors included IDP Education, Rio Tinto and Goodman Group. Key detractors included Costa Group and Reliance Worldwide. Bennelong's view is that investor sentiment still remains cautious despite the strong recovery over the past quarter. They observe that investors are still very much attracted to what is perceived to be safe, as evidenced by the recent outperformance of bonds, gold stocks, REITs, infrastructure and comfort stocks like Woolworths. However, they believe investors are incrementally paying more attention to fundamental drivers like earnings and growth which they expect will be supportive of returns. |
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26 Apr 2019 - Performance Report: Loftus Peak Global Disruption Fund
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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 | Over the quarter the Fund has returned +18.62%, beating the Index by +7.12%. Loftus Peak noted performance was supported by deploying cash towards companies that were trading at the lower end of their valuation range in the December quarter and taking profits as markets found their strength in the March quarter. Top contributors included Apple, Nvidia and Qualcomm. Detractors included Autodesk, Anritsu and Tesla. The Australian dollar depreciated -0.15% over the month against the US dollar, which meant the value of the Fund's US dollar positions increased. As at 31 March 2019, the Fund carried a foreign currency exposure of 99%. The Fund is 82% invested in 20 holdings with the balance in cash. |
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26 Apr 2019 - Performance Report: DS Capital Growth Fund
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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 portfolio performed reasonably well over the quarter, with strong results from several holdings including Breville and Lifestyle Communities. Softer than expected results came from McMillan Shakespeare, Experience Co and Challenger. DS Capital believe softer global economic growth will maintain pressure on global interest rates that have fallen from the multi-year highs of October 2018 deferring a return to higher rates that seemed likely just six months ago. They noted that, while lower interest rates are theoretically favourable for equity markets, weaker economic conditions can make it more difficult for businesses to grow earnings. Post reporting season company meetings, DS Capital have compiled a list of businesses that they would like to own or add to their current holding. They're seeing new opportunities, however, they are looking to deploy their cash (20% of the portfolio) sparingly. |
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