News
Fund Review: ARCO Absolute Trust June 2018
18 Jul 2018 - Australian Fund Monitors
Read the latest Fund Review on ARCO Absolute Trust. ARCO Investment Management is a specialist Australian equity investment manager and the Fund has a long/short equity strategy typically with a low but variable net market exposure...
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18 Jul 2018 - Fund Review: ARCO Absolute Trust June 2018
By: Australian Fund Monitors
AFM Fund Review - June 2018 (pdf format)
ARCO ABSOLUTE TRUST (formerly Optimal Australia Absolute Trust)
AFM have released the most recently updated Fund Review on the ARCO Absolute Trust.
We would like to highlight the following aspects of the Fund;
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ARCO Investment Management is a specialist Australian equity investment manager and the Fund has a long/short equity strategy typically with a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200.
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The investment team comprising George Colman, Peter Whiting, and Stephen Nicholls bring 100 years combined experience in equity markets.
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The Fund has an annualised return since inception of +8.00%. The Fund's approach to risk is shown by the Sharpe ratio of 1.31 (Index 0.32), Sortino ratio of 2.71 (Index 0.36), both of which are well above the ASX 200 Accumulation Index and has recorded over 77% positive months.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - June 2018 (pdf format)
Performance Report: Qato Capital Market Neutral Fund
17 Jul 2018 - Australian Fund Monitors
The Qato Capital Market Neutral Fund returned -0.95% in June. Qato noted they remain cautious on the outlook of the equity markets, both domestically and abroad.
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17 Jul 2018 - Performance Report: Qato Capital Market Neutral Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund seeks to preserve capital and maximise absolute returns through active and constant risk management, targeting monthly a net market exposure of 0% to hedge broader market risks by generally holding up to 50 S&P/ASX-100 positions (up to 25 long positions & 25 short positions). Historically, the strategy has been uncorrelated to traditional asset classes with a negative beta to equity markets. Qato Capital's process is entirely systematic - stock selection and risk management are all employed in a rules based approach. Positions in Qato's long-portfolio and short-portfolio are rotated monthly dependent upon their Q-Score ranking. The strategy employs no financial leverage/gearing to purchase securities, no derivatives and no financial products to imitate leverage. |
| Manager Comments | Long positions in Northern Star (+15.79%) and Evolution Mining (+7.81%) added considerable value to the Fund in June despite spot gold falling -3.49%, whilst the lagging Materials sector contributed to the underperformance of Qato's long book. Of the strong performing oil stocks, Qato's machine learning model held a long position in Santos, adding value to the long book as it rallied on news of an updated dividend policy. The two best contributing positions to Qato's short book were Telstra (-5.80%) and TPG Telecomm (-7.18%) as the telecommunications sector overall fell -5.77%. Qato believe this was due to the detrimental effects of increased production, the NBN rollout and reduced margins. |
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Performance Report: KIS Asia Long Short Fund
16 Jul 2018 - Australian Fund Monitors
The KIS Asia Long Short Fund returned -1.06% in June. Since inception in October 2009, the Fund has returned +13.19% per annum versus the ASX200 Accumulation Index's +7.71% per annum.
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16 Jul 2018 - Performance Report: KIS Asia Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Whilst the Fund's primary strategy is focused on long/short equities, the ability to retain discretionary powers to allocate across a number of other investment strategies is reserved. These strategies may include, but not be limited to: convertible bond investments, portfolio hedging, equity related arbitrage, special situations (e.g. merger arbitrage, rights offerings, participation in international public offerings and placements, etc.). The Fund's geographic focus is Asia excluding Japan, but including Australia). The Fund may invest outside of this region to the extent that: 1. The investment decision is driven from the Asian region or; 2. The exposure is intended to mitigate risk or enhance return from factors external to the Asian region. |
| Manager Comments | The KIS Asia Long Short Fund returned -1.06% in June. Since inception in October 2009, the Fund has returned +13.19% p.a. with an annualised volatility of 5.21%. By contrast, the ASX200 Accumulation Index has returned +7.71% p.a. over the same period with an annualised volatility of 11.58%. The Fund's Sharpe and Sortino ratios, 1.90 and 4.29 respectively, are significantly superior to the Index's Sharpe ratio of 0.46 and Sortino ratio of 0.59. The Fund's up-capture and down-capture ratios since inception indicate that, on a cumulative basis, the Fund has achieved positive performance in rising markets and significantly outperformed in falling markets. |
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Performance Report: Cyan C3G Fund
13 Jul 2018 - Australian Fund Monitors
The Cyan C3G Fund's performance was flat at the end of June. Since inception in August 2014, the Fund has returned +24.02% per annum.
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13 Jul 2018 - Performance Report: Cyan C3G Fund
By: Australian Fund Monitors
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| Fund Overview | Cyan C3G Fund is based on the investment philosophy which can be defined as a comprehensive, clear and considered process focused on delivering growth. These are identified through stringent filter criteria and a rigorous research process. The Manager uses a proprietary stock filter in order to eliminate a large proportion of investments due to both internal characteristics (such as gearing levels or cash flow) and external characteristics (such as exposure to commodity prices or customer concentration). Typically, the Fund looks for businesses that are one or more of: a) under researched, b) fundamentally undervalued, c) have a catalyst for re-rating. The Manager seeks to achieve this investment outcome by actively managing a portfolio of Australian listed securities. When the opportunity to invest in suitable securities cannot be found, the manager may reduce the level of equities exposure and accumulate a defensive cash position. Whilst it is the company's intention, there is no guarantee that any distributions or returns will be declared, or that if declared, the amount of any returns will remain constant or increase over time. The Fund does not invest in derivatives and does not use debt to leverage the Fund's performance. However, companies in which the Fund invests may be leveraged. |
| Manager Comments | Positive contributors in June included Readcloud (RCL +24%) and AfterpayTouch (+20%). Key detractors included Roots (-23%) and AxsessToday (-7%). With respect to the Fund's holdings for the financial year to June 2018, Cyan noted the following results: Afterpay Touch (+217%), Moelis Australia (+74%), Axsess Today (+59%), Psc Insurance (+30%), Capitol Health (+27%), AMA Group (+10%), Opus Group (+7%), Experience Co (0%) and Kelly Partners (-11%). The Fund has taken a handful of new investment positions in the past couple of months, deploying a portion of its defensive cash balance. Cyan envisage further investment in the coming quarter as more new opportunities have now been identified. They noted they have also reduced a couple of exposure as they are approaching Cyan's valuation target. |
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Performance Report: Glenmore Australian Equities Fund
12 Jul 2018 - Australian Fund Monitors
The Glenmore Australian Equities Fund rose +4.01% in June, outperforming the ASX200 Accumulation Index by +0.74% and taking annualised performance since inception to +36.77%.
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12 Jul 2018 - Performance Report: Glenmore Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The main driver of identifying potential investments will be bottom up company analysis, however macro-economic conditions will be considered as part of the investment thesis for each stock. |
| Manager Comments | Top performers in the portfolio in June included Appen (+31.0%), Stanmore Coal (+26.1%), NRW Holdings (+25.1%), Navigator Global Investments (+16.1%), Alliance Aviation Services (+12.2%), Lifestyle Communities (+10.8%), Pacific Current (+8.4%) and Emeco (+7.1%). Negative contributors included Imdex (-5.0%) and Atlas Arteria (-3.3%). Read Glenmore's latest report for their commentary on three of the Fund's top performing stocks - Appen (APX), Stanmore Coal (SMR) and NRW Holdings (NWH). |
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Performance Report: Bennelong Long Short Equity Fund
10 Jul 2018 - Australian Fund Monitors
The Bennelong Long Short Equity Fund returned +0.08% in June, taking annualised performance since inception in February 2002 to +16.50%.
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10 Jul 2018 - 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 | The Fund's top performing pair in May was long Woolworths / short Metcash. The weakest pair was long Mineral Resources / short BHP following changes to Mineral Resources' operations and monetisation strategy at its Wodgina lithium project. In their latest report, Bennelong contrast price gains for various equity indices against their respective 12m forward EPS for the purpose of observing whether price gains are being supported by earnings delivery (i.e. fundamentals) or otherwise (e.g. sentiment, liquidity). They noted that, for the most part, earnings change was greater than price change over the past financial year which is in stark contrast to fiscal 2017 where price gains outpaced earnings (with the exception of Australia). They believe that this year's decline in P/E ratios are evidence of the impacts to the valuation of all asset classes (equities included) in the face of the world's central banks commencing the unwinding of very loose monetary policy settings. Bennelong aren't ruling out further multiple compressions in the coming fiscal year, given the current accommodative policy settings and strained geopolitical tensions. |
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Performance Report: Insync Global Capital Aware Fund
6 Jul 2018 - Australian Fund Monitors
The Insync Global Capital Aware Fund returned +2.22% after the cost of protection in May, outperforming the Global Equity index by +2.51% and taking annualised performance since inception in October 2009 to +10.22%.
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6 Jul 2018 - Performance Report: Insync Global Capital Aware 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 of typically 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. At times, Insync may consider holding higher levels of cash if valuations are full and it is difficult to find attractive investment opportunities. When Insync believes markets to be overvalued, it may hold part of its resources in cash, or use derivatives as a way of reducing its equity exposure. Insync may use options, futures and other derivatives to reduce risk or gain exposure to underlying physical investments. The Fund may purchase put options on market indices or specific stocks to hedge against losses caused by declines in the prices of stocks in its portfolio. |
| Manager Comments | The Global Capital Aware Fund is a concentrated portfolio of large cap global companies with downside protection. Insync's investment strategy is driven by fundamentals combined with active risk management with the aim of to investing in high quality, large cap global companies at attractive prices. Insync looks for companies that can consistently pay rising dividends and earn high returns on invested capital. Their aims to provide investors with long term capital growth and some income. |
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Performance Report: Bennelong Concentrated Australian Equities Fund
6 Jul 2018 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund rose +8.09% in May, outperforming the ASX200 Accumulation Index by +7.0% and taking annualised performance since inception in Feb 2009 to +18.95%.
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6 Jul 2018 - Performance Report: Bennelong Concentrated Australian Equities Fund
By: Australian Fund Monitors
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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 | As at the end of May, the portfolio's weightings had been increased in the Health Care, Industrials and Materials sectors, and decreased in the Discretionary, Consumer Staples and Financials sectors. The Fund aims to invest in a concentrated portfolio of high quality companies with strong growth outlooks and underestimated earnings momentum and prospects. By comparison with the Fund's benchmark (ASX300 Accumulation Index), the portfolio's characteristics show that its holdings, on average, have a higher Return on Equity and lower debt/equity (Premium Quality), higher sales growth and higher EPS growth (Superior Growth), as well as higher price/earnings and lower dividend yield (Reasonable Valuation). |
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Performance Report: Touchstone Index Unaware Fund
5 Jul 2018 - Australian Fund Monitors
The Touchstone Index Unaware Fund returned -0.96% in May. Since inception in April 2016, the Fund has returned +12.19% per annum.
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5 Jul 2018 - 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 the end of the month the Fund held 21 stocks with an median position size of 4.6%. Overall, the portfolio's holdings had an average price/earnings of 15.1, EPS growth of 16.2%, tangible ROE of 23.2% and dividend yield of 5.0%. The Touchstone Index Unaware Fund primarily selects stocks from the S&P/ASX 300 Index and typically holds 10-30 stocks. It seeks to invest in reasonably priced, good quality companies with a significant share of expected returns coming from sustainable dividends. |
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Performance Report: Qato Capital Market Neutral Fund
4 Jul 2018 - Australian Fund Monitors
The Qato Capital Market Neutral Fund returned -2.81% in May, with the result driven predominantly by Qato's long book.
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4 Jul 2018 - Performance Report: Qato Capital Market Neutral Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund seeks to preserve capital and maximise absolute returns through active and constant risk management, targeting monthly a net market exposure of 0% to hedge broader market risks by generally holding up to 50 S&P/ASX-100 positions (up to 25 long positions & 25 short positions). Historically, the strategy has been uncorrelated to traditional asset classes with a negative beta to equity markets. Qato Capital's process is entirely systematic - stock selection and risk management are all employed in a rules based approach. Positions in Qato's long-portfolio and short-portfolio are rotated monthly dependent upon their Q-Score ranking. The strategy employs no financial leverage/gearing to purchase securities, no derivatives and no financial products to imitate leverage. |
| Manager Comments | At the sector level, Qato had a short bias to the Real Estate sector which rallied +3.13% for the month, hindering performance considerably. Qato held short positions in REITs, with an average performance of that subset of +6.03% for May, with only Westfield producing a negative return (-3.62%). Qato also noted that Telstra (short) provided a favourable 3Q trading update in May, announcing EBITDA would be at the bottom end of its already revised guidance range. Qato expect Telstra to reduce its dividend considerably as a means of stabilising its cash flows. |
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