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Platinum Unhedged Fund March 2013 performance report
18 Apr 2013 - Australian Fund Monitors
The Platinum Un-hedged Fund returned 0.69% during March 2013 and 8.69% pa since inception.
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18 Apr 2013 - Platinum Unhedged Fund March 2013 performance report
By: Australian Fund Monitors
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| Fund Overview | The Fund's Portfolio will typically have about 90% exposure to stocks. The Fund's Portfolio is constructed in accordance with 'Platinum's Investment Methodology', except that no market risk management of either markets or currencies will be undertaken. The geographic disposition of the assets will determine the Fund's currency exposure. The Fund's Portfolio is constructed by the senior analysts of Platinum's investment team under one analyst's chairmanship. Since inception, the Portfolio has generally held 50 stocks with limited commonality to the Platinum International Fund. On account of the relatively concentrated nature of the Portfolio, holdings that carry great conviction will generally be larger than in the Platinum's risk managed products (i.e. the other Platinum Trust Funds). The Fund may use Derivatives to achieve long equity exposure. |
| Manager Comments | The Fund is 94% invested (with no shorting) and its major exposures are 29.6% North America an 26.3% to Japan. Major sector exposures are to Information Technology (19.9%), Consumer Discretionary (15.6%) and Financials (14.2%). Exposures to Utilities and Telcos are both under 2% of the portfolio. Notably the two largest exposures are to Microsoft at 4.6% and Toyota at 3.3%. The manager's recently released quarterly report notes that while the Fund is built one stock at a time for the purpose of investor communication it is useful to group some of these holdings by theme. Currently these themes include; US capital spending renaissance driven by a globally competitive supply of natural gas, Explosive growth in mobile data, The rise of local emerging world consumer giants, Consumer globalisation - western brands, retailers and service providers positioned for global growth, Post-patent cliff pharmaceuticals and personalised medicine, Japanese relation driven by a broad consensus on the need for change, Gold- a hedge against a self-reinforcing cycle competitive quantitative easing (QE) from the three large developed world currency blocs. The manager's outlook for markets notes that there is some complacency creeping back into markets in the face of data disappointments, particularly, in the Japanese and European periphery. However Platinum remains cautiously optimistic that a combination of a continued recovery in US investment spending and loosening global monetary policy will be sufficient to offset a moderate level of global fiscal tightening. |
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BlackRock Australian Equity Market Neutral Fund
17 Apr 2013 - Australian Fund Monitors
The BlackRock Australian Equity Market Neutral Fund records a return of 1.29% during March and 7.69% for the twelve months to March 2013.
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17 Apr 2013 - BlackRock Australian Equity Market Neutral Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund's portfolio primarily consists of long and short Australian equity positions. The Fund may also invest in other funds managed by BlackRock. Derivative securities, such as futures, forwards, swaps and options, can be used to manage risk and return Key insights into the investment process include: Analyst Expectations, Relative Valuation, Earnings Quality, Market Signals and Timing. Short-Term return enhancing opportunities including: Dividend reinvestment plans, Manging index changes, Managing cash flows and Arbitrage, Initial public offerings and Seasoned Equity Offerings and Off Market Buybacks. |
| Manager Comments | The S&P/ASX200 rose 6.8% (8.1% accumulation) over the March quarter, but finished March down -2.7%, the worst month for the market since May 2012. There was some profit taking across much of the industrials after a very strong quarter, with the Cypriot banking crisis renewing global nervousness about the fragility of the European financial system. March also saw continued weakness in the resources sector due to uncertainty over the Chinese growth outlook and fears that rising commodity supply over the next two years could drive much weaker commodity prices. Domestically the economy showed some muted signs of strength, with improvements in consumer confidence, housing market activity and labour data causing the RBA to pause its easing cycle. Domestic cyclicals, especially consumer discretionary stocks, continued to outperform in March on anticipation of a turnaround in consumer spending. The search for yield was another theme that continued into March, concentrated largely in banks (+16.4%). The February reporting season highlighted companies’ focus on cost cutting, with margin expansion driving significant stock specific earnings improvements. The portfolio was largely unaffected by the global macro themes this quarter, however the Fund was caught in the first half of January by the sharp rally in specific domestic cyclical sectors (building materials, diversified financials) on anticipation of a domestic recovery. Performance since then has been dominated by stock specifics. The contribution from industry and risk factors was positive, while security specific returns detracted value over the quarter. |
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Optimal Australia Absolute Trust
16 Apr 2013 - Australian Fund Monitors
The Optimal Australia Absolute Trust had a flat return for March 2013 and a return of 1.37% for the year-ended March.
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16 Apr 2013 - Optimal Australia Absolute Trust
By: Australian Fund Monitors
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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 | Australian equities gave back part of their recent strong gains in March, and underperformed most other developed world equity markets. The Trust finished the month with a flat return. The manager comments that they had felt markets were due a pause, and maintained low net exposure for most of the month. Further they comment that investors need to be clearly aware that equity markets remain in thrall to central bank bond-buying and the consequent strangulation of interest rates. The impact of these policies on economic growth is unconvincing, but they have certainly served to distort liquidity flows and capital allocation on a grand scale. This has come as a boon to equity markets, which have re-rated earnings yields and dividend yields downwards in step with falling bond yields. But, in the absence of real growth, equity markets may be worshipping a false god. This environment is dangerous from the perspective of capital preservation, and increasingly so, because it requires wilful suspension of any risk consideration by equity investors other than “relative value” as measured against a highly artificial bond/cash yield construct. The manager has previously written at length about the unusually narrow breadth of market leadership in Australia, and the unusual concentration of returns in a handful of defensive/yield leaders. These trends continued through most of March, with Financials finishing the month flat, and Materials down another 10.5%. On a rolling year basis, Financials are up 29% and Materials are down 15%, while Consumer Staples are up 30%, Telcoms 37%, and Healthcare 43%. The manager comments that with an investment process grounded to a large extent in fundamental valuation, they are unable to buy grocery retailers at between 18-20x forward earnings, with low and declining earnings growth, with asset level ROIC that has already been rebased up sharply, and with the prospect of increasing competition and regulatory risk. Similarly, they could not regard dividend yield sourced from highly-leveraged financial equity featuring 70%+ payout ratios, astonishingly low credit loss provisions, and price-to-book multiples of 2-3x as a logical substitute for fixed income yield, even ignoring the apples/oranges duration mismatch. Yet it has been just those investments that have clearly paid, but, again, to an overwhelming extent, only due to the revaluation of yield. The performance gap between defensive industrials and resources stocks continues to confound the manager. This gap has reached levels unprecedented in Optimal's experience, at least for those time intervals when Chinese demand data points seem to be stabilising, and when the market has already worked itself into lather over well-advertised supply additions in the bulk commodity group. Major contributors to the Trust’s return for the month by industry sector included: Longs (-0.26% attribution) Positive: transport, media, gold, banks Negative: resources, energy, REITs. Shorts (0.29% attribution) Positive: REITs, staples, index futures Negative: gaming, diversified financials. |
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Insync Global Titans Fund
15 Apr 2013 - Australian Fund Monitors
The Insync Global Titans Fund recorded a return of 1.17% during March and 14.50% for the year to end March 2013.
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15 Apr 2013 - Insync Global Titans Fund
By: Australian Fund Monitors
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| Manager Comments | Global equity markets were mixed in March, with rises in the US and Japan offset by subdued European markets impacted by events in Cyprus, and by falls in the Chinese and HK markets. US data continues to be consistent with moderate economic growth, with the US corporate sector more inclined to hoard cash than invest. Europe remains mired in recession, with the Eurozone unemployment rate rising to 12% in February (over 19 million people), the highest rate ever recorded since the EU formed. China’s economy continues to grow but the rate of growth is likely to be lower than it was in the past decade. Markets are being held up by quantitative easing in more parts of the world now, with real growth hard to come by. Only the very best companies are likely to prosper in this sort of environment. The Fund’s unit price increased by 1.2% in March. The solid performance was driven by positive contributions coming from Sanofi, Reckitt Benckiser, Wyndham, BAT and IBM. The biggest detractor to performance was Oracle, which announced lower than expected quarterly earnings on the back of a problematic hardware transition. Insync’s approach is to focus on investing in exceptional businesses with high Return on Invested Capital, strong free cash flow, solid balance sheets, attractive valuation and a long track record of returning cash to shareholders through increasing dividends and share buy-backs. At month-end the Fund's investments had a weighted forecast yield of 2.68%, a PE ratio of 15.5 times and a Return on Equity of 21.5%. There was no currency hedging in place at the end of March. |
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Platinum International Fund
12 Apr 2013 - Australian Fund Monitors
The Platinum International Fund recorded a return of -0.61% over March 2013 and 11.01% over the preceding 12 months.
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12 Apr 2013 - Platinum International Fund
By: Australian Fund Monitors
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| Fund Overview | Typically, the Fund's portfolio will have 50% or more net exposure to stocks. The Fund's portfolio is constructed in accordance with Platinum's Investment Methodology. |
| Manager Comments | The Fund is 92% long and 12% short individual shares and indices with cash and liquids at 8% for a net invested position of 80%. The market moved upward in March however $A appreciation saw the MSCI World Index flat in $A terms. Despite concerns over Cyprus markets like France, Germany and the UK were all up 1%. The US market rose 4% on the back of stronger economic data like manufacturing, payroll and industrial production. Emerging markets fell 2% as money flows preferred developed markets and China (-5%). Equities in Japan continued to move higher, up 5%, and the Yen continued its fall on talk of the BoJ using monetary policy to re-inflate the country's declining economy. The manager notes that consistent out-performance and relative over-weight position of Japanese equities continues to contribute to Fund performance. |
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Morphic Global Opportunities Fund
11 Apr 2013 - Australian Fund Monitors
The Morphic Global Opportunities Fund had a sound performance over March 2013 returning 0.99% and 9.34% over the previous six months.
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11 Apr 2013 - Morphic Global Opportunities Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund amplified its holding in Wells Fargo through a series of short dated call options ahead of the unveiling of a US regulatory report on the capacity of the industry and individual banks to absorb economic shocks. The Manager was confirmed in its expectation that positive results would drive a sharp re-rating, as they have in the past. The Fund also made further gains on a short position in a Hong Kong listed global retailer and its long position in Irish listed cardboard box maker Smurfit Kappa. Stock losers were led by Chinese electric bike battery maker, Tianneng Power, where the market reacted badly to signs of margin pressure despite strong sales growth. The Fund also saw losses in India’s J&K Bank; and Hong Kong property company Emperor and US car parts maker TRW. All except J&K were exited during the month. Gains on market index exposures to Mexico and Turkey were slightly more than offset by losses in Thailand, China and Hong Kong. All of the latter were closed out in the month. Market tone was again dominated by uncertainty in Europe, this time caused by negotiations for a financial bail-out for Cyprus, which included a controversial levy on local bank depositors. As a precaution the Manager trimmed the Fund’s overall exposure, especially to Europe and the Euro, when the Cyprus bail-out terms were first announced. However this proved costly as markets shrugged off these concerns, and the US hit new highs towards the end of the month. Although the Manager partially rebuilt the Fund’s market exposure as its initial concerns about the ramifications of the Cyprus ‘rescue’ package seemed overblown, the Fund’s net investment level remained slightly lower at month end than at the beginning. Within this, the Fund is overweight Japan and the US, and underweight Europe. The Manager’s conviction about the sustainability of recent gains is ebbing as global market returns become increasingly dependent on the US despite deteriorating earnings revisions and economic data there. The Fund remains un-hedged into Australian dollars. The Manager believes slowing mining capital expenditure and falling commodity prices limit the risk of the dollar breaking out of its current range of US$1.02 to US$1.05 even if the RBA makes no further rate cuts. Some of the fund’s yen and Euro exposure is hedged into US dollars. |
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Aurora Fortitude Absolute Return Fund
9 Apr 2013 - Australian Fund Monitors
The Aurora Fortitude Absolute Return Fund returns 0.42% for February 2013 and 3.97% for the prior 12 months, ahead of the RBA cash rate.
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9 Apr 2013 - Aurora Fortitude Absolute Return Fund
By: Australian Fund Monitors
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| Manager Comments | The S&P/ASX200 Accumulation Index finished down ‐2.21% in March putting an end to a nine month positive streak. Within the Aussie Index, Australian banks continued to perform relatively well and again it was resources that lead the market lower. Of note,both BHP and RIO fell by more than 10%. Concerns out of Cyprus, namely the treatment of bank deposits, and the possible ramifications for other debt ridden European economies forced risk back into the spotlight. Commodity price declines also weighed heavily on our market as lower demand lead to lower spot pricing. The manager makes the following comments regarding each of the strategies; Convergence was the best performing strategy for the month (+0.26%). The Wesfarmers position was the biggest contributor again due to an increase in the value of the protection as the share price fell in line with the market. Long/Short generated a loss for the month (‐0.10%). Gains from holding a long position in Treasury Wines were offset by losses from being long Newcrest Mining and Downer EDI. Mergers and Acquisitions added +0.12% for the month. The best performers were Real Estate Capital Partners USA Property Trust and Challenger Infrastructure Fund. The protective Options strategy was also a small detractor for the month (‐0.04%). Volatility around the Cyprus situation produced good returns, but as the market grew more comfortable with the situation and the Aussie market approached a four day holiday weekend option prices were marked down aggressively. The Yield book provided a positive return of +0.17%. All hybrid instruments were positive for the month but the Macquarie Convertible Preference Security was the biggest contributor with only three months left to run until redemption or conversion, subject to some mandatory conversion conditions. |
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Bennelong Kardinia Absolute Return Fund
9 Apr 2013 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund had a positive month returning 1.42% for March 2013 and 14.40% for the preceding 12 months.
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9 Apr 2013 - Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund consists of a concentrated long/short portfolio typically comprising 30 to 40 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. There is a slight bias to large cap stocks in the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. The Fund was launched on 17th August 2011 following the resignation of Portfolio Managers Mark Burgess and Kristiaan Rehder from Herschel Asset Management in late July 2011. While at Herschel Burgess and Rehder had managed the Fund under the name of the Herschel Absolute Return Fund. As a result management of the Fund was transferred to Kardinia Capital, a new boutique fund manager 65% owned by Burgess and Rehder, with the balance owned by Bennelong Funds Management. The Fund's investment strategy and prior track record remains intact. |
| Manager Comments | The Australian All Ordinaries Accumulation Index fell 2.2% in March with events in Cyprus and the terms of its bail out affecting investor sentiment. The Australian equity market was particularly weak, under-performing global peers as the mining sector was weighed down by falling commodity prices, and negative sentiment related to property tightening measures in China. The Australian dollar finished the month higher at US$1.04. Most US economic readings surprised on the upside, however Chinese data revealed moderating manufacturing activity combined with higher inflation. This weighed on commodity prices with Resources (-9.6%) the weakest performing sector for the month. Consumer Discretionary (+2.4%), Utilities (+0.7%) and Financials (+0.7%) held up well, whilst Materials (-9.6%), Energy (-3.4%) and REITs (-2.7%) fell sharply. The Bennelong Kardinia Absolute Return Fund rose 1.42% in March. Share price index future contracts hedging long exposure, Sirius Resources, Mayne Pharma and Bank of Queensland were all significant contributors to performance, whilst long positions in Rio Tinto, Oil Search and GPT were the largest detractors. The Fund’s net equity market exposure (including derivatives) was progressively reduced to 36.7% (67.9% long and 31.2% short). |
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Bennelong Long Short Equity Fund
8 Apr 2013 - Australian Fund Monitors
The Bennelong Long Short Equity Fund had a strong March (2013) recording 0.69% and 15.46% for the previous 12 months.
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8 Apr 2013 - Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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| Manager Comments | The manager notes that stock markets took a breather in March as investors reassessed the outlook after strong returns for several months. European sovereign risks flared again as did concerns about policy tightening in China. The resulting decline in the resources sector pulled the Australian market lower with the ASX 200 finishing 2.7% lower despite global markets posting small gains (MSCI +1.9%). Fund performance was slightly positive due to gains from our shorts in the Materials sector, particularly profit downgrades in the Chemical sector. This was somewhat offset by losses in our short book in Consumer Discretionary. The fund was active in the Energy, Resources and Transport sector during the month. Despite positive global monetary policy settings there has recently been a large divergence in performance between the Resources sector (-11% ytd) and the rest of the market (+5% ytd) and investors will need to consider this when forming views on the growth outlook. The domestic economy has stabilised and the prospect of a majority government by year-end may provide confidence to the business sector. The domestic earnings picture is still sluggish though and ultimately needs to improve for stocks to push higher. |
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K2 Select International Absolute Return Fund
5 Apr 2013 - Australian Fund Monitors
The K2 Select International Absolute Return Fund delivers a sound performance of 0.7% in February 2013 and 10.6% over the previous 12 months.
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5 Apr 2013 - K2 Select International Absolute Return Fund
By: Australian Fund Monitors
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| Manager Comments | Regional performance in global equities was relatively mixed, with positive returns in the US and Japan offset by falls in S. Korea, China and Hong Kong. In the US data continues to be consistent with a moderate economic recovery. In stark contrast, Europe remains in its own world of pain. Inconclusive Italian elections and a banking “bail-in” in Cyprus are uncomfortable reminders of a crisis which is far from over. It is no surprise that March PMI’s for the Eurozone fell further and reflect ongoing recessionary conditions in the region. While the data in China remains broadly consistent with moderate economic recovery, the market focus was firmly on the reform agenda of the new administration. There seems to be an increasing acceptance by key policymakers of a further moderation in medium term growth while urgently needed reforms in the financial system are implemented. The fund chose to actively reduce exposure to equity markets during the month of March to just below 90% for the first time since September the 6th 2012. While not calling for an imminent correction the manager is conscious that markets have moved a long way in a short period, and having captured most of that upside felt it was prudent to lower exposure. Regionally performance during the month was broad based for the fund, with the main negative coming from the strengthening AUD where the fund is currently only 50% hedged. A correction in the short term certainly can’t be discounted, especially as investors approach the traditional “sell in May” seasonal weakness. The risks are well known, high sovereign debt levels lead to increasingly difficult fiscal decisions ahead for most developed nations, where welfare budgets in particular are running at unsustainable levels. Nevertheless in spite of these risks, it is important to keep focused on the medium term fundamentals for equities, which remain compelling in the manager's opinion. |
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