News
Pengana Australian Equities Market Neutral Fund
23 May 2013 - Australian Fund Monitors
The Pengana Australian Equities Market Neutral Fund delivered -0.9% for April and has an annualised return of 8.82% since inception in September 2008.
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23 May 2013 - Pengana Australian Equities Market Neutral Fund
By: Australian Fund Monitors
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| Manager Comments | Two of our largest long positions in April were BC Iron and Skilled Group, while two of our largest short positions were Macquarie Atlas Roads Group and AWE. Following on from March, Momentum (see chart below) was again the best performing investment theme in our model for the month followed by Earnings Revisions and Quality. Value failed to deliver in April and remains out of favour with a market that is firmly focused on Equity income via low risk(beta), large cap, and high dividend yielding stocks. With Momentum capturing share price movements that are based on previous performance, it provides a technical component to our mostly fundamental model. The market is now starting to pay attention to the fundamental Earnings Revisions and Quality components of our model, and the outstanding issue is when the market will start to factor in the fundamental or “true Value” of companies as they continue to stretch further into areas of over and under valuation across the defensive and cyclical sectors. |
| More Information | » View detailed profile of this fund |
8IP Asia Pacific Partners Fund
22 May 2013 - Australian Fund Monitors
The 8IP Asia Pacific Partners Fund delivered -1.17% during April bringing its six month performance to 21.57%.
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22 May 2013 - 8IP Asia Pacific Partners Fund
By: Australian Fund Monitors
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| Fund Overview | There is a relatively low number of individual securities in the Fund which may result in periods of high volatility. Ideally, investments should be made for a minimum of five years so that short term volatility may be offset by high capital growth over time. Companies are chosen using an active, bottom-up approach with particular attention paid to valuation and the sustainability of return on equity. The Fund takes a long term view when investing. Companies of all sizes are considered for inclusion in the Fund. The Fund invests in a mix of both developed and emerging markets. Investments in emerging markets may carry risk associated with delivery difficulties, failed or late settlement of market transactions and the registration and custody of securities is more complex. The lack of liquidity and efficiency in these markets may mean that from time to time the Fund may experience more difficulty in purchasing or selling securities than it would in a more developed market. |
| Manager Comments | After five months of strong gains, a number of stocks in the Fund ran into profit taking. During the month, we re-initiated a position in KWG Property Holdings Limited, a Chinese property company. Recent weakness in the share price provided an opportunity to buy after the strong performance by Chinese property stocks in 2012. Having recently visited six companies in the sector, it is clear that end-user demand is strong and interest costs have fallen sharply. In fact, demand for corporate bonds issued by Chinese property companies is the strongest we have ever seen. This bodes well for the performance of the shares over coming years. Largest sector exposures were financials, real estate and consumer discretionary. |
| More Information | » View detailed profile of this fund |
Pengana Asia Special Events (Onshore) Fund
21 May 2013 - Australian Fund Monitors
The Pengana Asia Special Events (Onshore) Fund returned 1.31% during April and had a twelve month return of 8.23%.
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21 May 2013 - Pengana Asia Special Events (Onshore) Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund seeks to profit from trading securities which are primarily subject to corporate events or from trading-related securities which the Investment Manager believes are mispriced by the market. The Fund invests in securities that are listed on Asian stock markets and other markets where related securities may be listed and in securities which are listed on markets outside of Asia where more than 70% (by assets or earnings) of the underlying business originates from an Asian country. The Fund aims to generate consistently positive returns which have a low correlation to the Asian stock markets. The objective is to generate 10-20% pa with a standard deviation of 6-10% |
| Manager Comments | Japanese, Singaporean and Malaysian positions contributed significantly to the positive performance over the month as M&A activity picked up. Capital Management was the most successful strategy for the Fund, with Earnings Surprise, M&A and Stubs Trades also making meaningful contributions. Short index futures positions negatively impacted on performance as Asian markets generally rose strongly over the month. The Fund maintained an average net and gross exposure of 16% and 164% respectively. Largest month-end net exposures were China, Japan and Indonesia and biggest gross exposure by strategy was Merger and Acquisitions. April was very eventful led by a significant pick up in M&A activity and the earnings seasons in some markets. Japan was the most active M&A market in Asia, accounting for 6 of the 14 new deals during the month. Interestingly, as a sign of returning corporate confidence, 2 of the biggest Asian deals for the year were announced in April. Leading the table was the stake increase in Hindustan Unilever by parent Unilever Plc. Within the consumer space as well CP ALL, the operator of over 5,000 7-Eleven stores in Thailand, announced a takeover of Thai hypermart operator Siam Makro. A fall in commodity prices, led by the unexpected collapse of gold prices, resulted in significant volatility in resource stocks during the month. The falls did not adversely affect the risk arbitrage spreads the Fund was involved in. |
| More Information | » View detailed profile of this fund |
BlackRock Australian Equity Market Neutral Fund
20 May 2013 - Australian Fund Monitors
The BlackRock Australian Equity Market Neutral Fund had a sound April returning 2.18%, bringing its 12 month return to 8.71%.
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20 May 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/ASX 200 rose 4.5% (4.5% accumulation) in April to reach its highest level since June 2008. This was largely driven by the seemingly insatiable appetite for yield, with high yield stocks outperforming and Australian Government bonds rallying strongly. Resources, however, slumped further amidst weaker than expected US and Chinese economic data and softer commodity prices. Domestically, the under-performance of resource stocks was most notable amongst gold stocks following the spectacular fall in the gold price. Small capitalisation miners with higher leverage to commodity prices were also hit particularly hard, and a number of mining service companies issued profit warnings. The search for yield was well evidenced by the remarkable turnaround (+9.7%) of WPL on the day it announced it will pay a special dividend and raise its dividend payout ratio. The portfolio benefited from the resource under-performance due to a tilt toward producers versus explorers, with significant contribution coming from short positions in Kingsgate Consolidated, Newcrest Mining and Oz Minerals, amongst others. The yield theme also proved profitable via our exposure to property trusts and telecoms. Elsewhere, the portfolio also had positive contributions from stock selection in domestic cyclicals, such as Flight Centre, Trade Me, Super Retail and Qantas. Losing stocks generally came from the same sectors, with long positions in Resolute Mining and St Barbara amongst the largest detractors. |
| More Information | » View detailed profile of this fund |
Hedge Clippings
17 May 2013 - Chris Gosselin, Australian Fund Monitors
Weekly commentary and opinion from AFM's CEO, Chris Gosselin. This week, Chris discusses the budget, superannuation guarantee and the Bloomberg saga. Please let us know if there are any topics you would like us to cover in future.
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17 May 2013 - Hedge Clippings
By: Chris Gosselin, Australian Fund Monitors
Budget week finally confirmed what most already knew: Australia was not going to be in, or return to, surplus any time soon, irrespective of any change in government in September. Treasury's earlier revenue estimates were far too optimistic, and some (in particular from the mining and carbon tax) have simply not materialised as anticipated by the government.
Coincidentally or not with the confirmation of the federal deficit, the A$ came under pressure as the combined effects of lower rates (down 25 bps to 2.75%), a reduced outlook for resources, and the reality of a mid to long term budget deficit added to the effects of a strengthening US currency.
The current government delivered a strategic budget which promised large social programs such as the disability pension scheme and education reform, cleverly boxing in the opposition and making it difficult for them to abandon them if, or when they assume power.
As previously telegraphed the budget included the gradual increase of the superannuation guarantee levy from the current 9 to 12%, which the opposition promptly announced would be delayed or deferred on their watch. One interesting twist in the ongoing progress or otherwise of reform of the superannuation system was the opposition's successful amendment this week requiring at least one third of industry superannuation fund trustees to be independent.
The current equal representation model requires industry super funds to appoint half their trustees from union representatives and the other half from employer representatives. Although the Cooper Review recommended that a lack of independent trustees was no longer appropriate, the government chose not to include the changes in the legislation.
The twist came not so much that the amendment was proposed, and passed 72 to 68, but in the fact that the independent MP's voted against a proposal favoring independence, and that it appears four government MP's, including two ministers and a government whip, either abstained, or were absent.
Given the importance and value of the superannuation system it seems incongruous that industry super funds are not subject to the same or similar governance and transparency regime as corporate Australia.
While on the subject of governance and transparency, Bloomberg the global leader in financial information with over 300,000 terminals installed, was (or should be) severely embarrassed. It was revealed this week that Bloomberg has been engaging in a case of "big brother" by enabling their journalists to be able to track who, what and where the terminals were being used, and what was being viewed.
While we haven't yet read of actual cases where the information gleaned has been misused, the potential for misuse (given that each terminal is usually registered to an individual user) is massive, and Bloomberg will no doubt be scrambling to protect their reputation in dealing rooms around the globe, just as users will be demanding changes to the terms of their agreements.
Performance and News Updates on www.fundmonitors.com this week:
The Monash Absolute Investment Fund returned 1.13% during April, a month of extreme moves on the ASX with Small Cap Resources falling 19% and the top industrials rising 4.7%. At month-end Fund net exposure was 67%.
Insync Global Titans Fund returned 1.63% for April with the biggest positive contributors coming from a range of stocks including Sanofi, Coach, Roche and Walt Disney. Average mkt cap of stocks in the portfolio is $A 99.1bn with a weighted average forecast dividend yield of 2.90%. The fund is currently un-hedged. We also released the latest Fund Insync Review for April 2013, which you may read here.
The Pengana Australian Equities Fund had a strong April returning 3.51% bringing its 12 month return to 25.91%. Cash exposure at end April was 29%.
Morphic Global Opportunities Fund had a sound April returning 2.80% with top stock contributors coming mostly from Japan. Performance since inception in August 2012 is now 20.53%. The Fund is fully un-hedged, you can read the most recent Morphic Fund Review here.
The Auscap Long Short Australian Equities Fund had a very strong month, recording 9.83% during April. A major contributor to performance was shorting gold stocks which provided the Fund with a 2.8% return.
And finally, for something completely different, a funny clip on how frustrating it could be to teach a child how to tell the time, almost as frustrating as teaching my wife how to fix her computer.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
Auscap Long Short Australian Equities Fund
17 May 2013 - Australian Fund Monitors
The Auscap Long Short Australian Equities Fund had a strong month recording 9.83% during April 2013.
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17 May 2013 - Auscap Long Short Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund focuses on fundamental long and short investments. The Fund may utilise a multi-strategy approach if short term opportunities to increase returns, hedge the portfolio, protect capital or minimise volatility are found. The Fund is a high conviction fund and the combined portfolio will typically have 25-45 positions, investing primarily in stocks in the ASX200. The Fund may be net long, short or neutral depending on the strategies employed at the time. The Fund may hold cash so that it is in a position to take advantage of market volatility and compelling investment opportunities as and when they arise. The Fund may be geared up to 200% gross long or short and up to 150% net long or short. |
| Manager Comments | The Fund returned 9.83% net of fees during April 2013. This compares with the benchmark return of 0.25%. Average gross capital employed by the Fund was 178.0% long and 48.5% short. Average net exposure over the month was +129.5%. At the end of the month the Fund had 33 long positions and 11 short positions. The Fund’s biggest exposures at month end were spread across the consumer discretionary, financials, telcos, industrials and materials sectors. The Fund had an unusually strong month in April. The Manager would caution investors against any expectation of monthly returns in this order of magnitude. A significant portion of the monthly return was due to the Fund’s overweight exposure to companies with strong competitive advantages and sustainable earnings that provide investors with a good dividend yield and growth that is anticipated to exceed inflation over coming years. These investments performed very strongly during April,and while the Manager expects them to continue to contribute positively to the Fund over the next few years, one should not expect the sort of monthly capital gains experienced in April. The other main contributor to the Fund’s performance was a short position across a small number of gold stocks that have constituted at most around 10% of the Fund’s capital at any point during the month. It is very unusual to have a few positions that move in line with expectations as quickly as they did during the month. Between the start of the month and the middle of the month, when the short positions were closed, the average price fall across these positions was 34% and provided the Fund with a positive 2.8% return. |
| More Information | » View detailed profile of this fund |
Pengana Australian Equities Fund
16 May 2013 - Australian Fund Monitors
The Pengana Australian Equities Fund had a strong April 2013 returning 3.51%, with its twelve month return 25.91%.
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16 May 2013 - Pengana Australian Equities Fund
By: Australian Fund Monitors
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| Manager Comments | As at April 30th, cash (including notes and preference shares) represented 29% of the Fund. The top five holdings by value were: DUET Group, ANZ Bank, Telstra, NAB and Caltex. The largest positive contributors to the month’s performance included ANZ, Telstra, NAB, DUET Group, Resmed and Woolworths. The only detractors of any consequence (and nevertheless small) were Seven Group and XRF. The Fund acquired a new holding in AMP. In addition, the Fund deployed cash into existing holdings including Caltex, DUET Group, Seven Group, ANZ, Tatts Group, Mermaid Marine and Ainsworth Gaming. The Fund’s exposure to non-Australian dollar earnings streams (inclusive of companies with global earnings profiles such as Resmed and News Corporation, NZ based companies and US dollar exposure) stands at 15%. The Fund also trimmed its holdings in News Corporation. Robust share prices have narrowed the Fund's investable opportunity set. In addition business activity levels continue to be muted with many sectors reporting evidence of a deteriorating operating environment. The re-rating of many companies’ share prices may be due to the (not immaterial) impact of a lower cost of money environment and the resulting positive effect on long duration assets (particularly off a low base) rather than the improvement in the outlook for revenues and earnings. Australian businesses are still fighting cyclical and structural factors such as a cautious consumer, the impact of a lack of confidence in the Government’s policy decisions (exaggerated by a prolonged election campaign), the increasing effects of a strong Australian dollar on domestic business’ competitive position and growing uncertainty in the mining and related sectors. |
| More Information | » View detailed profile of this fund |
Insync Global Titans Fund
15 May 2013 - Australian Fund Monitors
The Insync Global Titans Fund returned 1.63% for April 2013 bringing its twelve month return to 16.41%
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15 May 2013 - Insync Global Titans Fund
By: Australian Fund Monitors
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| Manager Comments | Most global equity markets rose in April, with the S&P 500 closing at a new all-time high, despite sub-par economic conditions prevailing in most parts of the developed world. Continued quantitative easing and negative real interest rates are exerting a powerful influence on the pricing of financial assets, but at the same time are also increasing risks within the financial system. The Manager notes that markets can run further, perhaps much further, but as valuations become extended and bullish sentiment for equities becomes more and more the consensus view, the need for vigilance and portfolio protection becomes greater. This can sometimes lead to short term relative under-performance versus equity indices but is done for the purpose of preserving capital and generating long term positive returns. Momentum following in the pursuit of short term relative performance often results in significant long term losses. The Fund seek to generate strong positive returns by investing in companies that can grow even in a tough operating environment and, the higher the market goes, the more we would look to hedge market risk. The unit price increased by 1.6% in April. The biggest positive contributions came from Sanofi, Coach, Roche, Walt Disney and Accenture. In the case of Coach, the shares of the luxury handbag manufacturer jumped by over 17% during the month on the back of solid quarterly earnings as revenue growth gained momentum in the US and China. The Fund's geographic distribution of investment, by listing, is North America 39.7%, Europe 26.4%, UK 26.3% and cash and puts 7.6%. In terms of the Fund's underlying metrics the Manager notes that the average market cap of equities in the portfolio is A$99.1bn with a weighted avg forecast dividend yield of 2.90%. The weighted avg forecast PE ratio is 15.4x and weighted avg ROE 21.3%. The Fund has no hedging in place at the moment. |
| More Information | » View detailed profile of this fund |
Meet the Manager - Morphic Asset Management
15 May 2013 - Australian Fund Monitors
On Thursday 16 May, AFM provides the opportunity for a small group of investors to attend a lunch time briefing with Jack Lowenstein from Morphic Asset Management.
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15 May 2013 - Meet the Manager - Morphic Asset Management
By: Australian Fund Monitors
Morphic Fund Review March 2013 (pdf format)
Continuing our highly successful "Meet the Manager" presentation series, Jack Lowenstein, Managing Director, Joint Chief Investment Officer, Morphic Asset Management will present an overview of the Morphic Global Opportunity Fund on Thursday 16th May 2013, which he describes as being, "Global with a long equity bias and a macro overlay".
Morphic's philosophy is summarised by the view that only funds with flexible hedging strategies will be able to deliver acceptable, steady, real, absolute returns for investors over the investment cycle. The latest copy of our Research Review of the Fund is here.
Jack will share his views on the outlook for the global economy and markets. He recently returned from Japan and will give us some insights into the changes in markets and sentiment since Prime Minister Abe's election.
Thursday 16th May 2013 at 12:30pm
Sydney city venue to be advised
RSVP by Monday 13th May 2013
If you are interested in attending this "Meet the Manager briefing", please reserve your seat and we will send you confirmation of your registration by return email.
Morphic Fund Review March 2013 (pdf format)
Morphic Global Opportunities Fund
14 May 2013 - Australian Fund Monitors
The Morphic Global Opportunities Fund had sound April 2013 returning 2.80% and its six month return to 12.99%.
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14 May 2013 - Morphic Global Opportunities Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund’s top stock contributors this month came mostly from Japan, led by long term holdings in HR services outsourcing company Relo and lease financer Century Tokyo. Also helping in Japan were Karaoke equipment maker Daiichikosho and two baskets, comprising three Japanese drug stores and two Japanese tyre producers. A recent Japanese purchase, low cost home builder Arnest One also achieved high returns, although this was partly offset by a short position in two other home builders established to hedge the exposure. Other positive contributions came from Korean cable shopping network GS Home Shopping, Turkish steel producer Kardemir, a collection of US financials, and a long-short Macau gaming stock position. Most of the underperformance in the Fund was due to long positions in two individual stocks, a basket of commodity related investments and partial reversals in previous gains on a handful of unpaired short positions. Shorting proved difficult in a month with such a strong underlying surge in global markets. The Manager closed out all its short equity positions other than the long-short pairs set up for hedging purposes mentioned above, but only after reporting losses that eroded somewhat previously profitable trades in a Hong Kong retailer and a pair of European power generators. From a macroeconomic perspective, the month saw a tug-of-war between deteriorating economic data battling investor optimism caused by expanded global money printing. Liquidity would appear to have the upper hand so far. The Manager expects this to persist and has slightly lifted Fund exposures to emerging market and commodities. However confidence remains fragile and vigilance is required for any sign this stance requires review. The Fund remains un-hedged into Australian dollars. |
| More Information | » View detailed profile of this fund |
