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.

9 Apr 2013 - Aurora Fortitude Absolute Return Fund

By: Australian Fund Monitors

Report Date	08 April 2013
Manager	Aurora Funds Management
Fund Name	Aurora Fortitude Absolute Return Fund
Strategy	Equity Market Neutral
Latest Return Date	March 2013
Latest Return	0.42%
Latest 6 Months	1.36%
Latest 12 Months	3.97%
Latest 24 Months	7.85%
Annualised Since Inception	8.11%
Inception Date	15 February 2005
FUM (millions)	AU$92
Fund Overview	Aurora Fortitude Absolute Return Fund is a multi-strategy market neutral fund specialising in ASX listed equities and derivatives. The core philosophy is the management of risk through a long volatility overlay incorporating listed equity and index derivatives. The multi-strategy approach includes M&A, Yield, Convergence and Long/Short strategies. The portfolio managers adopt an aggressive approach to managing downside risk whilst positioning the portfolio to benefit from positive alpha.
Manager Comments	The Aurora Fortitude Absolute Return Fund returned 0.42% for February 2013 and 3.97% for the prior 12 months, ahead of the RBA cash rate. 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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6 Ways Hedge Funds need to Adapt now

9 Apr 2013 - SEI Knowledge Partnership

This report highlights many areas of potential change and improvement in hedge fund practices and client relationships - from a greater focus on defining the value funds deliver to more robust and multi-faceted client communication.

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.

9 Apr 2013 - Bennelong Kardinia Absolute Return Fund

By: Australian Fund Monitors

Report Date	08 April 2013
Manager	Bennelong Group
Fund Name	Bennelong Kardinia Absolute Return Fund
Strategy	Equity Long/Short
Latest Return Date	March 2013
Latest Return	1.42%
Latest 6 Months	8.74%
Latest 12 Months	14.40%
Latest 24 Months	15.61%
Annualised Since Inception	14.44%
Inception Date	01 May 2006
FUM (millions)	AU$53.2
Fund Overview	The Kardinia Absolute Return Fund is an Australian domiciled equity long/short fund investing in ASX listed securities. The Fund uses some exchange traded call options and there is limited use of SPI futures contracts to hedge overall market risk. 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 Bennelong Kardinia Absolute Return Fund had a positive month returning 1.42% for March 2013 and 14.40% for the preceding 12 months. 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.

8 Apr 2013 - Bennelong Long Short Equity Fund

By: Australian Fund Monitors

Report Date	04 April 2013
Manager	Bennelong Group
Fund Name	Bennelong Long Short Equity Fund
Strategy	Equity Market Neutral
Latest Return Date	March 2013
Latest Return	0.69%
Latest 6 Months	3.06%
Latest 12 Months	15.46%
Latest 24 Months	25.69%
Annualised Since Inception	20.33%
Inception Date	01 January 2003
FUM (millions)	AU$261.3
Fund Overview	Bennelong Long Short Equity Management applies a qualitative stock selection process to construct a diversified portfolio of paired securities based on relative value. The Bennelong Long Short Equity Management strategy invests primarily in the S&P/ASX 100 and is dollar neutral at cost.
Manager Comments	The Bennelong Long Short Equity Fund had a strong March (2013) recording 0.69% and 15.46% for the previous 12 months. 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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Meet the Manager - InSync - now closed

7 Apr 2013 - Australian Fund Monitors

On WEDNESDAY 10 APRIL 2013 AFM provides the opportunity for a small group of investors to attend a lunch time briefing with Monik Kotecha from InSync Fund Managers.

Hedge Clippings

5 Apr 2013 - Chris Gosselin, Australian Fund Monitors

Weekly update and opinion from CEO, Chris Gosselin.

5 Apr 2013 - Hedge Clippings

By: Chris Gosselin, Australian Fund Monitors

Superannuation Update

Treasurer Swan and Superannuation Minister Shorten must have been well aware of the potential electoral backlash from major changes to superannuation judging by their announcement today, a month out from the budget. Although the changes will affect those on the top tax bracket, they are not nearly as ferocious as many, yours truly included, were expecting.

Few comments seen so far have been negative. A 15% tax rate on retirement incomes over $100,000 remains attractive, even if not as generous as zero % on everything. Generally speaking the changes seem to pass the "fair and reasonable" test, although they won't do much to fill Swan's budget problems, nor the government's electoral chances if it comes to that. Maybe it was the realisation that if they tinkered too much with everyone else's retirement incomes it might put too much focus on their own overly generous pension arrangements.

And so back to markets and fund performance. March was only the second negative month for the ASX200 since December 2011, ending a significant rally since last July of almost 25% during which risk averse absolute return funds underperformed, and the more concentrated long biased funds made up some of the ground lost in the previous three or four years. Early indications from funds that have reported March results indicate they have performed well, with positive returns confirming their value in negative markets.

Meanwhile the Japanese market continues to rally, now at a four and a half year high and 57% above the low hit in late July, while the Yen continues to weaken, as intended by their version of QE1, 2 and 3. Other Asian economies and markets may not be so happy about that, but may have to grin and bear it.

On that happy note, I wish you a happy, healthy and carefree week end.

Regards,

Chris

CEO, AUSTRALIAN FUND MONITORS

Meet the Manager

Due to an overwhelming response, our Wednesday 10 April Meet the Manager briefing with Insync Fund Managers is fully booked. We will be holding a second briefing for Insync and will release our next Fund Manager lunch briefing soon. Stay tuned for updates.

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.

5 Apr 2013 - K2 Select International Absolute Return Fund

By: Australian Fund Monitors

Report Date	04 April 2013
Manager	K2 Asset Management
Fund Name	K2 Select International Absolute Return Fund
Strategy	Equity Long/Short
Latest Return Date	March 2013
Latest Return	0.72%
Latest 6 Months	10.47%
Latest 12 Months	10.53%
Latest 24 Months	6.44%
Annualised Since Inception	10.44%
Inception Date	01 January 2005
FUM (millions)	AU$227.9
Fund Overview	K2 Select International Absolute Return Fund invests in global equities on a long/short, opportunistic trading basis. The K2 Select International fund is an AUD-denominated unit trust., Its strategy combines macro asset allocation with multi-variable stock selection. Internal and external research is extensive. K2 limits single-security exposure to 10% of the fund's NAV on a cost basis., Gearing is employed at a maximum of two times, mainly used to reduce net long exposure. The fund has a long bias, targeting 50% to 60% net long over an investment cycle. Cash positions have exceeded 50% and been as low as 5%. 50 to 70 positions are typically held., The management employs several stop-loss measures, including a stop-loss policy of 10% on shorts.
Manager Comments	The K2 Select International Absolute Return Fund delivers a sound performance of 0.72% in February 2013 against a benchmark of 0.0% and 10.53% over the previous 12 months (benchmark 9.8%). 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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Allard Investment Fund

4 Apr 2013 - Australian Fund Monitors

The Allard Investment Fund reports a return of 1.4% for February 2013 and 11.8% for the preceding 12 months.

4 Apr 2013 - Allard Investment Fund

By: Australian Fund Monitors

Report Date	03 April 2013
Manager	Allard Partners Australia
Fund Name	Allard Investment Fund
Strategy	Equity Long
Latest Return Date	February 2013
Latest Return	1.40%
Latest 6 Months	10.94%
Latest 12 Months	11.84%
Latest 24 Months	12.87%
Annualised Since Inception	8.79%
Inception Date	01 July 2003
FUM (millions)	AU$128
Fund Overview	Allard Partners is an absolute return, long only security investor with a single mission to provide its clients with a net compound rate of return on their capital of 15% per annum over the long term. With offices in Hong Kong and Australia, Allard invests in quoted companies in the Asia Pacific region. Allard's investment approach has remained consistent throughout their history. That is to invest prudently but proactively in well-managed businesses that achieve superior returns on capital in industries with long-term growth potential. The Manager uses both broad top-down guidance and detailed bottom-up analysis to identify suitable markets, industries and companies. As long only investors, a critical factor in their performance has been their preparedness to hold cash when they cannot find companies that meet their criteria or are at a sufficient discount to their valuations.
Manager Comments	The Allard Investment Fund reports a return of 1.4% for February 2013 and 11.8% for the preceding 12 months, a below benchmark return. The Fund's longer term record shows an above benchmark return over 3, 5 and 7 years with volatility 70% of the Index benchmark (MSCI Asia-Pacific ex Japan in $A). The Fund's cash holdings have acted to improve performance in draw-downs and dampen volatility. The portfolio is well diversified with 27.7% of holdings in China/HK and 11.8% in Singapore. Cash is currently at 34.4% and the Australian exposure is 2.2%. Sector exposure is also well diversified with large exposures to financials, conglomerates and utilities. The top 5 holdings are 35.2% of the portfolio.
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Perpetual Wholesale SHARE-PLUS Long-Short Fund

3 Apr 2013 - Australian Fund Monitors

The Perpetual Wholesale SHARE-PLUS Long-Short Fund records a return of 5.25% for February 2013, a notable return for a long-short fund in buoyant market, and 32.17% for the 12 months to February.

3 Apr 2013 - Perpetual Wholesale SHARE-PLUS Long-Short Fund

By: Australian Fund Monitors

Report Date	02 April 2013
Manager	Perpetual Investments
Fund Name	Perpetual Wholesale SHARE-PLUS Long-Short Fund
Strategy	Equity Long/Short
Latest Return Date	February 2013
Latest Return	5.25%
Latest 6 Months	23.13%
Latest 12 Months	32.17%
Latest 24 Months	29.89%
Annualised Since Inception	13.03%
Inception Date	01 March 2003
FUM (millions)	AU$139
Fund Overview	The Perpetual Wholesale SHARE-Plus Long-Short Fund aims to provide long term capital growth and income through investment in quality shares and taking short positions in selected Australian shares. Perpetual researches companies of all sizes using consistent share selection criteria. Perpetual's priority is to select those companies that represent the best investment quality and are appropriately priced. In determining investment quality, investments are carefully selected on the basis of four key investment criteria: -conservative debt levels -sound management -quality business and -in the case of industrial shares, recurring earnings In addition, Perpetual aims to take short positions in Australian shares that it believes will fall in value. The Short positions are determined based on each stock's expected returns and the investment constraints (designed to reduce the risks associated with taking short positions). Derivatives may also be used in managing the fund. The Fund's investment universe allows it to invest from time to time directly or indirectly in stocks listed on sharemarket exchanges outside Australia. To help manage the risk profile of the Fund relative to the Australian stockmarket, exposure to stocks listed outside of Australia is limited to 20% and is generally hedged to the Australian dollar to the extent reasonably practical.
Manager Comments	The Perpetual Wholesale SHARE-PLUS Long-Short Fund recorded a return of 5.25% for February 2013, a notable return for a long-short fund in buoyant market, and 32.17% for the 12 months to February. The Australian equity market, as measured by the S&P/ASX 300 Accumulation Index, rose by 5.3% during February. Equity markets continued their strong start to the year, with most regional bourses now firmly in bull market territory. Whilst some markets faltered late in the month due to concerns over US monetary and fiscal policy and an inconclusive Italian election, the Australian market pushed on to new 4 year highs. The local market was buoyed by an earnings season which, on the balance, met or beat market expectations. As a whole, industrial stocks (+6.9%) outperformed resource stocks (+0.4%), while large cap stocks (+4.9%) outperformed small cap stocks (+0.9%). In major company news, a predominantly positive reporting season dominated the headlines. The outlook in some sectors remains challenging,but those companies that were able to offer upbeat guidance were strongly rewarded by the market. Cost reductions remained a familiar theme, as investors continue to wait for signs of meaningful top line revenue growth. The Fund’s largest overweight positions include general insurer Insurance Australia Group, rail freight operator Aurizon and casino operator Crown. Insurance Australia Group is a market leader and operates in a duopoly in personal lines. Aurizon operates three main businesses including coal, freight, and network services primarily involved in the transportation of coal from mine to port. The Fund is underweight ANZ and Commonwealth Bank. The largest short positions in the Fund at the end of the month were Worley Parsons and CFS Retail Trust. The Fund is currently positioned 120.0% long (including cash) and 20.0% short. Whilst the outlook is improving, global markets remain hampered by a level of political and economic uncertainty. The Australian market is not immune from these forces; however, during periods of uncertainty and volatility, patient investors are often presented with the opportunity to acquire very high quality companies at attractive valuations. The portfolio manager believes there are a number of such opportunities at present, although these opportunities are becoming fewer. Further, recent interest rate cuts have also increased the relative attractiveness of sound, fully franked dividend streams offered by quality equities in comparison to declining term deposit rates.
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Whitehaven SPC Correlation Fund

2 Apr 2013 - Australian Fund Monitors

The Whitehaven SPC Fund recorded a February 2013 return of 0.42% with the annual return 18.69%, a solid return in a very low volatility environment.

2 Apr 2013 - Whitehaven SPC Correlation Fund

By: Australian Fund Monitors

Report Date	27 March 2013
Manager	Whitehaven Funds
Fund Name	Whitehaven SPC Correlation Fund
Strategy	Global Macro
Latest Return Date	February 2013
Latest Return	0.47%
Latest 6 Months	8.09%
Latest 12 Months	18.69%
Latest 24 Months
Annualised Since Inception	25.82%
Inception Date	01 September 2011
FUM (millions)	US$36.1
Fund Overview	The Whitehaven SPC Correlation Fund looks for short term dislocations in correlations between assets. The fund trades across global markets and enters spread trades opportunistically as they arise. The process relies upon proprietary software which systematically enters and exits trades on a timeframe measured in hours or days. Historically the strategy performs best in periods of high volatility. However it has still been profitable during periods of declining or low volatility. Currently the fund trades interest rates, equity indices, foreign exchange and commodity markets.
Manager Comments	The Whitehaven SPC Fund recorded a February 2013 return of 0.42% with the annual return 18.69%, a solid return in a very low volatility environment. Annualized returns since inception (Sept 2011) is sound at 25.82% as against the S&P 500 annualised return over the same period of 16.62%. The very low annualized monthly std deviation of 5.3% is also notable. February saw continuing strength in risk assets with ongoing global expansive monetary policy , a perception Japanese equities have bottomed and possible global equity short covering as debate intensifies on whether the great rotation from bonds to equities has started. The fund's strategies are by design defensive. In other words the fund returns are best when markets are volatile. This normally occurs when equity markets are falling. This relationship with volatility is demonstrated by the fund's high correlation with the VIX volatility index (59%). Over 2013 volatility has fallen and is approaching lows not seen since before the GFC in 2007. This is the dominant explanatory factor as to why the fund returns are more muted this year compared to its previous track record. However, it’s worth noting that the fund’s trading style has still generated positive returns while other defensive assets have fallen substantially in 2013.
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Fund Monitors Pty Ltd

News

9 Apr 2013 - Aurora Fortitude Absolute Return Fund

9 Apr 2013 - 6 Ways Hedge Funds need to Adapt now

9 Apr 2013 - Bennelong Kardinia Absolute Return Fund

8 Apr 2013 - Bennelong Long Short Equity Fund

7 Apr 2013 - Meet the Manager - InSync - now closed

5 Apr 2013 - Hedge Clippings

5 Apr 2013 - K2 Select International Absolute Return Fund

4 Apr 2013 - Allard Investment Fund

3 Apr 2013 - Perpetual Wholesale SHARE-PLUS Long-Short Fund

2 Apr 2013 - Whitehaven SPC Correlation Fund

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