NEWS
Performance Report: Bennelong Long Short Equity Fund
19 Nov 2019 - Australian Fund Monitors
The Bennelong Long Short Equity Fund rose +8.84% in October, outperforming the ASX200 Accumulation Index by +9.19%. Since inception in February 2002, the Fund has returned +15.37% p.a. versus the Index's +8.37%.
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19 Nov 2019 - 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 | Bennelong noted there was a significant amount of news flow during the month, with many companies providing a trading update with their AGMs. Overall, both long and short portfolios were on the right side of company news. Positive returns were spread across a wide range of pairs from all sectors while negative pairs made a modest contribution. Top contributing pairs included long BlueScope (BSL)/ short Sims Metal (SGM), long Qantas (QAN) / short Flight Centre (FLT) and long Iluka (ILU) / short RIO. |
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Performance Report: Loftus Peak Global Disruption Fund
18 Nov 2019 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund returned +2.69% in October, outperforming AFM's Global Equity Index by +2.1% and taking annualised performance since inception in November 2016 to +20.29% versus the Index's +15.35%.
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18 Nov 2019 - Performance Report: Loftus Peak Global Disruption Fund
By: Australian Fund Monitors
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| Fund Overview | The investment process involves a combination of top-down analysis with fundamental bottom-up qualitative and quantitative research to derive a risk-adjusted discounted cash flow (DCF) valuation of companies in the target universe. The investment team will generally buy stocks from the pool of securities that are trading below Loftus Peaks' valuation and sell them when they are trading above Loftus Peak's valuation. The approach allows for both fundamental accounting information as well as market-oriented inputs to be factored into the portfolio construction process. Loftus Peak's model typically does not rely on leverage to deliver investment returns and specifically takes into account risk in the valuation process. Capital preservation can be managed by holding up to 50% cash. Index and currency options and futures may also be used to manage risk. |
| Manager Comments | Top contributors during the month included Apple, Tesla and Nvidia. Key detractors included Mercadolibre, Tencent and Xilinx. The Australian dollar appreciated +2.2% against the US dollar, resulting in the Fund's US dollar positions decreasing. As at 31 October 2019, the Fund carried a foreign currency exposure of 96%. At month end, the Fund was 92% invested in 20 holdings with the balance in cash. |
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Performance Report: Bennelong Kardinia Absolute Return Fund
15 Nov 2019 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund has returned +8.93% p.a. with an annualised volatility of 7% since inception in May 2006. By contrast, the ASX200 Accumulation Index has risen +6.34% p.a. with an annualised volatility of 13.1%...
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15 Nov 2019 - Performance Report: Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund's discretionary investment strategy commences with a macro view of the economy and direction to establish the portfolio's desired market exposure. Following this detailed sector and company research is gathered from knowledge of the individual stocks in the Fund's universe, with widespread use of broker research. Company visits, presentations and discussions with management at CEO and CFO level are used wherever possible to assess management quality across a range of criteria. Detailed analysis of company valuations using financial statements and forecasts, particularly focusing on free cash flow, is conducted. Technical analysis is used to validate the Manager's fundamental research and valuations and to manage market timing. A significant portion of the Fund's overall performance can be attributed to the attention and importance given to the macro economic outlook and the ability and willingness to adjust the Fund's market risk. |
| Manager Comments | The Fund returned -0.73% in October, with gold stocks dragging on performance. Top contributors included CSL, Lifestyle Communities, City Chic, Imdex and Rhipe. The individual short book made a positive contribution of +12bp driven by shorts in technology and resources stocks. Detractors included Cleanaway, Northern Star, Evolution, Boral and Nickel Mines. Net equity market exposure was increased from 47.9% to 49.6% (57.4% long and 7.8% short), with the key changes being new positions in National Australia Bank, EML Payments, Pointsbet, nanosonics and Imdex, increased weightings in CSL and Rio Tinto, partially offset by the sale of Boral, Corporate Travel, Cleanaway and Worley. |
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Fund Review: Bennelong Long Short Equity Fund October 2019
14 Nov 2019 - Australian Fund Monitors
Latest Fund Review for the Bennelong Long Short Equity Fund is now available. The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large-caps from the ASX/S&P100 Index...
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14 Nov 2019 - Fund Review: Bennelong Long Short Equity Fund October 2019
By: Australian Fund Monitors
AFM Fund Review - October 2019 (pdf format)
BENNELONG LONG SHORT EQUITY FUND
Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.
- The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large-caps from the ASX/S&P100 Index, with over 16-years' track record and an annualised returns of 15.37%.
- The consistent returns across the investment history highlight the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market. The Fund's Sharpe Ratio and Sortino Ratio are 0.92 and 1.52 respectively.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - October 2019 (pdf format)
Performance Report: Loftus Peak Global Disruption Fund
8 Nov 2019 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund has returned +3.63% over the past 12 months and +19.83% p.a. since inception in November 2016. By contrast, AFM's Global Equity Benchmark has returned +15.59% p.a. since the Fund's inception.
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8 Nov 2019 - Performance Report: Loftus Peak Global Disruption Fund
By: Australian Fund Monitors
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| Fund Overview | The investment process involves a combination of top-down analysis with fundamental bottom-up qualitative and quantitative research to derive a risk-adjusted discounted cash flow (DCF) valuation of companies in the target universe. The investment team will generally buy stocks from the pool of securities that are trading below Loftus Peaks' valuation and sell them when they are trading above Loftus Peak's valuation. The approach allows for both fundamental accounting information as well as market-oriented inputs to be factored into the portfolio construction process. Loftus Peak's model typically does not rely on leverage to deliver investment returns and specifically takes into account risk in the valuation process. Capital preservation can be managed by holding up to 50% cash. Index and currency options and futures may also be used to manage risk. |
| Manager Comments | The Fund returned -2.54% in September. Top contributors included Apple, Google and Nutanix, while Netflix, Blackberry and Xilinx all detracted from performance. The Australian dollar appreciated +0.1% over the month against the US dollar, which meant the value of the Fund's US dollar positions decreased. As at 30 September 2019, the Fund carried a foreign currency exposure of 95%. At month end, the Fund was 87% invested in 20 holdings with the balance in cash. |
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Performance Report: NWQ Global Markets Fund
8 Nov 2019 - Australian Fund Monitors
The NWQ Global Markets Fund returned +3.27% over the September quarter, taking annualised performance since inception in September 2018 to +5.20% with an annualised volatility of 7.68%.
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8 Nov 2019 - Performance Report: NWQ Global Markets Fund
By: Australian Fund Monitors
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| Fund Overview | This is achieved through active allocations to a select number of liquid alternative managers that employ a variety of strategies. The Fund places emphasis on managers who demonstrate a rigorous and repeatable investment process that has delivered a strong track record. |
| Manager Comments | The Fund returned -1.73% in September. NWQ noted global markets continue to be caught between the conflicting currents of a global economic slowdown and heightened geopolitical risk on the one hand and central bank policies designed to stimulate growth on the other. This environment favoured managers that adopt a discretionary trading approach and collectively those managers in the Fund's portfolio made a positive contribution to the overall return (+0.62%), while managers with a systematic approach found this environment more challenging (-2.23%). The Fund's equity and currency exposures were positive contributors during the month. There were also modest losses from the Fund's fixed income and commodity exposures. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
7 Nov 2019 - Australian Fund Monitors
The Gyrostat Absolute Return Equity Income Fund rose +2.16% over the September quarter, taking performance over the past 12 months to +8.70% and annualised performance since inception in December 2010 to +4.51% with an annualised volatility of 3.77%.
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7 Nov 2019 - Performance Report: Gyrostat Absolute Return Income Equity Fund
By: Australian Fund Monitors
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| Fund Overview | The investment objective is to deliver regular and stable income stream (from ASX20 dividends) in a low interest rate environment with capital security - an 'alternative - defensive' asset class. Gyrostat has for 34 consecutive quarters operated within a 'hard' defined risk parameter (no more than 3% capital at risk with our maximum draw-down 2.2% in any circumstances) always in place, delivered regular income at a minimum BBSW90 + 3% by passing through ASX-20 dividends, and met returns guidance based upon market conditions (demonstrating increasing returns with market volatility). The fund buys and holds ASX-20 shares with lowest cost protection always in place with upside. It is an 'alternative - defensive' conservative asset allocation. Advances in investment risk management enable cost-effective protection to always be in place for a 'hard' defined risk parameter (say no more than 3% capital at risk). Returns are designed to increase as volatility levels increase, as this provides more opportunities to lower protection costs. Investment Objectives: - Returns: 6% - 8% pa in trending markets, greater than 8% pa in volatile markets, BBSW90 + 3% in stable markets - Income: Minimum cash rate + 3% paid semi-annually (currently 4.2% p.a.) from dividends and franking credits - Protection: No quarterly NAV draw-downs exceeding 3% Also includes a 'tail hedge' for gains on large market falls |
| Manager Comments | Gyrostat has for 35 consecutive quarters operated within a 'hard' defined risk parameter (no more than 3% capital at risk with a maximum draw-down of 2.2% in any circumstances) always in place, delivered regular income by passing through ASX-20 dividends, and met returns guidance based upon market conditions (demonstrating increasing returns with market volatility). The Fund buys and holds ASX-20 shares with lowest cost protection always in place with upside. Gyrostat noted it is an 'alternative - defensive' conservative asset allocation. Gyrostat anticipate increasing levels of 'late cycle' market volatility with geopolitical, historically high debt levels, and valuations elevated. |
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Performance Report: Spectrum Strategic Income Fund
7 Nov 2019 - Australian Fund Monitors
The Spectrum Strategic Income Fund returned +0.13% in September, taking performance over the past 12 months to +4.98% and annualised performance since inception in June 2009 to +4.62% with an annualised volatility of 1.03%.
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7 Nov 2019 - Performance Report: Spectrum Strategic Income Fund
By: Australian Fund Monitors
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| Manager Comments | Spectrum noted the portfolio remains well diversified with a broad spread of securities by legal structure. Bank T2 capital remains 25% whilst senior unsecured and senior secured represent 29% and 11% of the portfolio respectively. The fund holds 10% in ASX listed securities and 11.5% in cash. The portfolio continues to maintain an average credit rating of A-. Spectrum's view is that diversification remains imperative. They expect volatility to remain subdued as markets tussle with the push-pull of trade negotiations between the U.S. and China, and the U.S. and Europe. They also noted there is an expectation that the U.S. may make further rate cuts which would place further pressure on other central banks to cut interest rates, resulting in a scramble for yield and encouraging investors to invest in riskier assets despite the need for caution. |
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Performance Report: Insync Global Quality Equity Fund
7 Nov 2019 - Australian Fund Monitors
The Insync Global Quality Equity Fund has returned +13.67% p.a. vs AFM's Global Equity Index's +11.43% p.a. since inception in October 2009. Over the past 12 month, the Fund has returned +16.33% vs the Index's +8.64%.
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7 Nov 2019 - Performance Report: Insync Global Quality Equity 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 typically of 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. |
| Manager Comments | The Fund returned -1.70% in September and +4.76% over the quarter. Positive contributors included Apple, London Stock Exchange, Adidas and Bristol-Myer Squibb. Detractors included S&P Global, The Walt Disney Co, Visa and Intuit. The Fund continues to have no currency hedging in place as Insync consider the main risk to the Australian dollar to be on the downside. Insync believe currency market conditions continue to reflect the trend in place since the GFC of low growth and low inflation. They noted that, if this trend continues over the medium to long-term, they expect their portfolio of high ROIC stocks benefitting from global megatrends to outperform as these companies are less dependent on the global economy to generate consistent profitable growth. |
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Performance Report: Harvest Lane Asset Management Absolute Return Fund
6 Nov 2019 - Australian Fund Monitors
The Harvest Lane Absolute Return Fund returned +1.10% in September, taking annualised performance since inception in July 2013 to +8.43% with an annualised volatility of 6.84%. By contrast, the ASX200 Accumulation Index has returned...
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6 Nov 2019 - Performance Report: Harvest Lane Asset Management Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | Harvest Lane Asset Management employs a conservative, highly selective and opportunistic approach. Using their extensive knowledge in the area of corporate actions, the Fund's managers assess each opportunity based on a thoughtful, diligent and disciplined process and invest where they believe an opportunity exists to generate above average investment returns relative to the risk incurred. Investment decisions are made without speculating on market direction, with rigid risk controls enforced to minimise the risk of large losses of investor capital. The Fund invests in securities that are predominantly listed on the ASX and occasionally in those listed in other developed markets. Equity swaps and other derivatives may be used at times to reduce risk. The fund typically holds high levels of cash in the absence of sufficiently attractive opportunities to deploy investor capital in accordance with its objectives. |
| Manager Comments | The Harvest Lane Absolute Return Fund returned +1.10% in September, taking annualised performance since inception in July 2013 to +8.43% with an annualised volatility of 6.84%. By contrast, the ASX200 Accumulation Index has returned +10.22% p.a. with an annualised volatility of 10.69% over the same period. The Fund's Sortino ratio of 1.61 vs the Index's 1.16, average negative return of -1.40% vs the Index's -2.45% and down-capture ratio of -34.29% highlight the Fund's capacity to protect investor capital in falling markets. Harvest Lane noted September was an eventful month which saw further exciting opportunities emerge for the Fund. The Fund finished the month almost fully invested. Several full-sized positions in late stage transactions are due to complete throughout October and early November, which should see a significant percentage of the Fund converted back to cash. Two deals in Ruralco Limited and Kidman Resources completed as expected, with cash proceeds recycled straight back into other opportunities, however, Harvest Lane were slightly disappointed Kidman Resources failed to attract a competing proposal. Read the fund's latest report for more in its activities throughout September. Harvest Lane were pleased with the Fund's performance during September and maintain an optimistic outlook. |
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