NEWS
Performance Report: 4D Global Infrastructure Fund
13 Sep 2019 - Australian Fund Monitors
The 4D Global Listed Infrastructure Fund rose +1.26% in August, outperforming its benchmark (OECD G7 Inflation Index +5.5%) by +0.63%. Since inception in March 2016, the Fund has returned +14.34% per annum with an annualised volatility of 9.15%.
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13 Sep 2019 - Performance Report: 4D Global Infrastructure Fund
By: Australian Fund Monitors
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| Fund Overview | The fund will be managed as a single portfolio of listed global infrastructure securities including regulated utilities in gas, electricity and water, transport infrastructure such as airports, ports, road and rail as well as communication assets such as the towers and satellite sectors. The portfolio is intended to have exposure to both developed and emerging market opportunities, with country risk assessed internally before any investment is considered. The maximum absolute position of an individual stock is 7% of the fund. |
| Manager Comments | The strongest portfolio performer for August was US water operator American Water Works (AWK), up +11.4% for the month. 4D noted AWK is a strong regulated utility benefiting from a pipeline of replacement spend and a market flight to safety. The weakest performer was global port operator DP World (DPW), down -9.1% on the back of global concerns of slowing growth, middle-east conflict and increased US/China trade tensions. 4D's view is that DPW's global footprint offers strong diversified exposure and they believe it is now offering some of the most attractive value within the universe after being completely oversold. 4D noted that, despite a slowing global macro environment, they believe it remains supportive of the Fund's overweight to user pay assets. However, they also believe ongoing geopolitical issues see the Fund avoiding certain markets until issues are resolved (e.g. Brexits). |
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Performance Report: Cyan C3G Fund
13 Sep 2019 - Australian Fund Monitors
The Cyan C3G Fund outperformed the ASX200 Accumulation Index by +2.46% in August, returning +0.1%. Since inception in August 2014, the Fund has returned +19.65% p.a. versus the Index's +7.89%.
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13 Sep 2019 - Performance Report: Cyan C3G Fund
By: Australian Fund Monitors
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| Fund Overview | Cyan C3G Fund is based on the investment philosophy which can be defined as a comprehensive, clear and considered process focused on delivering growth. These are identified through stringent filter criteria and a rigorous research process. The Manager uses a proprietary stock filter in order to eliminate a large proportion of investments due to both internal characteristics (such as gearing levels or cash flow) and external characteristics (such as exposure to commodity prices or customer concentration). Typically, the Fund looks for businesses that are one or more of: a) under researched, b) fundamentally undervalued, c) have a catalyst for re-rating. The Manager seeks to achieve this investment outcome by actively managing a portfolio of Australian listed securities. When the opportunity to invest in suitable securities cannot be found, the manager may reduce the level of equities exposure and accumulate a defensive cash position. Whilst it is the company's intention, there is no guarantee that any distributions or returns will be declared, or that if declared, the amount of any returns will remain constant or increase over time. The Fund does not invest in derivatives and does not use debt to leverage the Fund's performance. However, companies in which the Fund invests may be leveraged. |
| Manager Comments | Positive contributors in August included Quickstep Holdings, Motorcycle Holdings, Afterpay, Atomos and Victory Offices. Detractors included PSI Insurance, Freelancer and Murray River Organics. Cyan notes the companies in which they have invested continue to thrive in their respective niches and so, from a bottom-up perspective, they remain bullish on the Fund's prospects. |
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Performance Report: Bennelong Kardinia Absolute Return Fund
12 Sep 2019 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund outperformed the ASX200 Accumulation Index by +1.53% in August, falling -0.83% against the Index's -2.36%. Since inception in May 2006 the Fund has returned +9.13% p.a. versus the Index's 6.30%.
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12 Sep 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's low net market exposure, stop loss discipline and a high success rate during reporting season led to the Fund's outperformance of the Index. Kardinia noted at its worst point during the month the ASX300 was down -6.03% whilst the Fund had only fallen -1.27%, demonstrating Kardinia's overarching philosophy of capital protection. A short position in Share Price Index Futures was the biggest positive contributor. The individual short book also made a positive contribution with shorts in financial services stocks the key driver. Other positive contributors included Charter Hall, City Chic, West African Resources, Ramelius Resources and Evolution, the last three of which benefited from strong gold prices. Detractors included A2 Milk, Cleanaway, Rio Tinto and Rhipe. Net equity market exposure was decreased from 40.5% to 20.3% (33.1% long and 12.8% short), with the key changes being the sale of Commonwealth Bank, Chorus and A2 Milk, lower weightings in Westpac, Macquarie Group, Rio Tinto and CSL, partially offset by a reduction in the Fund's short position in Share Price Index Futures contracts. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
9 Sep 2019 - Australian Fund Monitors
The Gyrostat Absolute Return Income Equity Fund rose +3.97% in August, outperforming the ASX200 Accumulation Index by +6.33%. Since inception in December 2010, the Fund has returned +4.61% per annum with an annualised volatility of 3.78%.
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9 Sep 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. Fund features: - holds a diversified portfolio of higher yielding ASX20 stocks. - has the lowest cost protection, always in place, at the stock specific level, with upside. - delivers regular equity income by passing through dividends. 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, short term bond returns in stable markets - Income: Minimum cash rate + 3% paid semi-annually (currently 4.8% 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 | The Fund is a solution for falling interest rates. It has a 'conservative' asset allocation and has for 34 consecutive quarters since inception operated within a 'hard' defined risk parameter (no quarterly NAV draw-downs exceeding 3%), delivered regular equity income (by passing through ASX20 dividends), and returns increasing with volatility levels (including a tail hedge for large gains on large market falls). Gyrostat noted they anticipate increasing levels of 'late cycle' market volatility with geopolitical tensions elevated, historically high debt levels and elevated valuations. |
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Performance Report: NWQ Global Markets Fund
6 Sep 2019 - Australian Fund Monitors
The NWQ Global Markets Fund rose +2.11% in August, outperforming the ASX200 Accumulation Index by +4.47% and marking 12 months since inception in September 2019. The Fund has returned +7.50% versus the Index's +5.91% over that period.
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6 Sep 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 | There were positive contributors to the Fund's overall return from both the discretionary (+1.94%) and systematic (+0.52%) managers. The Fund's currency and equity exposures were the largest positive contributors in August. There were modest losses from the Fund's commodity and fixed income exposures. NWQ believe the ongoing deterioration in economic fundamentals across the globe is likely to continue to spur episodic volatility in global markets similar to that which was seen in August. |
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Performance Report: Paragon Australian Long Short Fund
6 Sep 2019 - Australian Fund Monitors
The Paragon Australian Long Short Fund rose +2.6% in August, outperforming the ASX200 Accumulation Index by +4.96% and taking annualised performance since inception in March 2013 to +11.16% versus the Index's +8.69%.
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6 Sep 2019 - Performance Report: Paragon Australian Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Paragon's unique investment style, comprising thematic led idea generation followed with an in depth research effort, results in a concentrated portfolio of high conviction stocks. Conviction in bottom up analysis drives the investment case and ultimate position sizing: * Both quantitative analysis - probability weighted high/low/base case valuations - and qualitative analysis - company meetings, assessing management, the business model, balance sheet strength and likely direction of returns - collectively form Paragon's overall view for each investment case. * Paragon will then allocate weighting to each investment opportunity based on a risk/reward profile, capped to defined investment parameters by market cap, which are continually monitored as part of Paragon's overall risk management framework. The objective of the Paragon Fund is to produce absolute returns in excess of 10% p.a. over a 3-5 year time horizon with a low correlation to the Australian equities market. |
| Manager Comments | Positive contributors included the Fund's gold holdings, iSignthis (upgrade), Pilbara (downgrade; short), Jumbo (upgrade) and Mincor, partially offset by a decline in Champion Iron. Overall, the Fund had a solid August reporting season. Paragon noted that whilst they remain confident in the Fund's positioning and performance through this cycle, they will continue to watch macro-economic developments closely, and remain active, making any necessary adjustments to the portfolio accordingly. |
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Performance Report: Spectrum Strategic Income Fund
6 Sep 2019 - Australian Fund Monitors
The Spectrum Strategic Income Fund rose +0.71% in July, taking annualised performance since inception to +8.02%.
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6 Sep 2019 - Performance Report: Spectrum Strategic Income Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund's top 10 holdings at the end of the month were National Australia Bank (6.4% of the portfolio), DBS Group Holdings (5.7%), AAI Limited (4.9%), Suncorp Metway (4.3%), Toyota Finance Australia (4.2%), Multiplex Sites Trust (3.6%), UBS AG Australian (3.6%), Shinhan Bank (3.2%) and United Overseas Bank (2.8%). The Fund held 11.2% of the portfolio in cash. Spectrum's view is that trade tensions are shaping the future direction of rates in the near term which they believe is evident in the RBA's recent rate cut and their commentary about the next possible cut. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
30 Aug 2019 - Australian Fund Monitors
The Gyrostat Absolute Return Income Equity Fund has returned +5.50% over the past 12 months and +4.19% per annum since inception in December 2010. Gyrostat anticipate increasing levels of 'late cycle' market volatility.
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30 Aug 2019 - Performance Report: Gyrostat Absolute Return Income Equity Fund
By: Australian Fund Monitors
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| Fund Overview | Our 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. Fund features: - holds a diversified portfolio of higher yielding ASX20 stocks. - has the lowest cost protection, always in place, at the stock specific level, with upside. - delivers regular equity income by passing through dividends. 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, short term bond returns in stable markets - Income: Minimum cash rate + 3% paid semi-annually (currently 4.8% 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 noted the Fund is a solution for falling interest rates. It has a 'conservative' asset allocation and has for 34 consecutive quarters since inception operated within a 'hard' defined risk parameter (no quarterly NAV draw-downs exceeding 3%), delivered regular equity income (by passing through ASX20 dividends), and returns increasing with volatility levels (includes a tail hedge for large gains on large market falls.) As at the 15th of August, the Fund had increased +4.6%. |
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Performance Report: 4D Global Infrastructure Fund
30 Aug 2019 - Australian Fund Monitors
The 4D Global Infrastructure Fund rose +0.87% in July, taking annualised performance since inception in March 2016 to +14.29% with an annualised volatility of 9.26%.
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30 Aug 2019 - Performance Report: 4D Global Infrastructure Fund
By: Australian Fund Monitors
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| Fund Overview | The fund will be managed as a single portfolio of listed global infrastructure securities including regulated utilities in gas, electricity and water, transport infrastructure such as airports, ports, road and rail as well as communication assets such as the towers and satellite sectors. The portfolio is intended to have exposure to both developed and emerging market opportunities, with country risk assessed internally before any investment is considered. The maximum absolute position of an individual stock is 7% of the fund. |
| Manager Comments | The strongest portfolio performer for July was Brazilian toll road operator Ecorodovias which was up +9.5%. 4D noted this was note driven by stock specific news but rather the entire Brazilian infrastructure space was up as Bolsonaro executes on reforms. The weakest performer was US midstream operator Williams, down -12.1% on the back of concerns that key counterparties are cutting production targets which will flow through to Williams' volumes and earnings. 4D believe the sell-off was overdone. Despite a slowing global macro environment, 4D's view is that it remains supportive of the Fund's overweight to user pay assets. However, ongoing geopolitical issues see them avoiding certain markets until issues are resolved (e.g. Brexit). They are also seeing certain markets move ahead of fundamentals and have taken a more defensive stance in these regions, increasing their exposure to defensive yield stories. |
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Performance Report: Insync Global Capital Aware Fund
29 Aug 2019 - Australian Fund Monitors
The Insync Global Capital Aware Fund rose +4.07% in July, outperforming AFM's Global Equity Index by +1.20%. Over the past 12 months the Fund has returned +20.99% versus the Index's +11.87%.
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29 Aug 2019 - Performance Report: Insync Global Capital Aware Fund
By: Australian Fund Monitors
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| Fund Overview | Insync employs four simple screens to narrow the universe of over 40,000 listed companies globally to a focus group of high quality companies that it believes have the potential to consistently grow their profits and dividends. These screens are size of the company, balance sheet performance, valuation and dividend quality. Companies that pass this due diligence process are then valued using dividend discount models, free cash flow yield and proprietary implied growth and expected return models. The end result is a high conviction portfolio of typically 15-30 stocks. The principal investments will be in shares of companies listed on international stock exchanges (including the US, Europe and Asia). The Fund may also hold cash, derivatives (for example futures, options and swaps), currency contracts, American Depository Receipts and Global Depository Receipts. The Fund may also invest in various types of international pooled investment vehicles. At times, Insync may consider holding higher levels of cash if valuations are full and it is difficult to find attractive investment opportunities. When Insync believes markets to be overvalued, it may hold part of its resources in cash, or use derivatives as a way of reducing its equity exposure. Insync may use options, futures and other derivatives to reduce risk or gain exposure to underlying physical investments. The Fund may purchase put options on market indices or specific stocks to hedge against losses caused by declines in the prices of stocks in its portfolio. |
| Manager Comments | Insync noted strong stock selection was the key driver of the solid outperformance. Positive highlights during the month include London Stock Exchange, Intuit, Accenture, Apple and Visa. Detractors were Bristol-Myer Squibb, Heineken, Wirecard, TE Connectivity and PayPal. No currency hedging continues across both funds as Insync consider the main risks to the Australian dollar to be on the downside. Insync's view is that current market conditions continue to reflect the trend in place since the GFC of low growth and low inflation. They believe that if this trend continues then investing in a portfolio of high ROIC stocks benefitting from global megatrends should prevail. |
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