NEWS
Performance Report: Frazis Fund
26 Jun 2019 - Australian Fund Monitors
The Frazis Fund returned -1.8% in May, ahead of the S&P500 Total Return Index by +4.55% and AFM's Global Equity Index by +2.66%. This brings the Fund's CYTD return to +21.01%.
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26 Jun 2019 - Performance Report: Frazis Fund
By: Australian Fund Monitors
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| Fund Overview | The manager follows a disciplined, process-driven, and thematic strategy focused on five core investment strategies: 1) Growth stocks that are really value stocks; 2) Traditional deep value; 3) The life sciences; 4) Miners and drillers expanding production into supply deficits; 5) Global special situations; The manager uses a macro overlay to manage exposure, hedging in three ways: 1) Direct shorts 2) Upside exposure to the VIX index 3) Index optionality |
| Manager Comments | In the latest report, Michael Frazis discusses his views on the outlook for the global economy. He believes the past two years in Australia are suggestive of what may come next in the US. He says it is entirely possible that the recent Australian experience, where technology stocks reach new heights amidst slowing growth and growing uncertainty, will continue overseas. Frazis are tempering their views and positions accordingly. Frazis have high confidence in their portfolio companies and are closely tracking their fundamental value creation. They noted they have increased their short positions in structurally declining and capital intensive industries such as physical retail, coal, and where appropriate, physical commodities. |
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Performance Report: Glenmore Australian Equities Fund
26 Jun 2019 - Australian Fund Monitors
The Glenmore Australian Equities Fund rose +2.54% in May, outperforming the ASX200 Accumulation Index by +0.83% and taking annualised performance since inception in June 2017 to +28.43%.
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26 Jun 2019 - Performance Report: Glenmore Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The main driver of identifying potential investments will be bottom up company analysis, however macro-economic conditions will be considered as part of the investment thesis for each stock. |
| Manager Comments | Top contributors included Phoslock, Dicker Data, AP Eagers, Polynovo, Auckland International Airport and People Infrastructure. Detractors included Pinnacle Investment, NRW Holdings and Arena REIT. |
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Performance Report: Quay Global Real Estate Fund
25 Jun 2019 - Australian Fund Monitors
The Quay Global Real Estate Fund rose +1.7% in May, outperforming its benchmark (FTSE/EPRA NAREIT Developed Index Net TR AUD) by +0.4% and taking annualised performance since inception in July 2014 to +10.53%.
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25 Jun 2019 - Performance Report: Quay Global Real Estate Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund will invest in a number of global listed real estate companies, groups or funds. The investment strategy is to make investments in real estate securities at a price that will deliver a real, after inflation, total return of 5% per annum (before costs and fees), inclusive of distributions over a longer-term period. The Investment Strategy is indifferent to the constraints of any index benchmarks and is relatively concentrated in its number of investments. The Fund is expected to own between 20 and 40 securities, and from time to time up to 20% of the portfolio maybe invested in cash. The Fund is $A un-hedged. |
| Manager Comments | The largest positive contributors were Coresite (US Data Centres), Ventas (US Health) and Leg Immobilon (German Apartments). Largest detractors were Wharf REIC (HK Retail), Hysan (HK Diversified) and Safestore (UK Storage). There were no changes to the Fund during the month. Quay toured Hong Kong during May. They noted a recurring discussion topic was the impact the US/China trade wars could have on the HK economy, particularly retail sales, if Chinese visitors were to drop off as a result of RMB weakness and/or weaker economic growth in China. They believe the market is cautious about the near-term. With regards to the Fund's two HK investees (Hysan and Wharf REIC), Quay remain confident in their long-term outlook as both have best-in-class assets and negligible gearing. As for the resignation of UK Prime Minister Theresa May, Quay believe this has added further uncertainty to Brexit and the UK's outlook. The Fund's exposure to the UK consists of three investees exposed to two asset classes - storage and student accommodation, both of which Quay regard as defensive in nature. |
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Fund Review: Insync Global Capital Aware Fund May 2019
25 Jun 2019 - Australian Fund Monitors
Latest Fund Review on Insync Global Capital Aware Fund is now available. The Global Capital Aware Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend...
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25 Jun 2019 - Fund Review: Insync Global Capital Aware Fund May 2019
By: Australian Fund Monitors
AFM Fund Review - May 2019 (pdf format)
INSYNC GLOBAL CAPITAL AWARE FUND
Attached is our most recently updated Fund Review on the Insync Global Capital Aware Fund.
We would like to highlight the following:
- The Global Capital Aware Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.
- Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.
- Emphasis on limiting downside risk is through extensive company research, the ability to hold cash and long protective index put options.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - May 2019 (pdf format)
Performance Report: Harvest Lane Asset Management Absolute Return Fund
25 Jun 2019 - Australian Fund Monitors
The Harvest Lane Absolute Return Fund returned +0.34% in May, taking annualised performance since inception in July 2013 to +8.72% with an annualised volatility of 6.98%.
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25 Jun 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 | Harvest Lane noted the strong run of deal flow continued in May, offering further opportunities for the portfolio to establish positions selectively. A point of interest in the more recent deals announced, however, is that they have seen unusually elevated levels of abandoned transactions. The top contributor for the month was Lynas Corporation. Turning to June, Harvest Lane are looking to close out the financial year on a high and believe the Fund is currently well positioned to do so. Several deals remain in their infancy, which they believe should bode well for continued performance for new and existing investors into financial year end and beyond. |
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Performance Report: Spectrum Strategic Income Fund
24 Jun 2019 - Australian Fund Monitors
The Spectrum Strategic Income Fund rose +0.69% in May, taking annualised performance since inception in June 2009 to +8.03% versus the RBA Cash Rate's +2.72%.
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24 Jun 2019 - Performance Report: Spectrum Strategic Income Fund
By: Australian Fund Monitors
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| Manager Comments | Spectrum saw storm clouds gathering on a number of fronts during May, specifically highlighting the US/China trade war in their latest report. They suspect Trump's sanction of Huawei may yet return to haunt him as a number of large US Technology companies depend on Huawei to buy their products - Google and Broadcomm intervened to seek relief for the imposed sanctions due to the detrimental effect on their businesses. The net result of Trump's efforts, they say, saw a risk-off event; equities were sold, high yield was sold, and bonds enjoyed a rally. Spectrum's view is that risk-off looks certain to continue for as long as fears of trade remain elevated and Trump looks for further opportunities to impose tariffs. |
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Performance Report: 4D Global Infrastructure Fund
24 Jun 2019 - Australian Fund Monitors
The 4D Global Infrastructure Fund rose +0.96% in May, outperforming the benchmark (OECD G7 Inflation Index +5.5%) by +0.18% and taking annualised performance since inception in March 2016 to +13.69%.
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24 Jun 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 May was Brazilian toll road operator CCR (+17.2%). 4D noted this stock was oversold in April on an ongoing flow of corruption rumours and they believe the rebound in May was well justified. The weakest performer was global port operator DP World (-14.5%) as the US/China trade wars remain an overhang on the port story creating volatility. 4D noted that, despite a slowing global macro environment, they believe it remains in positive territory and supportive of the Fund's bias towards user pay assets. They also expect emerging markets to see a recovery with Fed rate hikes stalled. They remain cautious of ongoing geo-political issues and have positioned accordingly, avoiding certain markets until issues are resolved (e.g. Brexit). They are also seeing certain markets move ahead of fundamentals and are looking to take a more defensive stance in these regions. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
21 Jun 2019 - Australian Fund Monitors
The Gyrostat Absolute Return Income Fund rose +5.29% in May, outperforming the ASX200 Accumulation Index by +3.58% and taking annualised performance since inception to +4.48%.
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21 Jun 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 | The Fund performed strongly in May with solid gains across the portfolio, particularly the banking sector with the post-election rally. Gyrostat noted this was consistent with their track record and guidance of returns increasing with market volatility. The Fund has a tail hedge always in place for increasing gains on large market falls. During 2018-19 Gyrostat's investment view remains that stock market volatility will increased both up and down, consistent with historical 'late cycle' market conditions. Gyrostat noted they prefer trending and volatile markets. |
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Performance Report: Bennelong Concentrated Australian Equities Fund
21 Jun 2019 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund has returned +15.96% p.a. since inception in Jan 2009 versus the ASX200 Accumulation Index's +10.75% p.a. over the same period.
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21 Jun 2019 - Performance Report: Bennelong Concentrated Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The overriding objective of the Concentrated Australian Equities Fund is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings, while satisfying our stringent quality criteria. Bennelong's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The portfolio typically consists of 20-35 high-conviction stocks from the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to ASX-listed securities. Derivative instruments are mainly used to replicate underlying positions and hedge market and company specific risks. |
| Manager Comments | The Fund returned -2.09% in May. The largest detractor was Reliance Worldwide after the company downgraded its earnings guidance during the month. As Reliance had a significant weighting in the portfolio, the share price decline had a material impact on performance. In their latest report, Bennelong point out a number of issues they believe impacted Reliance's performance, noting that they believe these issues are largely one-off events and that they continue to believe in the company's longer term prospects. Other detractors included Corporate Travel Management and Costa Group. Aristocrat Leisure contributed positively after the company reported a strong interim result during the month, with growth revenues and earnings per share of 30% and 17% respectively. Bennelong's view is that while valuation metrics such as price-to-earnings ratios appear relatively attractive for the ASX, the main risk they see is that of earnings risk; i.e. the risk that companies disappoint investors by delivering earnings below expectations. They noted that share prices have often fallen disproportionately in response to earnings downgrades, such as those seen with Reliance Worldwide and Costa Group. Their conclusion is that investors remain very risk-averse, short-term focused and skittish. |
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Performance Report: Bennelong Kardinia Absolute Return Fund
21 Jun 2019 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund was flat in May, with short positions in banks the key detractors given the strong rally following the unexpected Coalition victory in the federal election. Since inception in May 2006 the Fund...
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21 Jun 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 | Top contributors included Evolution Mining (+33bp contribution), Northern Star (+29bp), Audinate Group (+32bp), Polynovo (+19bp) and Aristocrat Leisure (+19bp). The short book was the biggest detractor (-90bp), driven by short positions in two of the major four banks as well as a short position in Share Price Index Futures. Other detractors included Macquarie Group (-35bp), A2 Milk (-18bp) and Oz Minerals (-15bp). Net equity market exposure was decreased from 51.5% to 13.5% (47.6% long and 34.1% short), with the key changes being the sale of Bluescope, Fortescue and Worley Parsons and a large increase in their short position in Share Price Index Futures. This was partly offset by new positions in Evolution Mining and Flight Centre, as well as increased weightings in Commonwealth Bank, Polynovo and Northern Star. |
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