NEWS
Bennelong Twenty20 Australian Equities Fund February 2019
7 Mar 2019 - Australian Fund Monitors
The latest Fund Review on Bennelong Twenty20 Australian Equities Fund is now available. The Fund invests in ASX listed stocks, combining an indexed position in the Top 20 stocks with an actively managed portfolio of ex-20 stocks.
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7 Mar 2019 - Bennelong Twenty20 Australian Equities Fund February 2019
By: Australian Fund Monitors
AFM Fund Review - February 2019 (pdf format)
BENNELONG TWENTY20 AUSTRALIAN EQUITIES FUND
Attached is our most recently updated Fund Review on the Bennelong Twenty20 Australian Equities Fund.
- The Bennelong Twenty20 Australian Equities Fund invests in ASX listed stocks, combining an indexed position in the Top 20 stocks with an actively managed portfolio of stocks outside the Top 20. Construction of the ex-top 20 portfolio is fundamental, bottom-up, core investment style, biased to quality stocks, with a structured risk management approach.
- Mark East, the Fund's Chief Investment Officer, and Keith Kwang, Director of Quantitative Research have over 50 years combined market experience. Bennelong Funds Management (BFM) provides the investment manager, Bennelong Australian Equity Partners (BAEP) with infrastructure, operational, compliance and distribution services.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - February 2019 (pdf format)
Performance Report: Frazis Fund
5 Mar 2019 - Australian Fund Monitors
The Frazis Fund returned +8.74% over January, outperforming AFM's Global Equity index by +4.1%.
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5 Mar 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 | Stanmore Coal fell after an approx. $240m takeover bid failed, which was Frazis' preferred outcome. Frazis exited Samsung above their purchase price which, they noted, was a way of correcting the Fund's underperformance over the past few months caused by their exposure to the global smartphone sector. The Fund has maintained a 4% holding in Apple and approximately a 3% holding in Sunny Optical. In addition, their top energy pick, Lundin Petroleum, has recovered its losses despite the dramatic fall in crude oil. Frazis believe any further upside in crude, while risky for the global economy, should significantly benefit the Fund. As at the end of Jan 2019, Frazis' Australian stocks had significantly outperformed their global investments and are now some of the Fund's largest positions; Afterpay at 7%, Stanmore Coal at 6% and Cooper Energy at 6%. The Fund has also maintained exposure to Chinese tech stocks which Frazis expect to benefit from the stimulus as it makes its way through the economy. They pointed out the stimulus in 2016 reversed falls in PMIs (which have given plenty of false signals over the past decade) and led to a bull market in global stocks. While off their lows, the Fund's US-listed Chinese stocks remain significantly below their 2018 highs, unlike US stocks which have largely recovered. |
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Performance Report: KIS Asia Long Short Fund
1 Mar 2019 - Australian Fund Monitors
The KIS Asia Long Short Fund rose +0.91% in January, taking 12-month performance to +1.99% versus the ASX200 Accumulation Index's +1.37% and annualised performance since inception in Oct 2009 to +12.34% versus the Index's +6.84%.
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1 Mar 2019 - Performance Report: KIS Asia Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Whilst the Fund's primary strategy is focused on long/short equities, the ability to retain discretionary powers to allocate across a number of other investment strategies is reserved. These strategies may include, but not be limited to: convertible bond investments, portfolio hedging, equity related arbitrage, special situations (e.g. merger arbitrage, rights offerings, participation in international public offerings and placements, etc.). The Fund's geographic focus is Asia excluding Japan, but including Australia). The Fund may invest outside of this region to the extent that: 1. The investment decision is driven from the Asian region or; 2. The exposure is intended to mitigate risk or enhance return from factors external to the Asian region. |
| Manager Comments | The Fund's strong focus on downside protection is illustrated by its Sortino ratio of 4.06 versus the Index's 0.49, average negative return of -0.81% versus the Index's -2.72% and down-capture ratio of -88.53% (a negative down-capture ratio indicates that, on average, the Fund has risen during the months the market has fallen). In addition, since inception the largest drawdown the Fund has experienced was -2.69% whereas over the same period that of the market was -15.13%. The main positive contributor for the month was Avita Medical Ltd (AVH.AX) which contributed +77bp. Across other positions no one name contributed or detracted more than 30bp. |
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Performance Report: 4D Global Infrastructure Fund
1 Mar 2019 - Australian Fund Monitors
The 4D Infrastructure Fund rose +7.52% in January, outperforming its benchmark (OECD G7 Inflation Index +5.5%) by +6.90% and taking annualised performance since inception in March 2016 to +11.92%.
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1 Mar 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 portfolio benefited from overall market upside, with the outperformance relative to the market being driven by strong performance from Brazil as well as the US midstream sub-sector. The strongest performer for January was Brazilian toll road operator CCR (+32.9%), driven by general positive sentiment towards Brazil's new government as well as sector specific news regarding concession extensions. The weakest performer in January was China Resources Gas Group (-1.4%), driven by concerns of a slowing Chinese economy and potential negative implications for gas demand. 4D Infrastructure remain confident in the long-term domestic demand story. Despite a slowing global macro environment, 4D noted it remains in positive territory and supportive of the Fund's overweight positioning towards user pay assets which have a direct correlation to macro. However, they remain cautious of ongoing geo-political issues and have positioned accordingly. |
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Performance Report: Bennelong Concentrated Australian Equities Fund
1 Mar 2019 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund rose +2.93% in January, marking 10 years of operation for the Fund and taking annualised performance since inception to +15.74% versus the ASX200 Accumulation Index's +9.95%.
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1 Mar 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 | Bennelong noted that, particularly in these tougher times, sticking to the same tried-and-tested process is paramount. To that end, they remain focused on what they believe ultimately drives investor returns over time: earnings, growth prospects and other business fundamentals. Some stocks held in the portfolio, such as Aristocrat Leisure, have been sold down in recent months, in some cases without any material deterioration in fundamentals. Bennelong noted this has affected the Fund's returns, but in general the lower share prices have set them up with more attractive risk-return dynamics. Moving into reporting season Bennelong say they are mindful of what they perceive to be significant earnings risk prevalent right across the market. Their view is that investors nowadays are brutal when it comes to even minor earnings misses or downgrades. Overall, Bennelong like how the portfolio is currently positioned and are optimistic on its investment prospects. |
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Performance Report: Touchstone Index Unaware Fund
28 Feb 2019 - Australian Fund Monitors
The Touchstone Index Unaware Fund rose +3.75% in January, taking annualised performance since inception in April 2016 to +8.87%.
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28 Feb 2019 - Performance Report: Touchstone Index Unaware Fund
By: Australian Fund Monitors
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| Fund Overview | The portfolio is constructed using Touchstone's Quality-At-a-Reasonable-Price ('QARP') investment process. QARP is a fundamental bottom-up process, however, it also incorporates a top-down risk management framework designed to successfully manage the portfolio during varying market conditions and economic cycles. The Touchstone Fund is concentrated, typically holding between 15-20 stocks. No individual stock will ever make up more than 10% of the portfolio at any one time. The Investment Manager may temporarily exceed the exposure limits of the Fund occasionally, particularly during periods of market volatility, to allow for holdings in excess of this 10% limit where the increase in value of the underlying security is due to market movement. The Fund may also hold between 0-50% of the portfolio in cash. The Fund has a high level of associated risk, therefore, the minimum suggested investment time-frame is 5 years. |
| Manager Comments | As at the end of January, the Fund held 21 stocks with a median position size of 4.4%. The portfolio's holdings had an average forward year price/earnings of 14.3, forward year EPS growth of 5.3%, forward year tangible ROE of 28.2% and forward year dividend yield of 5.0%. The Fund's cash weighting increased to 3.7% from 3.3% at the end of December. The Fund primarily seeks to select stocks from the ASX300 Index, typically holding between 10-30 stocks. The Fund seeks to invest in reasonably priced, good quality companies with a significant share of expected returns coming from sustainable dividends. |
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Performance Report: Quay Global Real Estate Fund
28 Feb 2019 - Australian Fund Monitors
The Quay Global Real Estate Fund rose +6.90% in January, taking 12-month performance to +20.45% versus AFM's Global Equity Index's +2.82%. The Fund has returned +8.63% per annum since inception in Jan 2016.
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28 Feb 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 | Quay noted performance in January was broad based, with every investee contributing positively to the month's total return, led by the Fund's UK exposures (Safestore and Unite Group) and US retail landlord Brixmor Property Group. The Global Real Estate sector (up +7.0 in January) meaningfully outperformed equities as, Quay believe, investors appeared to chase 'yield proxies' in anticipation of the end of the interest rate cycle. They also noted they aren't particularly negative on the US economy; jobs growth (which is fundamental for real estate) remains robust and they see that there seems to be reasonable capacity for this momentum to continue. Quay are more concerned about the economic outlook in Europe as the German and Italian economies continue to weaken and uncertainty regarding Brexit weighs. The Fund is defensively positioned in these markets with exposure to traditionally defensive sectors such as student accommodation and affordable housing. Quay continue to monitor potential investment opportunities in Europe and the UK and remain prepared to take advantage in the event of meaningful market dislocation. |
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Performance Report: Bennelong Australian Equities Fund
27 Feb 2019 - Australian Fund Monitors
The Bennelong Australian Equities Fund rose +3.75% in January, marking 10 years since inception in 2009. Since then, the Fund has returned +12.84% p.a. versus the ASX200 Accumulation Index's +9.95%.
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27 Feb 2019 - Performance Report: Bennelong Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Bennelong Australian Equities Fund seeks quality investment opportunities which are under-appreciated and have the potential to deliver positive earnings. The investment process combines bottom-up fundamental analysis with proprietary investment tools that are used to build and maintain high quality portfolios that are risk aware. The investment team manages an extensive company/industry contact program which helps identify and verify various investment opportunities. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to the ASX-listed securities. The Fund typically holds between 25-60 stocks with a maximum net targeted position of an individual stock of 6%. |
| Manager Comments | Bennelong noted that, particularly in these tougher times, sticking to the same tried-and-tested process is paramount. To that end, they remain focused on what they believe ultimately drives investor returns over time: earnings, growth prospects and other business fundamentals. Some stocks held in the portfolio, such as Aristocrat Leisure, have been sold down in recent months, in some cases without any material deterioration in fundamentals. Bennelong noted this has affected the Fund's returns, but in general the lower share prices have set them up with more attractive risk-return dynamics. Moving into reporting season Bennelong say they are mindful of what they perceive to be significant earnings risk prevalent right across the market. Their view is that investors nowadays are brutal when it comes to even minor earnings misses or downgrades. Overall, Bennelong like how the portfolio is currently positioned and are optimistic on its investment prospects. |
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Performance Report: Insync Global Capital Aware Fund
27 Feb 2019 - Australian Fund Monitors
The Insync Global Capital Aware Fund rose +3.28% in January, taking 12-month performance to +4.52% and the Fund's annualised return since inception in October 2009 to +9.42%.
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27 Feb 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 that in January strong contributions from stock selection were partially offset by a decline in the value of the index 'puts' due to a sharp market recovery and significant fall in volatility. Positive contributors included Facebook, Intuit, Intercontinental Hotel Group, London Stock Exchange and Adidas. Detractors included Twenty-First Century Fox, Heineken, Walt Disney, Visa and Zoetis. No currency hedging continues across both of Insync's funds as Insync consider the main risks to the Australian dollar to be on the downside. |
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Performance Report: Harvest Lane Asset Management Absolute Return Fund
27 Feb 2019 - Australian Fund Monitors
The Harvest Lane Absolute Return Fund rose +0.80% in January, taking 12-month performance to +10.44% versus the ASX200 Accumulation Index's +1.37%. Since inception in July 2013, the Fund has returned +9.11% per annum.
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27 Feb 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 month was fairly active as they continued to see steady deal flow and positive catalysts in some of the Fund's existing positions which proved to be a key driver of the month's performance. The current portfolio composition consists of a larger number of deals in their early stages than Harvest Lane have typically observed in recent months. They noted they tend to allocate more capital to transactions as they firm up and exercise restraint so as not to over commit until doing so is warranted. The portfolio remains appropriately weighted in these new opportunities and holds enough cash to meaningfully scale up should the transactions progress as Harvest Lane anticipates. |
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