Bennelong Kardinia Absolute Return Fund

11 Aug 2016 - Australian Fund Monitors

The Bennelong Kardinia Absolute Return Fund rose 2.95% for the month of July to take annualised return since inception to 11.92% p.a.

11 Aug 2016 - Bennelong Kardinia Absolute Return Fund

By: Australian Fund Monitors

Report Date	09 August 2016
Manager	Kardinia Capital, A Bennelong boutique
Fund Name	Bennelong Kardinia Absolute Return Fund
Strategy	Equity Long/Short
Latest Return Date	July 2016
Latest Return	2.95%
Latest 6 Months	3.09%
Latest 12 Months	3.77%
Latest 24 Months	13.70%
Annualised Since Inception	11.92%
Inception Date	01 May 2006
FUM (millions)	AU$321.9
Fund Overview	The Fund consists of a concentrated long/short portfolio typically comprising 20 to 50 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. On average since inception the Fund's exposure has averaged 40% net long. There is a slight bias to large cap stocks on the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 5% to 10% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position. 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 Bennelong Kardinia Absolute Return Fund rose 2.95% in July, compared to the ASX 200 Total Return Index, which returned 6.29%. Since inception in May 2006, the Fund has an annualised performance of 11.92% p.a, compared to the Index's 5.07% p.a. The Fund has achieved this performance with lower volatility of 7.26% than that of the Index (14.24%), to give notable Sharpe and Sortino ratio of 1.05 (Index 0.14) and 1.93 (Index 0.09) respectively. Aristocrat Leisure, BWX, BlueScope Steel and Beadell Resources were the largest positive contributors to performance whilst Share Price Index Futures (hedging longs), Yowie and Syrah Resources were the largest detractors. Net equity market exposure (including derivatives) was increased to 55.6% (65.8% long and 10.2% short). Click below to read the latest Fund Report.
More Information	Fund Profile Manager's Report AFM Research Reports

The Paragon Fund

11 Aug 2016 - Australian Fund Monitors

The Paragon Fund returned a positive 2.90% after fees for the month of July, to take latest 12-months return to 35.12%.

11 Aug 2016 - The Paragon Fund

By: Australian Fund Monitors

Report Date	08 August 2016
Manager	Paragon Funds Management
Fund Name	The Paragon Fund
Strategy	Equity Long/Short
Latest Return Date	July 2016
Latest Return	2.90%
Latest 6 Months	32.10%
Latest 12 Months	35.12%
Latest 24 Months	42.99%
Annualised Since Inception	24.45%
Inception Date	28 February 2013
FUM (millions)	AU$77
Fund Overview	The Paragon Fund is a concentrated long/short Australian equities product that is fundamentally driven with a focus on the industrial and resource sectors. Paragon's own research process and active portfolio management is overlaid with risk management and an overarching focus on capital preservation. Paragon believes that markets are not always efficient, exhibiting a common tendency to price securities well outside of their intrinsic value over the medium term. This market characteristic provides the opportunity for Paragon, an active manager with a flexible mandate, to generate superior investment returns over the longer term. Paragon believes that it is critical to understand both the companies and the industries in which they operate, in order to fully comprehend each investment opportunity. Accordingly, a fundamental approach to company research is taken. Assessing the potential downside is also paramount in framing the risk/reward trade-off for potential investments.
Manager Comments	The Paragon Fund returned a positive 2.90% after fees for the month of July, to take latest 12-months return to 35.12%. Since inception, the Fund has an annualised return of 24.45% p.a. vs the Index's 7.10% p.a. The Fund has a notable Sharpe and Sortino ratios of 1.59 (Index 0.43) and 3.52 (Index 0.54) respectively. Key positive contributors for July included various gold holdings, as well as NetComm Wireless, Aconex and Smartgroup, offset by short positions in a rising market. The Fund's largest industry net exposure was in the Resources sector, at +59.9%. Cash balance was 7.4%. At the end of the month, the Fund had 31 long positions and 9 short positions. Click below to read the latest monthly report.
More Information	Fund Profile Manager's Report

APN Asian REIT Fund

10 Aug 2016 - Australian Fund Monitors

APN Asian REIT Fund rose 2.07% in July, outperforming the Bloomberg Asia REIT Index which returned 0.77%, by 1.30%.

10 Aug 2016 - APN Asian REIT Fund

By: Australian Fund Monitors

Report Date	08 August 2016
Manager	APN Funds Management Limited
Fund Name	APN Asian REIT Fund
Strategy	Real Estate
Latest Return Date	July 2016
Latest Return	2.07%
Latest 6 Months	13.76%
Latest 12 Months	10.02%
Latest 24 Months	37.24%
Annualised Since Inception	17.39%
Inception Date	19 July 2011
FUM (millions)	AU$8.69
Fund Overview	The APN Asian REIT Fund (Fund) is a property securities fund that invests in a quality portfolio of Asian REITs, listed on the securities exchanges of the Asian Region (including, but not limited to, Hong Kong, Singapore, Malaysia, Japan and New Zealand, but excluding Australia), as well as cash and fixed interest investments. Pete Morrissey and Corrine Ng are the Portfolio Managers of the Fund. Morrissey has over 15 years financial markets experience and joined APN in 2006. Previously, he worked at Lonsec and also managed an internationally focused private investment fund as well as spending several years as an analyst in the UK for Nomura, amongst others. He has also completed Masters level academic research papers on both commercial real estate cycles and global property cycles. Ng also has a strong background in property and REITs in Australia, Asia and the North American markets. Prior to joining APN, Ng worked for Aviva Investors (Senior Investment Analyst, North America Real Estate Securities Team) and Goldman Sachs & Co (Vice President, Goldman Sachs Asset Management Real Estate Securities Team) in New York. The Fund aims to deliver a competitive yield with lower risk than the market. The underlying stocks are selected based on a highly disciplined investment approach that focuses on the fundamentals and number of valuation approaches. The universe is expected to be dynamic as new IPO's, other corporate actions take place and / or corporate governance improvements at country or REIT level bring new stocks into focus. The Fund focuses on passive rental earnings derived from well managed Asian REITs listed in mature capital markets and will not invest in infrastructure, property development companies or stocks with a 'loose association with property'. The Fund provides access to a wide spread of property-based revenue streams that are specifically analysed, selected and weighted with the aim of delivering strong and sustainable income returns. The Fund is an unhedged product. The Fund is suited to medium to long term investors seeking a relatively high income and some capital growth over the long term. The manager has offered a special 50% reduction in management fee for all existing and new investors who apply by 30 June 2016.
Manager Comments	APN Asian REIT Fund rose 2.07% in July, outperforming the Bloomberg Asia REIT Index which returned 0.77%, by 1.30%. Since inception, the Fund has an annualised return of 17.39% p.a., with a volatility of 9.42% p.a. In comparison, the Index has returned 16.58% p.a. annualised. The Fund has notable Sharpe and Sortino ratios of 1.46 (Index 1.25) and 2.73 (Index 2.23) respectively. For July, the portfolio's two largest geographic exposure were in Japan at 38.3%, and Singapore at 31.7%. The majority (66.6%) of the Fund was invested in the Retail REITs (40.1%) and the Office REITs (26.5%) sectors. The top five holdings comprised of over 20% of the portfolio with 2 holdings above 4% each. Click below to read the latest Fund's performance report.
More Information	Fund Profile Manager's Report AFM Research Reports

Fund Review: Bennelong Long Short Equity Fund July 2016

10 Aug 2016 - Australian Fund Monitors

July Fund Review now available on Bennelong Long Short Equity Fund which has annualised returns of 17.81% p.a.

Optimal Australia Absolute Trust

9 Aug 2016 - Australian Fund Monitors

Optimal Australia Absolute Trust returned -2.3% in July to take annualised return since inception to 8.71% p.a.

9 Aug 2016 - Optimal Australia Absolute Trust

By: Australian Fund Monitors

Report Date	05 August 2016
Manager	Optimal Fund Management Australia
Fund Name	Optimal Australia Absolute Trust
Strategy	Equity Long/Short
Latest Return Date	July 2016
Latest Return	-2.30%
Latest 6 Months	2.46%
Latest 12 Months	8.37%
Latest 24 Months	8.47%
Annualised Since Inception	8.71%
Inception Date	15 September 2008
FUM (millions)	AU$100
Fund Overview	The investment objective of the Fund is to seek to achieve above average returns in absolute terms, through investing in listed securities in Australia and New Zealand, subject to the overarching requirement of capital preservation. Investments will predominantly be in equity securities but may include fixed interest instruments, money market instruments, derivatives and foreign exchange contracts. The Fund's bias is likely to be net long under normal market conditions, with the core strategy being to construct a portfolio of listed equity securities priced at levels that do not adequately reflect their underlying value. The Fund will seek to boost returns and limit potential market downside by selective short selling of individual stocks which are priced at levels that are viewed as materially above their underlying value. The Fund will also use certain trading strategies both within its core portfolio (through rebalancing stock weights and overall market exposure in response to price movements) and in certain other situations (typically of a shorter-duration and/or opportunistic nature) with the objective of further increasing returns.
Manager Comments	Optimal Australia Absolute Trust returned -2.3% in July. Since inception, the Fund has an annualised return of 8.71% p.a. (Index 5.63% p.a.), which has been achieved with relatively low volatility of 3.80% p.a. (Index 14.46% p.a). The Fund's small investment in lithium producer Orocobre was the big winner over the year. The insurance, builders, banks and media sectors positively contributed in July. However, the healthcare, staples, resources and index futures sectors detracted from the performance. The bias against interest-rate sensitive stocks proved expensive as a means of hedging portfolio risk. At month-end, the Fund had gross exposure of 94% and net short exposure of 22%. The Fund will continue to maintain a defensive focus. Click below to read the latest Fund monthly report.
More Information	Fund Profile Manager's Report AFM Research Reports

Fund Review: Meme Australian Share Fund July 2016

8 Aug 2016 - Australian Fund Monitors

July Fund Review is now available on Meme Australian Share Fund, that invests in ASX listed securities outside of the S&P/ASX20.

Hedge Clippings

6 Aug 2016 - Australian Fund Monitors

RBA winds down the cash rate, while the Bank of England goes one better, and winds back the clock.

6 Aug 2016 - Hedge Clippings

By: Australian Fund Monitors

RBA winds down the cash rate, while the Bank of England goes one better, and winds back the clock.

This week's news has been all about interest rates. In fact, when you think about it, it's been all about interest rates for the past few years.

Not only did the RBA drop interest rates by a further 0.25% to just 1.5% as expected, but there is a pretty fair chance that there will be a further cut before the end of the year. If you think that's low, the Bank of England announced a similar cut overnight, taking their rate to just 0.25%, the lowest since 1694. That's A.D. 1694 just in case there is any confusion.

For those with time on their hands over the weekend, or desperate to understand what our policy makers are thinking, here's a link to the RBA's Quarterly Statement on Monetary Policy.

For comparison, casting around the world the Bank of Canada's rate is 0.5%, the European Central Bank 0%, and the People's Bank of China a whopping 4.35%. In various parts of Europe, the rate is now negative.

Those of you (us) who are old enough, might remember the scary days of mortgage rates of 18 or 19%. At that time I remember being advised by the managing director of one Australian bank that we would never see interest rates in single digits again and our lifetime. It would be unfair to name him, or for that matter single him out, but he was one of the most successful and smartest in the business - then or since.

So here we are, locked into this low interest rate, low inflation environment which seems to be spiralling, or should that be inching, ever lower.

In the short term investors in equities will welcome this as good news. Minimal returns on cash in the bank, or invested in government bonds inevitably makes equities look attractive, with the result that equity PE multiples are at scary levels.

The danger of this is that increased PE multiples are not necessarily a reflection on economic or corporate health, or in many cases the result of increased earnings. Rather they are merely a reflection of the attractiveness of dividend yields, and particularly of franked dividend yields, of 4 to 6%.

As we enter the earnings season proper, it's worth noting that YTD to the end of July the ASX200 financial sector fell 9%, so merely chasing yield doesn't always provide a positive outcome.

By comparison, the Materials Sector (dominated by BHP and Rio) gained 23%, while REITs gained 20%.

So if the outlook for interest rates for the next one, three or five years is to remain low, expect that to support equity markets, in spite of the potential volatility and capital loss that can occur. The real risk will come when interest rates start to rise, and the inflows into equities of the past few years will convert to outflows.

Not tomorrow, but when it happens look out!

PERFORMANCE NEWS

Early results for July are thin on the ground so far, but with the ASX200 up over 6% in a post-Brexit selloff - rally yo-yo, are looking positive so far.

Meme Australian Share Fund rose 7.81% in July, outperforming the ASX-200 Accumulation Index which returned 6.29%, by 1.52%.

Bennelong Long Short Equity Fund returned +1.46% in July and +15.63% for the latest 12-months.

FUND REVIEWS released this week: Pengana Absolute Return Asia Pacific Fund; Supervised Global Income Fund; Insync Global Titans Funds;

And on that note, have a great weekend.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Bennelong Long Short Equity Fund

5 Aug 2016 - Australian Fund Monitors

Bennelong Long Short Equity Fund returned +1.46% in July and +15.63% for the latest 12-months.

5 Aug 2016 - Bennelong Long Short Equity Fund

By: Australian Fund Monitors

Report Date	04 August 2016
Manager	Bennelong Long Short Equity Management, a Bennelong boutique
Fund Name	Bennelong Long Short Equity Fund
Strategy	Equity Market Neutral
Latest Return Date	July 2016
Latest Return	1.46%
Latest 6 Months	0.76%
Latest 12 Months	15.63%
Latest 24 Months	32.65%
Annualised Since Inception	17.81%
Inception Date	01 January 2003
FUM (millions)	AU$419.9
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. 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.
Manager Comments	Bennelong Long Short Equity Fund returned +1.46% in July and +15.63% for the latest 12-months. The long term performance since inception remains strong with annual returns of 17.81% p.a. (Index 7.91% p.a.) with a volatility of 12.02% (Index 13.03%). The Fund has notable Sharpe and Sortino ratios of 1.08 (Index 0.32) and 1.83 (Index 0.35). Performance was mostly concentrated for the month, with the top pair (long Bluescope/ Short Sims Metal) as the standout contributor. The rest of the portfolio was evenly mixed with positive contributions from pair positions in the industrial and healthcare sectors offset by pairs in the financials and infrastructure / utilities sectors. The main portfolio change over the month involved exiting the position in Caltex. Click below to read the Fund Manager's commentary and market outlook.
More Information	Fund Profile Manager's Report AFM Research Reports

Meme Australian Share Fund

5 Aug 2016 - Australian Fund Monitors

The Meme Australian Share Fund rose 7.18% for the month of July 2016.

5 Aug 2016 - Meme Australian Share Fund

By: Australian Fund Monitors

Report Date	04 August 2016
Manager	Meme Capital Management Pty Ltd
Fund Name	Meme Australian Share Fund
Strategy	Equity Long
Latest Return Date	July 2016
Latest Return	7.18%
Latest 6 Months	25.46%
Latest 12 Months	33.55%
Latest 24 Months	57.36%
Annualised Since Inception	22.23%
Inception Date	01 July 2013
FUM (millions)	AU$4.6
Fund Overview	The Meme Australian Share Fund uses a robust and back-tested quantitative trend-following strategy to identify investment opportunities expected to provide both positive price appreciation and relative price outperformance over the medium to long term. The Fund invests on a long-only basis and does not use derivatives. Meme's investment philosophy is logically derived from addressing our prime investment objectives of creating and preserving wealth. The philosophy therefore comprises elements which separately address investment returns and investment risks while at the same time respecting the interplay between them. The Fund's investment strategy seeks to identify low-risk entry opportunities and then build positions in these stocks. Once established in the portfolio, individual stock holdings are maintained for as long as their long-term upward trend remains intact and while they continue to make positive contributions to portfolio growth. Positions are reduced and ultimately closed out as their trends become exhausted or as their relative long-term performance against the broad market weakens. The Fund believes that longer time frame investments also provide a number of advantages. The effect of false signals and 'noise' which attend shorter term time frames is mitigated by only attending to signals which are confirmed by our longer term assessments. Also, the Fund gains exposure to the more expansive price trends which can last for months and years, allowing dividends and distributions received during this time to further enhance portfolio returns.
Manager Comments	The Meme Australian Share Fund rose 7.81% in July, outperforming the ASX 200 Accumulation Index which returned 6.29%, by 1.52%. Since inception, the Fund has an annualised return of 22.23% p.a. (Index 9.59% p.a.) to give notable Sharpe and Sortino Ratios of 1.44 and 2.52 respectively. The five most positive contributors to the fund's July performance were Millennium Mining, Resolute Mining, Dacian Gold, Infigen Energy and Cardinal Resources, while the five most negative contributors were Syrah Resources, Antipa Minerals, Orocobre Limited, Galaxy Resources and Redflow Limited. The Fund increased its holding in the Consumer Discretionary, Industrials, Material and Telecommunications sectors and reduced its exposure to the Property, Consumer Staples, Financials and Utilities sectors. At month end, the total number of portfolio stocks reduced to 87 holdings and portfolio cash at approximately 1%. Click below to read the latest Fund Manager's commentary on the Fund.
More Information	Fund Profile Manager's Report AFM Research Reports

Fund Review: Insync Global Titans Fund June 2016

3 Aug 2016 - Australian Fund Monitors

Latest Fund Review on Insync Global Titans Fund is now available.

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11 Aug 2016 - Bennelong Kardinia Absolute Return Fund

11 Aug 2016 - The Paragon Fund

10 Aug 2016 - APN Asian REIT Fund

10 Aug 2016 - Fund Review: Bennelong Long Short Equity Fund July 2016

9 Aug 2016 - Optimal Australia Absolute Trust

8 Aug 2016 - Fund Review: Meme Australian Share Fund July 2016

6 Aug 2016 - Hedge Clippings

5 Aug 2016 - Bennelong Long Short Equity Fund

5 Aug 2016 - Meme Australian Share Fund

3 Aug 2016 - Fund Review: Insync Global Titans Fund June 2016

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