Be careful of what you wish for....

I suppose it's always gratifying to be able to say "I told you so", or "don't tell me you weren't warned", but last week's Hedge Clippings was entitled "Lookout for the unknown unknowns", and went on as follows:

"I don't know if it is just me, boredom with the election campaign both here and in the US, or a case of going  grey, getting old (and grumpy) but I get the feeling that something significant is going to shake the world's major economies and their current low growth, low inflation trends."

And even though we noted that Brexit was a "known unknown", all the smart money, if that's how one describes the bookies and various UK fund managers, were backing the REMAIN vote, and presumably putting their money where their mouths were. Sadly (for them) and for the stability of financial markets for the foreseeable future, based on current indications they got it badly wrong.

Of course in last week's Clippings we did go on to say that we didn't know what the event might be, when all the time it was right there in front of us. However, sometimes you just have trust your gut feeling, combined with a reasonable understanding of the peculiar vagaries of the psychology of the English, and the peculiarity of a voting system that relies on the weather to determine a nation's future.

So what happens now is anyone's guess, but what is certain is that volatility will be back with a capital V. Markets hate uncertainty, and that's now what they've got, and here in Australia we will not be immune to it.

PERFORMANCE NEWS

Affluence Investment Fund rose 1.87% to take annualised return since inception to 11.8% p.a.

NWQ Fiduciary Fund rose 2.86% in May bringing the net performance for the trailing 12 months to 9.50%.

Bennelong Twenty20 Australian Equities Fund returned +4.48%, outperforming the ASX200 Accumulation Index by 1.39%.

Signature Quantitative Fund generated a positive return of 0.40% in May to take annualised return since inception to 7.18% p.a.

APN AREIT Fund returned +1.58% in May to take annualised return since inception to 18.46% p.a.

QATO Capital Market Neutral Long/Short Fund returned 2.19% in May. The Fund is negatively correlated to the S&P/ASX-100 Index (beta of -0.33).

FUND REVIEWS released this week: Bennelong Kardinia Absolute Return Fund; Pengana Absolute Return Asia Pacific Fund; APN Asian REIT;

And on that note, try to have a great weekend working out the ways of the World.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.

APN Asian REIT Fund

Attached is our most recently updated Fund Review on the APN Asian REIT Fund.

We would like to highlight the following aspects of the Fund;

• APN is an ASX-listed fund manager specialising in property investment, with an investment team of six. Established in 1996, APN now has FUM of $A2.1bn including four REIT (Real Estate Investment Trust) funds.
• 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, with the ability to hold some cash and fixed interest investments. 
• 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 can include 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 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.
• APN's Asian REIT Fund invests in a portfolio of 25-40 listed Asian REITs with a core philosophy of investing in properties with sustainable rental income streams.
• The Fund has delivered an annalised return of 17.09% p.a., since inception in July 2011 with a standard deviation of 9.57% p.a. The Sharpe and Sortino ratios are 1.41 and 2.63 respectively.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - May 2016 (pdf format)

PENGANA ABSOLUTE RETURN ASIA PACIFIC FUND

Attached is our most recently updated Fund Review on the Pengana Absolute Return Asia Pacific Fund.

• The Pengana Absolute Return Asia Pacific Fund ("PARAP") was established in 2008 by portfolio managers Antonio Meroni and Vikas Kumra. The Fund is a feeder fund into a Cayman Islands AUD share class fund.
• The Fund invests both long and short in Asia Pacific equities, including in Australian and New Zealand, after a stock specific "event" has either occurred or been announced and the portfolio aims to be uncorrelated to the underlying equity markets. A combination of the Manager's experience, thorough research and continuous back- testing identify the most attractive of these events.
• Risk controls include limits on individual positions as well as gross and net exposure. Limits are in place for option exposure and cash borrowing, with stop loss limits on individual positions. Overall the manager is looking to derive returns from the event strategies as opposed to any currency or market exposures.
• Since inception, the Fund has an annualised return of 9.75% p.a., compared to the AFM's Asia Pacific Index of 5.17%. The Fund has achieved this with lower volatility of 6.08% (Index 11.96%).

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - May 2016 (pdf format)

BENNELONG KARDINIA ABSOLUTE RETURN FUND

Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile.

• The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with a nine-year track record. 

• The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in May 2006 and also has significantly lower risk KPIs. The Fund has an annualised return of 11.86% p.a. with a volatility of 7.28%, compared to the ASX200 Accumulation's return of 4.78% p.a. with a volatility of 14.21%.

• The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while Bennelong Funds Management provide infrastructure, operational, compliance and distribution capabilities.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - May 2016 (pdf format)