NEWS
25 Feb 2015 - Fund Review: Optimal Australia Absolute Trust January 2015
OPTIMAL AUSTRALIA ABSOLUTE TRUST
AFM have released the most recently updated Fund Review on the Optimal Australia Absolute Trust.
CPD Points are now available for all AFM Fund Reviews. Read the review and answer 5 questions to earn half a point toward your continuing professional development.
We would like to highlight the following aspects of the Fund;
- Optimal Australia is a specialist Australian equity investment manager and the Fund has a long/short equity strategy typically with a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200.
- The investment team comprising George Colman, Peter Whiting supported by Stephen Nicholls and Justin Hay have over 100 years combined experience in equity markets.
- The Fund's approach to risk is shown by the Sharpe ratio of 1.36, Sortino ratio of 3.02, both of which are well above the ASX 200 Accumulation Index and has recorded 81% positive months.
For further details on the Fund, please do not hesitate to contact us.
Sean Webster
Research and Database Manager
Australian Fund Monitors
25 Feb 2015 - Bennelong Long Short Equity Fund
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| Fund Overview | 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. |
| Manager Comments | The Fund's performance in January was contributed by being long Resmed / short Ansell. Specifically, Resmed's 2Q earnings result in late January highlighted a strong revenue performance across all geographies and validated traction in the recent launch of a suite of new products. Also helping performance was long Henderson's / short AMP, while long Caltex / short Metcash again was a top contributor following last month's respective profit upgrade / downgrade announcements. Negative contributors for the month came from long Beach Energy / short AGL Energy largely owing to the fall in oil price, as well as long QBE / short Suncorp despite limited news flow. |
| More Information | » View detailed profile of this fund |
24 Feb 2015 - Fund Review: Morphic Global Opportunities Fund January 2015
MORPHIC GLOBAL OPPORTUNITIES FUND
Attached is our most recently updated Fund Review on the Morphic Global Opportunities Fund.
CPD Points are now available for all AFM Fund Reviews. Read the review and answer 5 questions to earn half a point toward your continuing professional development.
Key points include:
- The Fund is a global equity long/short manager with a long bias and a macro-economic overlay. The mandate allows the Fund to short sell, use derivatives and invest in assets such as commodities & currencies.
- Morphic's philosophy is that only funds with flexible investment and hedging strategies will be able to deliver acceptable, steady, real, absolute returns over the investment cycle.
- The Fund is an early stage, boutique, Sydney-based fund established in 2012 with experienced CIO's, and an investment team of 6 including a risk manager.
- The Board has a majority of independent members with significant risk and investment experience.
For further details on the Fund, please do not hesitate to contact us.
Sean Webster
Research Manager
Australian Fund Monitors
23 Feb 2015 - Avenir Capital Value Fund
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| Fund Overview | The Fund will invest in securities where Avenir believes the company is simply mis-priced and deeply undervalued and offers significant potential for revaluation. The Fund will also invest in companies that are subject to specific corporate events such as mergers, acquisitions, restructurings, recapitalisations, spin-offs, demergers, management change, distressed situations, and other sharply delineated corporate events. The Fund will also selectively invest in short positions in companies where Avenir believes the company is significantly overvalued or where the company's business model is broken or structurally challenged. |
| Manager Comments | The Fund's Sharpe and Sortino ratio are 1.04 (Index 0.75) and 1.73 (Index 1.06) respectively. At month-end the Fund's geographic exposure was US 45%, W. Europe 15% Asia 16% Australia 1%, Other 7% with cash at 14%. |
| More Information | » View detailed profile of this fund |
23 Feb 2015 - Understanding Hedge Funds - Episode 1
Understanding Hedge Funds
What is a Hedge Fund?
In the first video of the Understanding Hedge Funds series, we will explain what constitutes a hedge fund to improve investor knowledge and understanding.
There is no strict definition of a hedge fund. They are a type of managed or mutual fund but with a series of features that typically qualify them as a hedge fund. In this video we will list the features and the conditions under which funds might qualify.
Within the www.fundmonitors.com database, we sort through the mountain of information to focus on the facts and provide a daily analysis of each funds performance so investors can make informed decisions.
Chris Gosselin, interviewed by Chris Simond
Understanding Hedge Funds from Australian Fund Monitors on Vimeo.
20 Feb 2015 - Hedge Clippings
The X factor and unconventional wisdom.
Conventional wisdom within the Australian financial services sector says that local fund managers are at a significant disadvantage when it comes to raising significant amounts of FUM, whether from local or overseas investors. By conventional, we would include David Murray and his FSI panel, most local fund managers, and the majority of offshore institutional investors.
The main benefit Australian managers have comes from managing local Australian assets on behalf of local Australian investors. When it comes to managing offshore assets, and equities in particular, for offshore investors that is considered more than an uphill battle for an Australian born, bred and domiciled fund manager.
What then is the difference or the X factor with Magellan Financial Group, who released their interim results this week? Ignoring their financial results, and focusing on the extent and source of their Funds under Management would indicate that either conventional wisdom is simply wrong, or there's more to it than that.
In the six months to December 2014 Magellan increased their FUM from $23.5 to $31.6 billion, with the offshore component increasing from $13.9 to $19.6 billion. No doubt the fall in the A$ has assisted in raising the overall FUM figure, but it doesn't factor in the fact that in spite of being a relatively young manager (having started out from a standing start in July 2007) 62% of that FUM comes from overseas institutional investors.
I'm sure there's not one single reason, with strategy, structure, market capacity, management, marketing and distribution all playing their part. However performance since inception has been good without being stellar. In fact between launching in July 2007 and July 2011 the Magellan Global Fund had gained a cumulative 1.01% inclusive of distributions net of fees. To be sure the fund's performance then accelerated though to December 2013 to be up a cumulative 96% courtesy of a 48% return that year, before going sideways for the following eight months and then lifting in the final quarter of 2014.
Whatever the X factor is, full marks to the Magellan team. They've proven that local Australian fund managers can compete on the global as well as the local stage in spite of being geographically challenged.
Specific results received this week include the following PERFORMANCE UPDATES:
Bennelong Alpha 200 Fund returned 2.18% during January 2015, bringing the fund's annual return to 4.13% since inception.
Cor Capital Fund returned 4.0% during January and 8.57% over the previous 12 months with a volatility of 4.94%. The return since inception in August 2012 was 6.34% per annum with a volatility of 5.62%.
The Aurora Fortitude Absolute Return Fund returned -0.04% in January, bringing the fund's annual return per annum to 7.31% with a volatility of 2.70%..
FUND IN FOCUS VIDEO released this week: Jack Lowenstein, the Joint CIO of the Morphic Global Opportunities Fund discusses January performance and condition of the market.
25-27 March 2015 - Digital Marketing for Banking and Financial Services Summit
For those of you travelling on buses this weekend, after watching this you might think twice about offering up your seat.
On that note enjoy your week-end, and if you're affected by either cyclone Marcia or Lam, stay safe.
Kind regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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20 Feb 2015 - Bennelong Kardinia Absolute Return Fund
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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 | Long positions in Telstra, ResMed,Transurban and National Australia Bank were all significant positive contributors whilst Share Price Index Futures contracts (hedging long positions), Twenty-First Century Fox warrants, Amcor and Ardent Leisure were the main detractors from performance. Net equity market exposure (including derivatives) was reduced slightly to 62.1% (88.9% long and 26.8% short). |
| More Information | » View detailed profile of this fund |
19 Feb 2015 - Aurora Fortitude Absolute Return Fund
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| Fund Overview | The Fund aims to produce positive returns irrespective of the direction of the share market. For each investment the manager considers the risk, the timeline of that risk occurring and then the potential return. Low transaction costs and liquidity are other important factors in the success and implementation of the strategies. |
| Manager Comments | Performance was impacted by Stonewall Resources which was marked down during December and then came out of a trading halt at the end of January. The options portfolio produced some good returns but was offset by losses again in long/short and in particular, Stonewall. We have continued to reduce the number of positions in the Long/Short part of the portfolio as a result of the recent losses in this part of the portfolio. |
| More Information | » View detailed profile of this fund |
18 Feb 2015 - Cor Capital Fund
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| Fund Overview | The Cor Capital Fund is a Multi- Asset Fund which combines a pre-determined strategic asset allocation with active but systemised rebalancing to generate returns and manage volatility whilst maintaining transparency and liquidity. The Fund strategy is not reliant on accurate market predictions, forecasts or timing for success. Returns are generated in a number of ways; 1) by maintaining sufficiently large positions in a diverse group of asset classes, 2) via the 'volatility harvesting' consequences of active rebalancing, and 3) from the offsetting behaviour of certain asset classes under specific conditions. The combined portfolio is expected to exhibit relatively low volatility and low turnover. In the interests of avoiding complexity, maintaining liquidity, and minimising reliance on third parties, the Fund strategy does not employ gearing, derivatives or short-selling. |
| Manager Comments | These results were achieved without the use of derivatives, gearing or short-selling. The Fund's expected return is 5% above the rate of inflation before fees. Following a surge in the gold price (+22% over the last quarter) relative to the other assets in the Fund, that position represented over 28% of the portfolio with cash falling to 23.46%. These weightings exceed the defined limits and so the Fund will be rebalanced at the start of February. |
| More Information | » View detailed profile of this fund |
17 Feb 2015 - Optimal Australia Absolute Trust
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| Fund Overview | 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 | The valuation gap between (loosely generalised) financial repression/low interest rate winners and cyclical losers has continued to blow out. Any stock with 'defensive yield' characteristics continues to be re-rated to valuations that are indefensible on any non-yield metric; yet no price is low enough for materials and cyclicals in view of earnings risk. Our longs, which include a small exposure to the latter category, lost 0.60% in NAV terms. Our shorts, which do feature 'indefensible valuation yield' as a common factor weight, were roiled by a further collapse in bond yields, losing 0.68%/NAV. Our index futures position compounded hedge costs. The big macro events of January and early February seemed similarly supportive of further yield-seeking investment strategies. Both the ECB quantitative easing program and locally the RBA cut 0.25% in cash rate down to record low 2.25% had intended effect of driving yields down further. So we watch and wait for further opportunities on this thematic, having tightened our risk management disciplines around this trade. |
| More Information | » View detailed profile of this fund |
