NEWS
Fund Review: Bennelong Long Short Equity Fund January 2021
16 Feb 2021 - Australian Fund Monitors
Latest Fund Review for the Bennelong Long Short Equity Fund is now available. The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large-caps from the ASX/S&P100 Index...
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16 Feb 2021 - Fund Review: Bennelong Long Short Equity Fund January 2021
By: Australian Fund Monitors
AFM Fund Review - January 2021 (pdf format)
BENNELONG LONG SHORT EQUITY FUND
Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.
- The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large-caps from the ASX/S&P100 Index, with over 19-years' track record and an annualised returns of 15.25%.
- The consistent returns across the investment history highlight the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market. The Fund's Sharpe Ratio and Sortino Ratio are 0.93 and 1.54 respectively.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - January 2021 (pdf format)
Performance Report: Paragon Australian Long Short Fund
12 Feb 2021 - Australian Fund Monitors
The Paragon Australian Long Short Fund has returned +21.25% over the past 12 months vs the ASX200 Accumulation Index's -3.11%. Since inception in March 2013, the Fund has returned +11.45% p.a. vs the Index's +7.66%.
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12 Feb 2021 - Performance Report: Paragon Australian Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Paragon's unique investment style, comprising thematic led idea generation followed with an in depth research effort, results in a concentrated portfolio of high conviction stocks. Conviction in bottom up analysis drives the investment case and ultimate position sizing: * Both quantitative analysis - probability weighted high/low/base case valuations - and qualitative analysis - company meetings, assessing management, the business model, balance sheet strength and likely direction of returns - collectively form Paragon's overall view for each investment case. * Paragon will then allocate weighting to each investment opportunity based on a risk/reward profile, capped to defined investment parameters by market cap, which are continually monitored as part of Paragon's overall risk management framework. The objective of the Paragon Fund is to produce absolute returns in excess of 10% p.a. over a 3-5 year time horizon with a low correlation to the Australian equities market. |
| Manager Comments | The Fund returned -2.5% in January. Paragon noted markets corrected in the last week of the month on excessive optimism, leaving global and local indices mixed. Positive contributors included Pilbara, PointsBet and DeGrey (short), offset by declines in gold and technology holdings impacted by the market sell-off. Paragon's view is that monetary and fiscal stimulus tailwinds remain, with Biden proposing new spending plans at approx. US$2t. They believe the strength in markets is analogous to the recovery and expansion from March 2009 lows. They reiterated their view that this equities bull market is early-stage (and not late). |
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Performance Report: Surrey Australian Equities Fund
11 Feb 2021 - Australian Fund Monitors
The Surrey Australian Equities Fund has risen +16.21% over the past 12 months, outperforming the ASX200 Accumulation Index by +19.32% and taking annualised performance since inception in June 2018 to +10.17% vs the Index's +7.33%.
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11 Feb 2021 - Performance Report: Surrey Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Investment Manager follows a defined investment process which is underpinned by detailed bottom up fundamental analysis, overlayed with sectoral and macroeconomic research. This is combined with an extensive company visitation program where we endeavour to meet with company management and with other stakeholders such as suppliers, customers and industry bodies to improve our information set. Surrey Asset Management defines its investment process as Qualitative, Quantitative and Value Latencies (QQV). In essence, the Investment Manager thoroughly researches an investment's qualitative and quantitative characteristics in an attempt to find value latencies not yet reflected in the share price and then clearly defines a roadmap to realisation of those latencies. Developing this roadmap is a key step in the investment process. By articulating a clear pathway as to how and when an investment can realise what the Investment Manager sees as latent value, defines the investment proposition and lessens the impact of cognitive dissonance. This is undertaken with a philosophical underpinning of fact-based investing, transparency, authenticity and accountability. |
| Manager Comments | The Fund returned -1.49% in January. Top performers included Pointsbet Holdings, Sezzle, Uniti Wireless and Lifestyle Communities. Heading into reporting season, Surrey are comfortable with their portfolio and look forward to the large number of company meetings they have planned. Surrey made various changes to the portfolio over January and ended the month with 5% in cash and 30 individual holdings. Top holdings included Auckland International Airports, Mineral Resources, Omni Bridgeway, Pointsbet and Unitit Group. By sector, the portfolio was most heavily weighted towards the Industrials and IT sectors. |
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Performance Report: AIM Global High Conviction Fund
11 Feb 2021 - Australian Fund Monitors
The AIM Global High Conviction Fund has risen +5.30% over the past 12 months vs AFM's Global Equity Index's +2.59%. Since inception in July 2015, the Fund has returned +4.02% p.a. with an annualised volatility of 11.29%.
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11 Feb 2021 - Performance Report: AIM Global High Conviction Fund
By: Australian Fund Monitors
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| Fund Overview | AIM look for the following characteristics in the businesses they want to own: - Strong competitive advantages that enable consistently high returns on capital throughout an economic cycle, combined with the ability to reinvest surplus capital at high marginal returns. - A proven ability to generate and grow cash flows, rather than accounting based earnings. - A strong balance sheet and sensible capital structure to reduce the risk of failure when the economic cycle ends or an unexpected crisis occurs. - Honest and shareholder-aligned management teams that understand the principles behind value creation and have a proven track record of capital allocation. They look to buy businesses that meet these criteria at attractive valuations, and then intend to hold them for long periods of time. AIM intend to own between 15 and 25 businesses at any given point. They do not seek to generate returns by constantly having to trade in and out of businesses. Instead, they believe the Fund's long-term return will approximate the underlying economics of the businesses they own. They are bottom-up, fundamental investors. They are cognizant of macro-economic conditions and geo-political risks, however, they do not construct the Fund to take advantage of such events. AIM intend for the portfolio to be between 90% and 100% invested in equities. AIM do not engage in shorting, nor do they use leverage to enhance returns. The Fund's investable universe is global, and AIM look for businesses that have a market capitalisation of at least $7.5bn to guarantee sufficient liquidity to investors. |
| Manager Comments | The Fund returned -2.7% in January. AIM noted near-term uncertainty regarding the pace of global vaccine rollouts was the main headwind to the Fund's monthly performance. Businesses owned in the Fund that will benefit from a normalisation of their operations as vaccines are increasingly widely distributed over the course of 2021 continued to face operating constraints due to COVID-related lockdowns. The top five contributors to performance were Prosus, Microsoft, Alphabet, ICON and PayPal. The five largest detractors were Coca-Cola Co., Mastercard, Estee Lauder, Accenture and Heineken. AIM emphasised that their focus will remain on owning high quality businesses with resilient cash streams, strong balance sheets, competitive advantages underpinning high returns on capital and run by capable management that understand capital allocation. They added that they will avoid the speculative end of the market. |
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Performance Report: DS Capital Growth Fund
10 Feb 2021 - Australian Fund Monitors
The DS Capital Growth Fund was flat in January. Over the past 12 months it has risen +17.62% vs the ASX200 Accumulation Index's -3.11%. Since inception in January 2013, the Fund has returned +15.86% p.a. with an annualised volatility of...
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10 Feb 2021 - Performance Report: DS Capital Growth Fund
By: Australian Fund Monitors
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| Fund Overview | The investment team looks for industrial businesses that are simple to understand; they generally avoid large caps, pure mining, biotech and start-ups. They also look for: - Access to management; - Businesses with a competitive edge; - Profitable companies with good margins, organic growth prospects, strong market position and a track record of healthy dividend growth; - Sectors with structural advantage and barriers to entry; - 15% p.a. pre-tax compound return on each holding; and - A history of stable and predictable cash flows that DS Capital can understand and value. |
| Manager Comments | The Fund's capacity to protect investors' capital in falling and volatile markets is highlighted by the following statistics (since inception): Sortino ratio of 1.80 vs the Index's 0.67, average negative monthly return of -1.94% vs the Index's -3.14%, and down-capture ratio of 45%. The Fund's down-capture ratio indicates that, on average, it has fallen less than half as much as the market during the market's negative months. The Fund has also outperformed the Index in all 10 of the Index's 10 worst months since the Fund's inception. |
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Performance Report: Bennelong Long Short Equity Fund
8 Feb 2021 - Australian Fund Monitors
The Bennelong Long Short Equity Fund has returned +4.56% over the past 12 months vs the ASX200 Accumulation Index's -3.11%. Since inception in February 2002, the Fund has risen +15.25% p.a. vs the Index's +7.95%.
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8 Feb 2021 - Performance Report: Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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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. The Bennelong Market Neutral Fund, with same strategy and liquidity is available for retail investors as a Listed Investment Company (LIC) on the ASX. |
| Manager Comments | The Fund's return was flat in January (-0.25%). Bennelong noted retail participants in the US market sparked several dramatic rallies in heavily shorted stocks. The Fund's short portfolio delivered a zero contribution for the month. Seven of the Fund's top ten positive contributors were shorts, and four of the ten largest negative contributors were shorts. Bennelong highlighted that they tend to avoid more heavily shorted stocks. There were a number of updates ahead of reporting season. Some notable ones in the long portfolio included large upgrades from BlueScope and JB Hi-Fi, and strong FUM flow data for Netwealth. Bennelong's view is that recent strength of equity markets reconciles with highly positive liquidity conditions but contrasts with a weak and uncertain economic and corporate earnings backdrop. |
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Performance Report: Insync Global Quality Equity Fund
3 Feb 2021 - Australian Fund Monitors
The Insync Global Quality Equity Fund rose +15.43% over CY20, outperforming AFM's Global Equity Benchmark by +9.22%. Since inception in October 2009, the Fund has returned +13.89% p.a. vs the Index's +11.14%.
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3 Feb 2021 - Performance Report: Insync Global Quality Equity 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 typically of 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. |
| Manager Comments | The Fund's return was flat in December, in line with the Index. Insync believe the outperformance of neglected sectors over the past quarter (e.g. banks, energy & cyclicals) is primarily due to exuberant expectations of much higher growth (from vaccines) and inflation views for the near term. Insync noted Megatrends have proved resilient to the COVID-19 fallout, with many existing long-term trends having been accelerated by the pandemic. These include the move to e-commerce, uptake of contactless payment methods, expansion of cloud-based services, collision of biological science technology and the transition from carbon energy to electric. They added that megatrends are typically not determined by short-term shocks, even those as significant as COVID-19. The Fund's top 10 active holdings at month-end included Nintendo, Walt Disney, Domino's Pizza, PayPal, Dollar General, Qualcomm, Visa, S&P Global, Facebook and Nvidia. |
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Performance Report: Delft Partners Global High Conviction
2 Feb 2021 - Australian Fund Monitors
The Delft Global High Conviction Strategy has returned +14.68% p.a. with an annualised volatility of 11.81% p.a. since inception in August 2011. By contrast, AFM's Global Equity Index has returned +13.86% p.a. with an annualised volatility...
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2 Feb 2021 - Performance Report: Delft Partners Global High Conviction
By: Australian Fund Monitors
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| Fund Overview | The quantitative model is proprietary and designed in-house. The critical elements are Valuation, Momentum, and Quality (VMQ) and every stock in the global universe is scored and ranked. Verification of the quant model scores is then cross checked by fundamental analysis in which a company's Accounting policies, Governance, and Strategic positioning is evaluated. The manager believes strategy is suited to investors seeking returns from investing in global companies, diversification away from Australia and a risk aware approach to global investing. It should be noted that this is a strategy in an IMA format and is not offered as a fund. An IMA solution can be a more cost and tax effective solution, for clients who wish to own fewer stocks in a long only strategy. |
| Manager Comments | The Portfolio returned -0.9% in December. Delft highlighted that, following the results of the US election, the yield curve is steepening as fiscal spending is now likely to accompany ultra low interest rates which they noted typically leads to change in market leadership - Delft currently favour small and value. Delft remain very diversified, with underweight positions in banks and oils and overweight positions in 'true technology' companies and healthcare. Delft like Japan and Asia on valuation, fiscal resilience and improving governance. They see a poor outlook for European profits notwithstanding the 'cheap' market. Notable performers in the portfolio included AES (a US utility company, Shin-Etsu Chemical (Japanese high-end chemicals company), and Discovery (US provider of documentary content). Alibaba fell as investors worried about political interference, and Intel was hit by announcements regarding increased in-sourcing by Apple and Microsoft. The Strategy remains unhedged for AUD$ based investors. |
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Performance Report: Bennelong Twenty20 Australian Equities Fund
2 Feb 2021 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund rose +2.59% in December, outperforming the ASX200 Accumulation Index by +1.53% and taking CY20 performance to +12.62% vs the Index's +1.40%. Since inception in November 2009, the Fund has...
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2 Feb 2021 - Performance Report: Bennelong Twenty20 Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund is managed as one portfolio but comprises and combines two separately managed exposures: 1. An investment in the top 20 stocks of the markets, which the Fund achieves by taking an indexed position in the S&P/ASX 20 Index; and 2. An investment in the stocks beyond the S&P/ASX 20 Index. This exposure is managed on an active basis using a fundamental core approach. The Fund may also invest in securities expected to be listed on the ASX, securities listed or expected to be listed on other exchanges where such securities relate to ASX-listed securities.Derivative instruments may be used to replicate underlying positions and hedge market and company specific risks. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Accumulation Index. The Fund typically holds between 40-55 stocks and thus is considered to be highly concentrated. This means that investors should expect to see high short-term volatility. The Fund seeks to achieve growth over the long-term, therefore the minimum suggested investment timeframe is 5 years. |
| Manager Comments | As at the end of December, the portfolio's weightings had been increased in the Communication, IT, Consumer Staples and Materials sectors, and decreased in the Discretionary, Industrials, Health Care, Financials and REIT's sectors. The portfolio is significantly overweight the Discretionary sector (Fund weight: 32.4%, benchmark weight: 7.7%). |
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Performance Report: Quay Global Real Estate Fund
2 Feb 2021 - Australian Fund Monitors
The Quay Global Real Estate Fund has returned +6.81% p.a. with an annualised volatility of 11.84% since inception in January 2016. The Fund's underlying investees rallied into Christmas along with other risk assets, however, the headwinds...
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2 Feb 2021 - 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 | Key positive contributors included Brixmor (US retail) and Whart REIC (Hong Kong retail). US apartments (Essex, Mid-America) were among the performance drags, along with Hysan (Hong Kong diversified). The Fund returned -9.8% over CY20 which Quay noted was disappointing, however, in constant currency terms the underlying investees delivered a return of -1.2%. This indicates that almost all of the negative returns this year were currency related. Quay added that this return should be seen in light of the extraordinary cost the real estate industry was asked to bear during the pandemic, essentially being asked to shut down, forgive or forgo rent, and in some jurisdictions prevented from evicting tenants whether they had the ability to pay rent or not. As was the case after the GFC in 2009, Quay believe attractive long-term total returns are available for investors in global listed real estate. Unlike 2009, they don't believe it is available across all sectors. They believe the best opportunities are those with mispriced quality real estate, with strong balance sheets, sensible dividend payout policies and best-in-class management. |
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