NEWS
Performance Report: Frazis Fund
29 Jun 2020 - Australian Fund Monitors
The Frazis Fund rose +16.7% in May, outperforming AFM's Global Equity Index by +14.6% and taking 12-month performance to +12.85% versus the Index's +9.83%. CYTD the Fund has returned +9.97% against the Index's -4.25%.
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29 Jun 2020 - 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 | Frazis have continued reducing their holdings in software firms that have doubled or tripled from the lows and are reinvesting the proceeds into areas they think are next most likely to benefit, such as renewables. At the end of May, the Fund held significantly more cash than usual at over 15% of the portfolio. Frazis' base case remains that economic activity is depressed around the world on average, with pockets of the world, such as the technology sectors, experiencing a true boom. They Fund has remained invested in over 35 stocks across the manager's core thematics: software, e-commerce, digital health, life sciences, renewable energy, and companies changing the way people live. |
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Performance Report: Surrey Australian Equities Fund
26 Jun 2020 - Australian Fund Monitors
The Surrey Australian Equities Fund rose +11.30% in May, outperforming the ASX200 Accumulation Index by +6.94% and taking annualised performance since inception in June 2018 to +3.05% versus the Index's +1.81%. The Fund has outperformed...
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26 Jun 2020 - 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 | Given the large number of company meetings Surrey have had and the insights gained into how businesses are dealing with and recovering from the COVID-19 crisis, coupled with record low interest rates, Surrey maintain an outlook of cautious optimism. In addition to management meetings, there were also a number of company announcements throughout the month. For companies such as Xero, Appen, Service Stream and Austal, these are discussed in Surrey's latest report. The Fund's top holdings at month-end included Appen (APX), Omni Bridgeway (OBL), Opticom (OPC), Saracen Mineral (SAR) and Xero Limited (XRO). By sector, the Fund was most heavily weighted towards the Industrials and IT sectors. |
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Performance Report: DS Capital Growth Fund
26 Jun 2020 - Australian Fund Monitors
The DS Capital Growth Fund rose +8.65% in May, outperforming the ASX200 Accumulation Index by +4.29% and taking annualised performance since inception in December 2012 to +14.15% versus the Index's +7.82%.
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26 Jun 2020 - 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 achieve superior risk adjusted returns whilst avoiding the market's downside is highlighted by the following statistics (since inception): Sharpe ratio of 1.06 vs the Index's 0.49, Sortino ratio of 1.52 vs the Index's 0.55, and down-capture ratio of 45.22%. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
26 Jun 2020 - Australian Fund Monitors
The Gyrostat Absolute Return Income Equity Fund has returned +10.15% over the past 12 months and +5.07% p.a. with an annualised volatility of 4.22% since inception in December 2010. Since inception, the Fund has had no quarterly NAV...
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26 Jun 2020 - Performance Report: Gyrostat Absolute Return Income Equity Fund
By: Australian Fund Monitors
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| Fund Overview | The investment objective is to deliver regular and stable income stream (from ASX20 dividends) in a low interest rate environment with capital security - a 'highly-defensive' asset class. Gyrostat has operated for 37 consecutive quarters within a 'hard' pre-defined risk parameter (no more than 3% capital at risk with the Fund's maximum draw-down 2.2% in any circumstances) always in place, delivering regular income by passing through ASX-20 dividends, and meeting returns guidance based upon market conditions (demonstrating increasing returns with market volatility). The Fund buys and holds ASX-20 and international assets with lowest cost protection always in place with upside. It is a conservative asset allocation. Note that Gyrostat have expanded their international assets within the Fund to include SP500, FANGS, Nikkei, Hang Seng, MSCI China, MSCI Developed and Developing markets. Advances in investment risk management enable cost-effective protection to always be in place for a 'hard' defined risk parameter (say no more than 3% capital at risk). Returns are designed to increase as volatility levels increase, as this provides more opportunities to lower protection costs. Investment Objectives: - Returns: 6% - 8% pa in trending markets, greater than 8% pa in volatile markets, BBSW90 + 3% in stable markets - Income: Minimum cash rate + 3% paid semi-annually (currently 4.0% p.a.) from dividends and franking credits - Protection: No quarterly NAV draw-downs exceeding 3% Also includes a 'tail hedge' for gains on large market falls. |
| Manager Comments | Market conditions in May enabled Gyrostat to enter additional positions, allowing the Fund to achieve more elevated returns on any future uplift in market volatility. The Fund's strategy allows for up to 15% of assets to be invested in international assets, with positions in the S&P500, NASDAQ, Hang Seng, MSCI Developed and emerging markets (among others). Gyrostat anticipate increasing levels of 'late cycle' market volatility given elevated geopolitical tensions, historically high debt levels and elevated valuations. |
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Performance Report: Bennelong Twenty20 Australian Equities Fund
25 Jun 2020 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund rose +6.58% in May, outperforming the ASX200 Accumulation Index by +2.22%. Since inception in November 2009, the Fund has returned +9.27% p.a. versus the Index's +6.58%.
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25 Jun 2020 - 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 May, the portfolio's weightings had been increased in the Discretionary, Industrials, Communications and IT sectors, and decreased in the Materials, Consumer Staples, Health Care and Financials sectors. The portfolio's weightings in the Energy and REIT's sectors remained unchanged at 1.2% and 3.4% respectively. Bennelong believe it is more difficult to outperform when investing in the top 20 stocks on the ASX given that they are well known, heavily researched and have more broker and media coverage. They believe there is more opportunity to outperform when investing in ex-20 stocks, which they note tend to be priced less efficiently. At month-end, indexed positions in the top 20 stocks made up 56% of the portfolio while the other 44% comprised active positions in stocks outside of the top 20. |
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Performance Report: Australian Eagle Trust Long-Short Fund
25 Jun 2020 - Australian Fund Monitors
The Australian Eagle Trust Long-Short Fund rose +9.97% in May, outperforming the ASX200 Accumulation Index by +5.61% and taking annualised performance since inception in July 2016 to +16.73% p.a. versus the Index's +6.80%.
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25 Jun 2020 - Performance Report: Australian Eagle Trust Long-Short Fund
By: Australian Fund Monitors
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| Manager Comments | The largest positive contributions in May came from long positions in Pushpay Holdings, Fortescue Metals Group and Evolution Mining. The largest detractors were a long position in CSL and short positions in Flight Centre Travel Group and Virgin Money UK. The Fund had 32 long positions and 25 short positions at month-end, with the largest exposure being to medical devices & services and technology stocks. The Fund ended the month with relatively less exposure to banking and real estate stocks. |
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Performance Report: Ark Global Fund - Class B AUD Hedged
24 Jun 2020 - Australian Fund Monitors
The Ark Global Fund (hedged) has returned +7.63% on an annualised basis with an annualised volatility of 9.58% since inception in July 2017. Over this time it has achieved a down-capture ratio of -52.5%, highlighting the Fund's capacity to...
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24 Jun 2020 - Performance Report: Ark Global Fund - Class B AUD Hedged
By: Australian Fund Monitors
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| Fund Overview | The investment objective of the Fund is to achieve long-term capital appreciation with low correlation to global equity markets through investment in the Underlying Fund. Fund One is a global macro fund that utilises quantitative research including machine learning techniques and fully automated trading algorithms which will aim to generate positive uncorrelated returns relative to any significant equity benchmark. The traded instruments are either major FX pairs or the most liquid exchange traded stock index, bond, and commodity futures across North America, Europe and Asia Pacific. The algorithm backtests over 10 years of tick data and in order to do so effectively requires machine learning to filter noise and identify meaningful signals, which results in statistically significant prediction of price movements. In production this processing is done in real time and the portfolio reacts to asset movements by rebalancing automatically to the desired risk exposure through the market impact optimised execution logic. Risk management layers built into the algorithm have been developed using the experience the team has gained from their decades in highly liquid fast-moving markets in the proprietary High Frequency Trading world. This allows the system to trade autonomously but safely to all trading opportunities and potential system issues, and to alert the team to any behaviour outside of strictly controlled bounds. The Fund is a 'feeder fund' which indirectly gains exposure to the underlying assets by investing all or substantially all of its assets in the Underlying Fund. The Fund may retain a certain amount of cash from the investment in the Fund for the purpose of payment of costs, fees, hedging and expenses. |
| Manager Comments | The Fund returned -4.4% in May. The best performing assets for the month were: SMI Index (+1.34% of NAV), Gold (+0.23% of NAV) and Soybean Oil (+0.22% of NAV). The worst performing assets were: Hang Seng Index (-0.75% of NAV), USD/CAD (-0.79% of NAV) and Silver (-2.71% of NAV). |
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Performance Report: Bennelong Emerging Companies Fund
24 Jun 2020 - Australian Fund Monitors
The Bennelong Emerging Companies Fund rose +9.89% in May, outperforming the ASX200 Accumulation Index by +5.53%. The Fund has returned +22.81% p.a. since inception in November 2017 against the Index's +3.14%.
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24 Jun 2020 - Performance Report: Bennelong Emerging Companies Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund may invest in securities expected to be listed on the ASX within 12 months. The Fund may also invest in securities listed, or expected to be listed, on other exchanged where such securities relate to ASX-listed securities |
| Manager Comments | May saw a continuation of the recovery in the stock market. Bennelong noted this was particularly evident among micro and small cap stocks. Despite the high month-to-month stock price volatility, Bennelong believe the companies in which the Fund invests are incrementally building value as the months turn over. The Fund has taken the volatility as an opportunity to make a number of changes to the portfolio that Bennelong think will enhance the risk-return settings. At the same time, they believe the Fund remains reasonably diversified across sector and risk-return drivers. The top holdings include Viva Leisure (gyms), Mader Group (mining services) and BWX (personal care products). |
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Performance Report: Loftus Peak Global Disruption Fund
23 Jun 2020 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund rose +3.05% in May, outperforming AFM's Global Equity Index by +0.95% and taking annualised performance since inception to +23.18% p.a. versus the Index's +12.60%.
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23 Jun 2020 - Performance Report: Loftus Peak Global Disruption Fund
By: Australian Fund Monitors
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| Fund Overview | The investment process involves a combination of top-down analysis with fundamental bottom-up qualitative and quantitative research to derive a risk-adjusted discounted cash flow (DCF) valuation of companies in the target universe. The investment team will generally buy stocks from the pool of securities that are trading below Loftus Peaks' valuation and sell them when they are trading above Loftus Peak's valuation. The approach allows for both fundamental accounting information as well as market-oriented inputs to be factored into the portfolio construction process. Loftus Peak's model typically does not rely on leverage to deliver investment returns and specifically takes into account risk in the valuation process. Capital preservation can be managed by holding up to 50% cash. Index and currency options and futures may also be used to manage risk. |
| Manager Comments | The best performing investments in the strategy were in companies with well-developed digital strategies allowing users to work and play while sheltering in place - companies such as Amazon, Microsoft, Nvidia and Nutanix. Loftus Peak remain confident these companies will continue to deliver in a post-COVID world, especially those with strong cashflows (Apple) and successful business models (Netflix). The main detractors were Roku and Amazon. Loftus Peak noted investors appeared wary of Amazon's current quarter strategy which will see the company deploy all of its quarterly cashflow (around US4$b) to hardening its business against biohazards such as COVID-19. Roku's share price continues to be weighed down by the market's expectation of additional competitive pressures which Loftus Peak believe are overstated. With many investee companies approaching valuation targets, Loftus Peak took the opportunity to take profits and raise the Fund's cash weighting during the month. |
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Performance Report: Insync Global Capital Aware Fund
22 Jun 2020 - Australian Fund Monitors
The Insync Global Capital Aware Fund rose +7.40% in May, outperforming AFM's Global Equity Index by +5.3% and taking 12-month performance to +29.64% versus the Index's +9.83%. Since inception in October 2009, the Fund has returned +12.11%...
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22 Jun 2020 - 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 they continue to hold companies exposed to Megatrends that they believe will deliver sustainable profitable growth in a post-pandemic environment. Their view is that COVID-19 simply brought forward the demise of many businesses that were already in structural decline or on shaky financial ground. The top three Megatrends in the portfolio by weighting as at the end of May were the 'Age related health solutions' megatrend (15%), the 'Digitisation' megatrend (13%), and the 'Cashless society' megatrend (10%). The Fund's top 5 holdings at month-end were PayPal, Adobe, JD Sports Fashion, S&P Global and Dominos. The Fund continues to have a portion of the underlying US dollar exposure hedged back to the Australian dollar. |
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