NEWS
Performance Report: Datt Capital Absolute Return Fund
4 Mar 2020 - Australian Fund Monitors
The Datt Capital Absolute Return Fund returned +2.02% in January. Since inception in August 2018, the Fund has returned +10.58% p.a. with an annualised volatility of 9.92%.
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4 Mar 2020 - Performance Report: Datt Capital Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | Our investment objectives are: 1) To minimise the risk of permanent capital loss 2) Generate a net return of 10% through the economic cycle An unconstrained, concentrated approach focused on superior risk-adjusted returns. The investment strategy: - targets long-term capital growth in a prudent manner, with an emphasis on capital preservation and low volatility in returns - aims to outperform in markets where equities are down - diversifies investments across asset classes and duration to reduce risk while maintaining relatively concentrated exposure to attractive investment opportunities - is an application of the Manager's investment process, that has no institutional constraints and is completely benchmark unaware |
| Manager Comments | During January the Fund evaluated one debt deal and made no new investments. Datt Capital continue to monitor a number of fixed income instruments in the distressed and special situation space. The Fund's equity exposure increased with a new position being taken in Alkane Resources. The Fund's current exposures include: Afterpay, Adriatic Metals, Alice Queen, Alkane Resources, Argonaut Resources, Valmec, Whitehaven Coal and Yandal Resources. Datt Capital believe the portfolio is well positioned and exposed to a number of positions with near term catalysts. They noted they have a full pipeline of potential investment opportunities which they consider materially undervalued and will carefully consider for inclusion into the portfolio at the appropriate time. |
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Performance Report: Insync Global Quality Equity Fund
3 Mar 2020 - Australian Fund Monitors
The Insync Global Quality Equity Fund returned +5.23% in January, outperforming AFM's Global Equity Benchmark by +1.5% and taking 12-month performance to +38.03%. Since inception in October 2009, the Fund has returned +14.18% versus the...
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3 Mar 2020 - 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 | Positive contributors in January included Intuit, Visa, Adobe, S&P Global, and PayPal. Detractors were Bookings.com, Treasury Wine Estates, Boston Scientific, Walt Disney and Estee Lauder. The Fund continues to have no currency hedging in place as Insync consider the main risks to the AUD to be skewed to the downside. Insync believe the prevailing low growth and low inflation environment is unlikely to change in the medium term. |
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Performance Report: Touchstone Index Unaware Fund
3 Mar 2020 - Australian Fund Monitors
The Touchstone Index Unaware Fund returned +2.70% in January, taking 12-month performance to +21.59%. Since inception in April 2016, the Fund has returned +12.06% p.a. with an annualised volatility of 9.81%.
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3 Mar 2020 - Performance Report: Touchstone Index Unaware Fund
By: Australian Fund Monitors
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| Fund Overview | The portfolio is constructed using Touchstone's Quality-At-a-Reasonable-Price ('QARP') investment process. QARP is a fundamental bottom-up process, however, it also incorporates a top-down risk management framework designed to successfully manage the portfolio during varying market conditions and economic cycles. The Touchstone Fund is concentrated, typically holding between 15-20 stocks. No individual stock will ever make up more than 10% of the portfolio at any one time. The Investment Manager may temporarily exceed the exposure limits of the Fund occasionally, particularly during periods of market volatility, to allow for holdings in excess of this 10% limit where the increase in value of the underlying security is due to market movement. The Fund may also hold between 0-50% of the portfolio in cash. The Fund has a high level of associated risk, therefore, the minimum suggested investment time-frame is 5 years. |
| Manager Comments | As at the end of January, the Fund held 21 positions with a median position size of 4.5%. The portfolio's holdings had an average forward year price/earnings of 17.6, forward-year EPS growth of 7.1%, forward-year tangible ROE of 22.5% and forward-year dividend yield of 3.8%. The Fund's cash weighting was decreased to 8.4% from 9.3% as at the end of December. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
3 Mar 2020 - Australian Fund Monitors
The Gyrostat Absolute Return Income Fund has returned +5.50% over the past 12 months versus the RBA Cash Rate's +1.10%. Since inception in December 2010, the Fund has returned +4.35% p.a. with an annualised volatility of 3.73%.
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3 Mar 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 - an 'alternative - defensive' asset class. Gyrostat has for 34 consecutive quarters operated within a 'hard' defined risk parameter (no more than 3% capital at risk with our maximum draw-down 2.2% in any circumstances) always in place, delivered regular income at a minimum BBSW90 + 3% by passing through ASX-20 dividends, and met returns guidance based upon market conditions (demonstrating increasing returns with market volatility). The fund buys and holds ASX-20 shares with lowest cost protection always in place with upside. It is an 'alternative - defensive' conservative asset allocation. 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 4.2% 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 | The Fund is a solution for falling interest rates. It has a 'conservative' asset allocation and operates with a 'hard' defined risk parameter (no quarterly NAV drawdowns exceeding 3%), delivered regular equity income (by passing through ASX20 dividends), and has provided superior returns during periods of heightened market volatility due to the Fund's tail hedge on large gains for large market falls. Gyrostat noted they anticipate increasing levels of 'late cycle' market volatility with geopolitical tensions elevated, historically high debt levels and elevated valuations. |
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Performance Report: Ark Global Fund - Class B AUD Unhedged
2 Mar 2020 - Australian Fund Monitors
The Ark Global Fund (Unhedged) rose +6.33% in January, outperforming AFM's Global Equity Benchmark by +2.6% and taking annualised performance since inception in July 2017 to +15.81% p.a. with an annualised volatility of 10.74%.
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2 Mar 2020 - Performance Report: Ark Global Fund - Class B AUD Unhedged
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 best performing assets for the month were: Gold (+2.61% of NAV), Topix (+2.13% of NAV), and 10 Year Government of Canada Bond (+1.68% of NAV). The worst performing assets for the month were: E-mini & S&P 500 (-1.90% of NAV), Silver (-1.89% of NAV), and Copper (-1.73% of NAV). |
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Performance Report: Bennelong Concentrated Australian Equities Fund
28 Feb 2020 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund returned +5.53% in January, outperforming the ASX200 Accumulation Index by 0.55%. Since inception in February 2009, the Fund has returned +17.11% p.a. versus the Index's +11.22%.
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28 Feb 2020 - Performance Report: Bennelong Concentrated Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The overriding objective of the Concentrated Australian Equities Fund is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings, while satisfying our stringent quality criteria. Bennelong's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The portfolio typically consists of 20-35 high-conviction stocks from the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to ASX-listed securities. Derivative instruments are mainly used to replicate underlying positions and hedge market and company specific risks. |
| Manager Comments | As at the end of January, the portfolio's weightings had been increased in the Health Care, Materials, IT, Industrials and Financials sectors, and decreased in the Discretionary, Consumer Staples and Communication sectors. The Fund's top holdings included CSL, BHP Billiton and James Hardie Industries PLC. The Fund aims to invest in a concentrated portfolio of high quality companies with strong growth outlooks, underestimated earnings momentum and underestimated prospects. By comparison with the ASX300 Accumulation Index, the portfolio's holdings, on average, have a higher return on equity, lower debt/equity, higher sales growth, higher EPS growth, higher price/earnings and lower dividend yield which collectively indicate that the Fund is in line with its investment objectives. |
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Performance Report: DS Capital Growth Fund
28 Feb 2020 - Australian Fund Monitors
The DS Capital Growth Fund rose +1.85% in January, taking 12-month performance to +26.19% versus the ASX200 Accumulation Index's +24.72%. Since inception in December 2012, the Fund has returned +15.51% p.a. with an annualised volatility of 7.03%.
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28 Feb 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 Sharpe and Sortino ratios for performance since inception, 1.84 and 3.83 respectively, by contrast with the Index's Sharpe of 0.85 and Sortino of 1.27, highlight the Fund's capacity to achieve superior risk-adjusted returns whilst avoiding the market's downside volatility over the long-term. The Fund's down-capture ratio for performance since inception of 18.16% indicates that, on average, the Fund has significantly outperformed during the market's negative months. |
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Performance Report: Harvest Lane Asset Management Absolute Return Fund
28 Feb 2020 - Australian Fund Monitors
The Harvest Lane Absolute Return Fund returned +0.27% in January. Since inception in July 2013, the Fund has returned 7.95% p.a. with an annualised volatility of 6.70%. The manager noted the Fund was almost fully invested at month-end,...
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28 Feb 2020 - Performance Report: Harvest Lane Asset Management Absolute Return Fund
By: Australian Fund Monitors
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| Fund Overview | Harvest Lane Asset Management employs a conservative, highly selective and opportunistic approach. Using their extensive knowledge in the area of corporate actions, the Fund's managers assess each opportunity based on a thoughtful, diligent and disciplined process and invest where they believe an opportunity exists to generate above average investment returns relative to the risk incurred. Investment decisions are made without speculating on market direction, with rigid risk controls enforced to minimise the risk of large losses of investor capital. The Fund invests in securities that are predominantly listed on the ASX and occasionally in those listed in other developed markets. Equity swaps and other derivatives may be used at times to reduce risk. The fund typically holds high levels of cash in the absence of sufficiently attractive opportunities to deploy investor capital in accordance with its objectives. |
| Manager Comments | Corporate activity ramped up in the second half of January. One new position in Windlab Limited was established following a non-binding offer from Federation Asset Management, but the majority of the Fund's activity was focused on existing positions in the portfolio or existing deals that saw Harvest Lane re-enter as the risk-reward dynamics became more favourable. The largest detractor for the month was the Fund's residual holding in Panoramic Resources Limited. Fresh from completing a $32m equity raise in mid-January, it took only two weeks for the company to realise it still wasn't adequately funded and was likely in breach of existing debt covenants. Due to the complexities of the company's required funding and management's inability to understand it, Harvest Lane exited their position for safety. |
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Performance Report: Frazis Fund
28 Feb 2020 - Australian Fund Monitors
The Frazis Fund rose +11.4% in January, outperforming AFM's Global Equity Benchmark by +7.67% and taking 12-month performance to +27.22%.
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28 Feb 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 | The Frazis Fund rose +11.4% in January, outperforming AFM's Global Equity Benchmark by +7.67% and taking 12-month performance to +27.22%. The software firms the Fund was buying heavily late in 2019 rebounded strongly, with Afterpay moving to new highs. The Fund also saw strong performance from ASX-listed life sciences companies such as PolyNovo and Avita which are discussed in more depth in the latest report. Frazis noted, given the strong start to the year, there's an inclination to trim and realise profits, however they're going to stick to their long-term investment philosophy. So far the Fund's investment theses are on track during reporting season. |
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Performance Report: Bennelong Twenty20 Australian Equities Fund
28 Feb 2020 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund rose +5.21% in January, taking 12-month performance to +28.82% versus the ASX200 Accumulation Index's +24.72%. Since inception in November 2009 the Fund has returned +11.05% p.a. versus the...
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28 Feb 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 | Bennelong remain constructive on equities. They believe valuations are relatively attractive in the context of low rates and by comparison with the competition (bonds, term deposits and property), corporate fundamentals are supportive with some earnings growth, generally strong balance sheets and decent cash flows, and investor sentiment is still quite cautious. They also highlight the following uncertainties impacting markets at present - ongoing US-Sino trade frictions, remaining Hong Kong tensions, Brexit fallout, the US Presidential election, coronavirus, and a sluggish Australian economy. |
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