NEWS
Performance Report: Surrey Australian Equities Fund
7 May 2020 - Australian Fund Monitors
The Surrey Australian Equities Fund rose +16.9% in April, outperforming the ASX200 Accumulation Index by +8.12% as many of the Fund's companies recovered from the oversold levels seen during March.
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7 May 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 | During the month Surrey were in active contact with in excess of 70 companies as they updated their existing holdings, searched for new ideas and analysed how various industries were tracking. The Fund's top holdings as at the end of April included Appen (APX), Omni Bridgeway (OBL), Opticom (OPC), Saracen Minerals (SAR) and Xero Limited (XRO). By sector, the Fund was most heavily weighted towards the Industrials and IT sectors. The Fund holdings remain in high quality companies with strong balance sheets and solid outlooks that Surrey believe will continue to outperform over time. |
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Performance Report: Ark Global Fund - Class B AUD Unhedged
1 May 2020 - Australian Fund Monitors
The Ark Global Fund (unhedged) rose +11.45% in March, outperforming AFM's Global Equity Index by +19.52% and taking annualised performance since inception to +18.45% versus the Index's +8.92%.
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1 May 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: 10 year Canadian Government bond futures (+3.17% of NAV), TOPIX futures (+2.34% of NAV), and E-mini Russell 2000 futures (+2.16% of NAV). The worst performing assets were: E-mini NASDAQ 100 future (-1.22% of NAV), Euro Stoxx 50 future (-4.07% of NAV) and ASX200 Index future (-4.97% of NAV). |
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Performance Report: Wheelhouse Global Equity Income Fund
30 Apr 2020 - Australian Fund Monitors
The Wheelhouse Global Equity Income Fund outperformed AFM's Global Equity Index by +7.48% in March, returning -0.59%. Over the quarter the Fund rose +2.17%, outperforming the Index by +12.13%. Since inception in May 2017, the Fund has...
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30 Apr 2020 - Performance Report: Wheelhouse Global Equity Income Fund
By: Australian Fund Monitors
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| Fund Overview | To pursue this objective, the Investment Manager is responsible for actively managing, monitoring and tailoring the integration of derivative contracts alongside the Morningstar Portfolio, while taking into account changing market and stock specific conditions. The Investment Manager is responsible for maximising the structural benefits of short option positions (lowered Volatility, improved capital preservation, higher income generation), whilst mitigating, minimising and monitoring the structural negatives (variable market exposure, option expiries, collateral management and asymmetric return profiles). In addition, long derivatives positions are also used to enhance the capital preservation characteristics of the Fund in more extreme market movements. As a consequence of the integration of Derivatives, returns of the strategy, intra-cycle, are expected to vary from the underlying Morningstar Portfolio due to these characteristics. For example in weak markets, or in extended sideways markets, the Fund is expected to outperform relative to the Morningstar Portfolio. Conversely in strong positive markets the Fund is expected to underperform. |
| Manager Comments | The March return comprised -5.64% from the portfolio (in USD), and +5.05% from the weakening of the Australian dollar versus the US dollar. Top contributors included Kao Corp, Veeva Systems, Novo Nordisk, Roche and Reckitt Benckiser. Key detractors included Guidewire Software, United Technologies, Microchip Technology, Zimmer Biornet and Enbridge. |
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Performance Report: Delft Partners Global High Conviction
29 Apr 2020 - Australian Fund Monitors
The Delft Global High Conviction strategy outperformed AFM's Global Equity Index by +0.88% in March. Since inception in July 2011, the strategy has returned +14.85% p.a. versus the Index's annualised return of +12.97% over the same period.
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29 Apr 2020 - 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 | Delft noted companies and analysts currently have no idea about the near-term outlook for earnings. Delft's view is that they are going to be down or evaporate. They were defensively positioned into this but have seen significant declines in some equities they liked. Notable contributors over the quarter included Gilead, General Mills, Verizon, NTT. Key detractors included AXA, Barratt Developments, Celanese Corp. They remain unhedged for AUD based investors. |
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Performance Report: Insync Global Quality Equity Fund
28 Apr 2020 - Australian Fund Monitors
The Insync Global Quality Equity Fund has returned +14.63% over the past 12 months against AFM's Global Equity Index's +2.72%. Since inception in October 2009, the Fund has returned +12.74% p.a. versus the Index's +10.23%.
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28 Apr 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 | The Fund returned -7.89% in March against the Index's -8.07%. As the Australian dollar fell significantly against the USD dollar, Insync hedged back into AUD a portion of the Fund's USD exposure. Insync believe the portfolio is well positioned for the recovery in markets. Their view is that large-scale operations with the strongest balance sheets, a long runway for growth due to global megatrends, and effective capital allocators are going to be the greatest beneficiaries as global economies start to recover. They noted the Fund's global megatrend companies are less sensitive to the economic cycle or crisis and have therefore have not had to make significant changes to the portfolio. |
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Performance Report: Ark Global Fund - Class B AUD Hedged
24 Apr 2020 - Australian Fund Monitors
The Ark Global Fund (hedged) returned +5.06% in March, outperforming AFM's Global Equity Index by +13.13%. The Fund's strategy has returned +7.58% with a volatility of 9.98% over the past 12 months versus the Index's return of +2.72% with...
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24 Apr 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 best performing assets for the month were: 10 year Canadian Government bond futures (+3.17% of NAV), TOPIX futures (+2.34% of NAV), and E-mini Russell 2000 future (+2.16% of NAV). The worst performing assets were: E-mini NASDAQ 100 future (-1.22% of NAV), Euro Stoxx 50 future (-4.07% of NAV) and ASX200 Index future (-4.97% of NAV). |
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Performance Report: Bennelong Kardinia Absolute Return Fund
23 Apr 2020 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund outperformed the ASX200 Accumulation Index by +16.33% in March, returning -4.32%. Since inception in May 2006, the Fund has returned +8.58% p.a. with an annualised volatility of 7.22%. By...
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23 Apr 2020 - Performance Report: Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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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 | In March, the Fund's short book and low net market exposure protected the portfolio from the significant coronavirus-induced market decline. The Short Book contributed +600 basis points to performance. Other positive contributors included Fisher & Paykel, Fortescue, Jumbo Interactive and Rio Tinto. Key detractors included Macquarie, CBA, Aristocrat Leisure, Charter Hall and CSL. Net equity market exposure was increased from -5.6% to +28.4% (36.1% long and 7.7% short) during the month. Key changes to the portfolio included the closure of most of the Fund's individual stock shorts and a significantly reduced short position in Share Price Index Futures, partially offset by the sale of a significant portion of the long book. Kardinia also added a number of new long positions including Fortescue Metals, Fisher & Paykel Healthcare and JB Hi-Fi. |
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Performance Report: Insync Global Capital Aware Fund
22 Apr 2020 - Australian Fund Monitors
The Insync Global Capital Aware Fund outperformed AFM's Global Equity Index by +3.69% in March, taking 12-month performance to +19.62% versus the Index's +2.72%. Since inception in October 2009, the Fund has returned +10.92% p.a. with an...
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22 Apr 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 | In March, Insync sold down all remaining index put positions as volatility measured by the VIX index approached all-time highs mid-month, reflecting extreme fear and panic by investors. They also hedged a portion of the Fund's USD exposure back into Australian dollars as the Australian dollar fell significantly against the USD. Insync believe the portfolio is well positioned for the recovery in markets. Their view is that large-scale operations with the strongest balance sheets, a long runway for growth due to global megatrends and effective capital allocators are going to be the greatest beneficiaries as global economies start to recover. Insync noted the Fund's global megatrend companies are less sensitive to the economic cycle or crisis and have therefore not had to make significant changes to the portfolio. |
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Performance Report: DS Capital Growth Fund
21 Apr 2020 - Australian Fund Monitors
The DS Capital Growth Fund has outperformed the ASX200 Accumulation Index by +7.66% over the past 12 months. Since inception in December 2012, the Fund has returned +11.19% p.a. versus the Index's +6.15%.
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21 Apr 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 protect investor capital in falling markets is highlighted by the following statistics (since inception): Sortino ratio of 1.15 versus the Index's 0.39, down-capture ratio of 45.22%, and an average negative monthly return of -2.06% versus the Index's -3.12%. DS Capital expect the current downturn to present many opportunities to the patient investor with a long-term view. They believe the evolution of the crisis will feature a total reset of earnings expectations and operating conditions along with many capital raisings. They noted every bear market lays the seeds for the next bull market and they are excited by the number of opportunities being worked on by the investment team. |
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Performance Report: Loftus Peak Global Disruption Fund
20 Apr 2020 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund outperformed AFM's Global Equity Index by +5.44% in March, returning -2.63%. Since inception in November 2016, the Fund has returned +20.93% p.a. versus the Index's +11.24%.
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20 Apr 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 | Top contributors in March included Apple, Netflix, Amazon and Tencent. Key detractors were Google, Qualcomm and Roku. The Australian dollar depreciated -5.1% over the month against the US dollar, which meant the value of the Fund's US dollar positions increased. As at 31 March 2020, the Fund carried a foreign currency exposure of 93%, giving it the ability to participate in any Australian dollar rebound from its decade-low levels. At month end, the Fund was 89% invested in 24 holdings with the balance in cash. |
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