NEWS
Performance Report: Bennelong Long Short Equity Fund
12 Dec 2019 - Australian Fund Monitors
The Bennelong Long Short Equity Fund rose +2.84% in November, taking annualised performance since inception in February 2002 to +15.47% p.a. with an annualised volatility of 12.39%.
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12 Dec 2019 - 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 | In November, the number of positive and negative pairs was equal, however none of the negative pairs made a significant return. The dominant sector contribution was Industrials, with Healthcare a distant second. The Fund's top pair was ALS (ALQ) / Aurison (AZJ). ALS reported their September half results with the highest improved and above forecast margins in the Life Sciences division. The second best pair was Qantas (QAN) / Flight Centre (FLT), with Qantas disclosing bullish long-term financial targets in their investor day presentation. Third best was Macquarie (MQG) / Bendigo Bank (BEN) with Macquarie's September half result slightly ahead of estimates. |
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Performance Report: Paragon Australian Long Short Fund
11 Dec 2019 - Australian Fund Monitors
The Paragon Australian Long Short Fund has risen +17.13% over the past 12 months as returned +9.98% p.a. since inception in March 2013.
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11 Dec 2019 - 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 Paragon Australian Long Short Fund has risen +17.13% over the past 12 months as returned +9.98% p.a. since inception in March 2013. By contrast, the ASX200 Accumulation Index has returned +9.12% p.a. since the fund began. The Fund's down-capture ratio of 42.2% indicates that, on average, the Fund has significantly outperformed during the months the market has fallen since inception. The Fund returned +0.2% in November. Positive contributors included Adriatic, Alacer Gold, Xero and PoistBet. These were offset by declines in Agrimin, Atrum and Alkane. The Fund ended the month with 26 long positions and 6 short position. Paragon discuss their views on Adriatic Metals (ADT) in depth in their latest monthly report. Adriatic Metals is one of the Fund's key long positions. Paragon noted ADT released an outstanding scoping study for its high-grade polymetallic Vares project during the month. They believe that, despite the stock breaking all-time highs, there remains considerable upside. |
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Performance Report: Gyrostat Absolute Return Income Equity Fund
10 Dec 2019 - Australian Fund Monitors
The Gyrostat Absolute Return Income Fund has risen +6.37% over the past 12 months and returned +4.35% p.a. with an annualised volatility if 3.76% since inception in December 2010.
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10 Dec 2019 - 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 has for 35 consecutive quarters since inception operated 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: Surrey Australian Equities Fund
9 Dec 2019 - Australian Fund Monitors
The Surrey Australian Equities Fund returned +3.1% in November, taking 12-month performance to +17.99% and annualised performance since inception in June 2018 to +6.23%.
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9 Dec 2019 - 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's November performance was driven by a range of different companies, highlighting the Fund's diversity. Surrey have been lifting their position in Catapult (CAT) on the back of a strengthened management team, strong product offering, growing cashflows and valuation. Similarly, the Fund's weightings in Xero (XRO) and Pointsbet (PBH) have been increasing and have been of benefit. Negative contributors included Smart Group (SIQ) and Sezzle (SZL). Surrey remain confident in the long-term prospects of both companies. Surrey noted they remain positive on the outlook for local and global equity markets. They encourage investors to continue watching the US 10-year bond yield which they believe is providing a very positive relative valuation benchmark for stocks |
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Performance Report: Australian Eagle Trust Long-Short Fund
6 Dec 2019 - Australian Fund Monitors
The Australian Eagle Trust Long-Short Fund rose +3.80% in November, outperforming the ASX200 Accumulation Index by +0.52% and taking annualised performance since inception in July 2016 to +20.61% versus the Index's +12.93%.
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6 Dec 2019 - Performance Report: Australian Eagle Trust Long-Short Fund
By: Australian Fund Monitors
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| Manager Comments | The portfolio's largest positive contributions for the month came from long positions in Xero, Cochlear and CSL, while the largest detractors were short positions in Virgin Money UK plc, Caltex Australia and a long position in National Australia Bank. The Fund had 30 long positions and 19 short positions with largest exposure to medical devices & services and technology stocks. There was relatively less exposure to the financial services and materials stocks. |
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Performance Report: Wheelhouse Global Equity Income Fund
6 Dec 2019 - Australian Fund Monitors
The Wheelhouse Global Quality Equity Fund returned -0.78% in October. Since inception in May 2017, the Fund has returned +8.93% p.a. with an annualised volatility of 7.35%.
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6 Dec 2019 - 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 Fund's October return comprised +1.30% from the portfolio (in USD) and -2.08% from the strengthening of the Australian dollar against the US dollar. Top contributors included Amgen, Kao Corp, Western Union, Bristol-Myers Squibb and UnitedHealth Group. Detractors included Anheuser-Busch InBev, McDonald's, Nike, Veeva Systems and General Mills. The strategy's high-income generation and active tail risk program are designed to lower risk and deliver equity returns with a smoother, more retiree-friendly return profile. As a result, Wheelhouse expect returns to add relative value in weak and low-growth markets and to drag in more positive markets. |
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Performance Report: Bennelong Concentrated Australian Equities Fund
5 Dec 2019 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund rose +1.62% in October, outperforming the ASX200 Accumulation Index by +1.97% and taking 12-month performance to +19.65%. Since inception in January 2009, the Fund has returned +16.55%...
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5 Dec 2019 - 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 October, the Fund's weightings had been increased in the Discretionary, Health Care and Industrials sectors, and decreased in the Consumer Staples, IT, Communication, REIT's, Materials and Financials sectors. The Fund's top holdings included CSL, Reliance Worldwide and BHP Billiton. The Fund aims to invest in a concentrated portfolio of high quality companies with strong growth outlooks and underestimated earnings momentum and 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, high price/earnings and lower dividend yield which collectively highlight that the Fund is in line with its investment objectives. |
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Performance Report: Spectrum Strategic Income Fund
5 Dec 2019 - Australian Fund Monitors
The Spectrum Strategic Income Fund returned -0.07% in October. The Fund has returned +4.70% over the past 12 months and +7.85% p.a. since inception in June 2009 with an annualised volatility of 3%.
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5 Dec 2019 - Performance Report: Spectrum Strategic Income Fund
By: Australian Fund Monitors
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| Manager Comments | The portfolio remains well diversified with a broad spread of securities by legal structure. Bank T2 capital remains at 25% of the portfolio, while senior unsecured comprises 29% and senior secured represents 11%. The Fund holds 10% in ASX listed securities. Over the month hybrid securities recorded their first negative month since February 2019 which had an adverse effect on performance. The portfolio is positioned to take advantage of movements in spreads or rates. With 11.6% in cash, the Fund can take advantage of any credit spread weakness. Spectrum noted that over time the cash balance will be reinvested. The portfolio continues to maintain an average credit rating of A-. |
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Performance Report: Insync Global Quality Equity Fund
4 Dec 2019 - Australian Fund Monitors
The Insync Global Quality Equity Fund has risen +23.01% over the past 12 months, outperforming AFM's Global Equity Index by +8.42%. Since inception in October 2009, the Fund has returned +13.51% p.a. versus the Index's +11.39%.
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4 Dec 2019 - 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 -0.33% in October after fees. Positive contributors included Apple, Bristol-Myer Squibb, Facebook, Rightmove PLC and Nvidia Corp. Detractors included Heineken, Estee Lauder, Constellation Brands, Accenture and Intuit. The Fund continues to have no currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside. Insync noted there continued to be a shift from quality growth companies towards cyclical companies during the month, led by optimism around some form of partial trade deal. Whilst central banks globally now have an accommodative monetary policy, Insync continue to hold the view that the global economic backdrop remains challenging, with low growth and low inflation a major headwind for businesses that are reliant on a strong economy to drive their earnings. They believe the current environment continues to favour secular growth businesses with high levels of profitability. |
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Performance Report: Bennelong Emerging Companies Fund
4 Dec 2019 - Australian Fund Monitors
The Bennelong Emerging Companies Fund rose +2.61% in October, outperforming the ASX200 Accumulation Index by +2.96% and taking 12-month performance to +65.51% versus the Index's +19.29%.
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4 Dec 2019 - 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 | Bennelong noted that, whilst performance has been reasonably strong, they continue to find very attractive opportunities among emerging companies that they believe should position the Fund for decent future returns over time. The Fund's top holdings as at the end of October included Viva Leisure, BWX and Mader. |
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