NEWS
Performance Report: Bennelong Kardinia Absolute Return Fund
12 Jul 2019 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund rose +2.82%, taking annualised performance since inception in May 2006 to +9.29% versus the ASX200 Accumulation Index's +6.34%.
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12 Jul 2019 - 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 | The Fund's June return was driven by gold, financials, bond proxies and healthcare stocks. Top contributors included Polynovo, Northern Star, Evolution, Goodman Group, Atlas Arteria and Rhipe. Key detractors included Adairs, A2 Milk, Dubber and Netwealth. The largest detractor was a short position in Share Price Index Futures (-45bp contribution), partly offset by a modest positive contribution from the individual stock short book. Net equity market exposure was increased from 13.5% to 24.9% (67.3% long and 42.4% short), with the key changes being new long positions in National Australia Bank and Telstra as well as increased weightings in Commonwealth Bank, Atlas Arteria, Chorus, APA Group, Northern Star and Rio Tinto. This was partly offset by the sale of Tabcorp, Flight Centre, Netwealth and Adairs, four new individual stock shorts and an increase in the Fund's short position in Share Price Index Futures. |
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Performance Report: Bennelong Long Short Equity Fund
8 Jul 2019 - Australian Fund Monitors
The Bennelong Long Short Equity Fund rose +3.00% in June, taking annualised performance since inception in February 2002 to +14.81% versus the ASX200 Accumulation Index's +8.41%.
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8 Jul 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 | Bennelong say net improved fundamental news flows across the portfolio in May was a contributing factor to June's performance. At the sector level, Consumer Discretionary was the strongest, followed by Industrials, whilst Information Technology and Energy were the weakest. The number of positive pairs exceeded the number of negative pairs in June. Long Woolworths / short Metcash was the strongest pair after Metcash announced its full-year results which disappointed due to further weakness in its wholesale grocery business. Long Magellan / short Perpetual was also a solid contributor following consensus earnings upgrades to Magellan after strong fund performance. The weakest pair was long Link Administration / short Computershare following Link downgrading earnings. Long Challenger / short IOOF / short AMP was also a negative contributor following Challenger lowering its earnings outlook. |
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Performance Report: Paragon Australian Long Short Fund
5 Jul 2019 - Australian Fund Monitors
The Paragon Australian Long Short Fund rose +0.9% after fees in June, taking annualised performance since inception in February 2013 to +9.45% versus the ASX200 Accumulation Index's +8.85%.
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5 Jul 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 | Positive contributors included Alacer Gold, Nearmap and Jumbo. These were offset by declines in Atrum and PowerApp. Paragon noted, as of 2 July, Sandfire had increased its interest in Adriatic to 11%. They expect Sandfire to pursue the rest of Adriatic at a premium in time. In June, Gold broke out above a long-term (6-yr) base of US$1,350/oz, with A$ gold continuing to break all-time highs. Paragon discuss their view on gold and A$ gold equities in their latest report. They consider gold a strong hedge to global market volatility and expect volatility to be an ongoing feature in global markets due to macro risk factors, slowing global growth and fears of a US recession. |
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Performance Report: Insync Global Quality Equity Fund
28 Jun 2019 - Australian Fund Monitors
The Insync Global Quality Equity Fund returned -2.25% in May, outperforming AFM's Global Equity Index by +2.21% and taking annualised performance since inception to +12.87% versus the Index's +10.79%.
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28 Jun 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 | Insync attribute the Fund's outperformance in May to strong stock selection. Positive highlights include Adidas, IDEXX Laboratories, Wirecard, Boston Scientific Corp and the London Stock Exchange. Detractors included Facebook, Apple, Booking Holdings, Constellation Brands and Tencent Holdings. The Fund continues to have no currency hedging as Insync consider the main risks to the Australian dollar to be on the downside. Insync's view is that current market conditions continue to reflect the trend in place since the GFC of low growth and low inflation. They believe if this trend continues then investing in a portfolio of high ROIC stocks benefitting from global megatrends should be beneficial. They noted their portfolio of companies is less dependent on the global economy to generate consistent profitable growth. |
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Performance Report: Touchstone Index Unaware Fund
27 Jun 2019 - Australian Fund Monitors
The Touchstone Index Unaware Fund rose +0.25% in May, taking annualised performance since inception in April 2016 to +11.01% with an annualised volatility of 9.99%.
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27 Jun 2019 - 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 May, the Fund held 21 stocks with a median position size of 4.8%. The portfolio's holdings had an average forward year price/earnings of 15.8, forward year EPS growth of 6.8%, forward year tangible ROE of 24.2% and forward year dividend yield of 4.5%. The Fund's cash weighting was increased to 3.4% from 3.0% as at the end of April. The Fund primarily seeks to select stocks from the ASX300 Index, typically holding between 10-30 stocks. The Fund seeks to invest in reasonably priced, good quality companies with a significant share of expected returns coming from sustainable dividends. |
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Performance Report: NWQ Fiduciary Fund
27 Jun 2019 - Australian Fund Monitors
The NWQ Fiduciary Fund has risen +5.13% since inception in May 2013 with an annualised volatility of 4.85%. By contrast, the ASX200 Accumulation Index has risen +8.19% p.a. with an annualised volatility of 10.93% over the same period.
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27 Jun 2019 - Performance Report: NWQ Fiduciary Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund aims to produce returns, after management fees and expenses of between 8% to 11% p.a. over rolling five-year periods. Furthermore, the Fund aims to achieve these returns with volatility that is a fraction of the Australian equity market, in order to smooth returns for investors. |
| Manager Comments | The Fund returned -0.72% in May. NWQ noted the continuation of the 'melt up' in Australian equities was a tailwind for the Fund's Beta managers and presented challenges for its Alpha managers. NWQ maintain their conviction in their Alpha managers for their ability to deliver attractive risk-adjusted returns and provide their investors diversification when equity markets are challenged. |
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Performance Report: Insync Global Capital Aware Fund
27 Jun 2019 - Australian Fund Monitors
The Insync Global Capital Aware Fund has returned 12.60% over the past 12 months versus AFM's Global Equity Index's +7.90%, and +10.46% p.a. since inception in October 2009.
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27 Jun 2019 - 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 May the Fund returned -1.90% after the cost of downside protection, outperforming AFM's Global Equity Index by +2.56%. Strong contributions from stock selection and a positive contribution from the increase in the value of the index 'puts' led to the Capital Aware Fund losing significantly less than the market. Positive highlights include Adidas, IDEXX Laboratories, Wirecard, Boston Scientific Corp and the London Stock Exchange. Detractors included Facebook, Apple, Booking Holdings, Constellation Brands and Tencent Holdings. The Fund continues to have no currency hedging as Insync consider the main risks to the Australian dollar to be on the downside. Insync's view is that current market conditions continue to reflect the trend in place since the GFC of low growth and low inflation. They believe if this trend continues then investing in a portfolio of high ROIC stocks benefitting from global megatrends should be beneficial. They noted their portfolio of companies is less dependent on the global economy to generate consistent profitable growth. |
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Performance Report: Frazis Fund
26 Jun 2019 - Australian Fund Monitors
The Frazis Fund returned -1.8% in May, ahead of the S&P500 Total Return Index by +4.55% and AFM's Global Equity Index by +2.66%. This brings the Fund's CYTD return to +21.01%.
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26 Jun 2019 - 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 | In the latest report, Michael Frazis discusses his views on the outlook for the global economy. He believes the past two years in Australia are suggestive of what may come next in the US. He says it is entirely possible that the recent Australian experience, where technology stocks reach new heights amidst slowing growth and growing uncertainty, will continue overseas. Frazis are tempering their views and positions accordingly. Frazis have high confidence in their portfolio companies and are closely tracking their fundamental value creation. They noted they have increased their short positions in structurally declining and capital intensive industries such as physical retail, coal, and where appropriate, physical commodities. |
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Performance Report: Glenmore Australian Equities Fund
26 Jun 2019 - Australian Fund Monitors
The Glenmore Australian Equities Fund rose +2.54% in May, outperforming the ASX200 Accumulation Index by +0.83% and taking annualised performance since inception in June 2017 to +28.43%.
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26 Jun 2019 - Performance Report: Glenmore Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The main driver of identifying potential investments will be bottom up company analysis, however macro-economic conditions will be considered as part of the investment thesis for each stock. |
| Manager Comments | Top contributors included Phoslock, Dicker Data, AP Eagers, Polynovo, Auckland International Airport and People Infrastructure. Detractors included Pinnacle Investment, NRW Holdings and Arena REIT. |
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Performance Report: Quay Global Real Estate Fund
25 Jun 2019 - Australian Fund Monitors
The Quay Global Real Estate Fund rose +1.7% in May, outperforming its benchmark (FTSE/EPRA NAREIT Developed Index Net TR AUD) by +0.4% and taking annualised performance since inception in July 2014 to +10.53%.
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25 Jun 2019 - 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 | The largest positive contributors were Coresite (US Data Centres), Ventas (US Health) and Leg Immobilon (German Apartments). Largest detractors were Wharf REIC (HK Retail), Hysan (HK Diversified) and Safestore (UK Storage). There were no changes to the Fund during the month. Quay toured Hong Kong during May. They noted a recurring discussion topic was the impact the US/China trade wars could have on the HK economy, particularly retail sales, if Chinese visitors were to drop off as a result of RMB weakness and/or weaker economic growth in China. They believe the market is cautious about the near-term. With regards to the Fund's two HK investees (Hysan and Wharf REIC), Quay remain confident in their long-term outlook as both have best-in-class assets and negligible gearing. As for the resignation of UK Prime Minister Theresa May, Quay believe this has added further uncertainty to Brexit and the UK's outlook. The Fund's exposure to the UK consists of three investees exposed to two asset classes - storage and student accommodation, both of which Quay regard as defensive in nature. |
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