NEWS
Performance Report: Wheelhouse Global Equities Income Fund
5 Dec 2018 - Australian Fund Monitors
The Wheelhouse Global Equity Income Fund has returned +9.84% over the past 12 months versus AFM's Global Equity Index's +7.75%. This has been achieved with a volatility of 7.72% versus the Index's 9.36%.
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5 Dec 2018 - Performance Report: Wheelhouse Global Equities 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 returned -4.39% in October, ahead of the benchmark (MSCI World Index ex Australia) return of -5.40%. This return comprised a return of -6.34% from the portfolio (in USD) and a positive return of +1.95% from the weakening of the Australian dollar against the US dollar. The Wheelhouse Global Equity Income Fund is designed to deliver equity returns with higher income generation and active downside protection. 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 intend for 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 Emerging Companies Fund
5 Dec 2018 - Australian Fund Monitors
The Bennelong Emerging Companies Fund has returned +19.93% over the past 12 months versus the ASX200 Accumulation Index's +2.94%.
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5 Dec 2018 - 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 | The Fund's top holdings as at the end of October were Baby Bunting, Clover, Helloworld, Cml and Pinnacle Investment Management. The Fund invests predominantly in micro and small-cap stocks listed on the ASX. It is managed via a research-intensive and predominantly bottom-up investment approach. The Fund focuses on high quality stocks and seeks to avoid the higher risk that usually comes with micro and small-cap stocks. |
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Performance Report: Insync Global Capital Aware Fund
4 Dec 2018 - Australian Fund Monitors
The Insync Global Capital Aware Fund has returned +9.98% over the past 12 months versus AFM's Global Equity Index's +7.75%. This return has been achieved with a similar level of volatility and includes the cost of fees and put protection.
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4 Dec 2018 - 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 | The Fund posted -5.82% after fees and downside protection in October. Insync noted that, unlike most long-only managers, they don't have a high cash allocation in the Fund should they believe danger lies ahead in shorter term valuations. They believe this enables them to maximise returns by staying focused on longer term outcomes. Additionally, Insync add that, given the indirect way in which they tend to gain exposure to the many positive trends occurring within several emerging markets, the current negative turmoil they are facing has had a very limited negative impact on the Fund. The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside. |
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Performance Report: Glenmore Australian Equities Fund
4 Dec 2018 - Australian Fund Monitors
The Glenmore Australian Equities Fund has risen +14.68% over the past 12 months versus the ASX200 Accumulation Index's +2.94%. Since inception in June 2017, the Fund has returned +24.87% per annum.
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4 Dec 2018 - 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 | The Fund returned -8.7% in October. This return was driven by a large number of portfolio stocks falling by more than 5% despite no company-specific announcements. Glenmore noted sentiment was the dominant driver of stock prices during the month, with the result that most stocks' prices declined regardless of business quality and earnings growth prospects. In particular, small/mid cap stocks (which the Fund has a strong exposure to) were sold off much more than larger cap stocks, with the Small Ords Accumulation Index declining -9.6%. Glenmore added that it is frustrating to see good quality businesses falling 10-20% on no news, however, they believe at times investors must be willing to incur periods of underperformance in order to achieve above average long-term returns. Key detractors included Pinnacle Investment Management (-30.6%), WorleyParsons (-24.7%) and Navigator Global Investments (-16%). Glenmore remain confident in the composition of the portfolio. Importantly, they noted that during the month there were no negative announcements regarding operational performance from any of the Fund's investments. |
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Performance Report: Loftus Peak Global Disruption Fund
3 Dec 2018 - Australian Fund Monitors
The Loftus Peak Global Disruption Fund has returned +11.07% over the past 12 months, outperforming AFM's Global Equity Index by +3.32%. Since inception in November 2016, the Fund has returned +22.67% per annum.
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3 Dec 2018 - 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 | In reference to the market's performance in October, Loftus Peak noted it is never the case that stock market performance is linear. They therefore used the weakness in October to add to a number of key strategic holdings at low prices, starting the month with 10% in cash and finishing with 2%. The Fund is 98% invested in 24 holdings which the manager considers likely outperformers. Key detractors included Nvidia, Tencent, Alibaba, Amazon and Qualcomm, whilst on the positive side Tesla performed well on the back of US$1.4b of operating cashflow in the quarter. Loftus see the falls in Tencent and Alibaba to be the result of the impact of tariffs on China, whilst they believe the fall in Amazon was expected after some very aggressive price targets. They believe Nvidia to hold an important role in machine learning and global data centres, and thus remain invested. They also see Qualcomm as being key in the roll out of the 5G network, which is why they continue to invest. In addition, the Australian dollar depreciated 2.05% over the month against the US dollar, which meant the value of the Fund's US dollar positions increased. As at 30 October 2018, the Portfolio carried a foreign currency exposure of 99%. |
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Performance Report: Touchstone Index Unaware Fund
3 Dec 2018 - Australian Fund Monitors
The Touchstone Index Unaware Fund has returned +3.23% over the past 12 months versus the ASX200 Accumulation Index's +2.94%. Since inception in April 2016, the Fund has returned +9.96% per annum.
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3 Dec 2018 - 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 October, the Fund held 20 stocks with a median position size of 4.6%. The portfolio's holdings had average price/earnings of 14.9, EPS growth of 11.8%, tangible ROE of 27.0% and dividend yield of 4.9%. The Fund's cash weighting increased to 7.0% from 4.5% at the end of September. The Touchstone Index Unaware Fund primarily selects 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: Bennelong Concentrated Australian Equities Fund
30 Nov 2018 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund has returned +16.24% per annum since inception in February 2009 versus the ASX200 Accumulation Index's +10.06% p.a. over the same period.
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30 Nov 2018 - 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 Health Care, Industrials, Materials and REIT's sectors, and decreased in the Discretionary, Consumer Staples, Communication and Financials sectors. The Fund's cash weighting was increased from 0.9% at the end of September to 1.6%. The Fund is most heavily weighted towards the Discretionary, Health Care and Consumer Staples sectors, each with weightings of 30.7%, 22.1% and 19.0% respectively. 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 and lower debt/equity (Premium Quality), higher sales growth and higher EPS growth (Superior Growth), as well as higher price/earnings and lower dividend yield (Reasonable Valuation), highlighting that the Fund is in line with its objective. |
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Performance Report: KIS Asia Long Short Fund
29 Nov 2018 - Australian Fund Monitors
The KIS Asia Long Short Fund returned -0.15% in October, outperforming the ASX200 Accumulation Index by +5.9% and taking annualised performance since inception in October 2009 to +12.74%.
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29 Nov 2018 - Performance Report: KIS Asia Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Whilst the Fund's primary strategy is focused on long/short equities, the ability to retain discretionary powers to allocate across a number of other investment strategies is reserved. These strategies may include, but not be limited to: convertible bond investments, portfolio hedging, equity related arbitrage, special situations (e.g. merger arbitrage, rights offerings, participation in international public offerings and placements, etc.). The Fund's geographic focus is Asia excluding Japan, but including Australia). The Fund may invest outside of this region to the extent that: 1. The investment decision is driven from the Asian region or; 2. The exposure is intended to mitigate risk or enhance return from factors external to the Asian region. |
| Manager Comments | October's volatility saw KIS reduce gross exposure and increase activity. Long exposure to gold companies such as Evolution Mining and Newcrest mining helped, contributing 29bp and 14bp respectively. The Fund's smaller companies impacted negatively, detracting -283bp across all names. This was mostly offset by a short bias across large caps (+94bp) and index hedges (+134bp). KIS noted October presented investors with one of the toughest months since 2008. They believe we are entering a corporate buyback period in the US equity market and that the higher yields in the US will temper further borrowing to fund these buy backs. KIS don't expect yields to increase any further over the short to medium term. |
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Performance Report: Bennelong Kardinia Absolute Return Fund
29 Nov 2018 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund has returned +9.57% p.a. with an annualised volatility of only 7.11% since inception in May 2006. By contrast, the ASX200 Accumulation Index has returned +5.37% p.a. with an annualised volatility...
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29 Nov 2018 - 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 | Kardinia Capital noted October was a brutal month for equity markets and the Fund. The Fund fell -5.71%, with performance impacted primarily by the Fund's Resources exposure (which they believe will be a primary beneficiary of the merging global reflationary environment) and core holdings in quality growth stocks like Aristocrat, CSL and Macquarie. However, fundamental stock-specific news flow was positive. Other detractors included WorleyParsons, Seven Group, Nine Entertainment, and a short position in MYOB. The Fund's shorts performed well overall, with Share Price Index Futures contracts adding 95bp for the month and individual stock shorts, led by financials, IT and bond proxy stocks, adding 44bp. In addition, during the sell-off Kardinia Capital added to their highest conviction positions, building net exposure to 55% (72.4% long and 17.4% short) from 30% on their expectation that this is a short but violent pullback rather than the beginning of a bear market. The key changes to the portfolio included new positions in Westpac, NAB and ANZ, as well as increased weightings in Macquarie Group, CSL and Aristocrat Leisure. Kardinia noted this was partly offset by the sale of Bluescope, Nine Entertainment, Services Stream and WorleyParsons. |
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Performance Report: Quay Global Real Estate Fund
28 Nov 2018 - Australian Fund Monitors
The Quay Global Real Estate Fund returned -0.8% in October, outperforming its benchmark (FTSE/EPRA NAREIT Developed Index Net TR AUD) by +0.9% and taking 12-month performance to +13.13%.
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28 Nov 2018 - 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 | Quay noted almost all of the Fund's investees reported earnings in line with or better than their expectations in October, with many lifting full year guidance. They believe improving earnings outlook (especially in the USA) is the flip-side to higher interest rates; i.e. if higher interest rates are the result of a strong economy then that strength will be felt in rental growth and earnings. This, Quay noted, is particularly evident in the Fund's multifamily exposure, which in simple terms is apartments to rent. Quay also mentioned that the US reported new homes sales fell -5.5% to a new two-year low, which they believe the market's reaction suggests investors could be equating soft new home sales with another financial crises event. Quay believe, on this occasion, weak new home sales don't suggest a poor economy but instead an affordability issue. They noted housing affordability around the world has been one of their key themes, pointing to high levels of students debt, rising construction costs, weak wage growth and a 200bp increase in mortgage rates in the US keeping more young Americans from home ownership and living at home with their parents for longer. Quay added that new homes in the US are still needed and total new housing supply remains relatively low by historic standards. Consequently, the Fund's US residential investees continue to report very robust leasing demand and 'better-than-inflation' rental growth. By contrast with the residential environment in Australia today where supply of new dwellings is at a record high and banks continue to tighten lending standards, Quay believe the relative income stability of off-shore residential property to be a better alternative. |
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