NEWS
Performance Report: Bennelong Long Short Equity Fund
15 Nov 2018 - Australian Fund Monitors
The Bennelong Long Short Equity Fund has risen +5.38% over the past 12 months versus the ASX200 Accumulation Index's +2.94%. Since inception in February 2002, the Fund has returned +15.81% per annum versus the Index's +7.75%.
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15 Nov 2018 - 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 noted the Fund fared poorly in October, returning -7.05% in a month which featured elevated market volatility, general weakness, corporate activity and an abundance of updates to earnings guidance at AGMs. With respect to company earnings and guidance updates, both the long and short portfolio experienced favourable bias of upgrades/downgrades. However, company fundamentals were overwhelmed by the market favouring defensive traits in preference to operating/fundamental performance, which Bennelong noted is unusual in this type of environment. In addition, Bennelong believe there was element of mean reversion in the Fund's September and October performance following their strong August return of +10.59%. Key contributing long/short pairs included long Orica (ORI)/ short Downer EDI (DOW), long Ramsay Health Care (RHC)/ short Primary (PRY)/Healthscope (HSO) and long Woolworths (WOW)/ short Metcash(MTS). Detractors included long Xero (XRO)/ short MYOB (MYO), long TPG Telecom (TPM)/ short Telstra (TLS) and long Iluka Resources (ILU)/ short Rio Tinto (RIO). Bennelong noted the indicative bid by private equity firm KKR for MYOB negatively impacted the Fund's long Xero / short MYOB pair, which accounted for one third of the Fund's negative return for the month. |
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Performance Report: Harvest Lane Asset Management Absolute Return Fund
14 Nov 2018 - Australian Fund Monitors
The Harvest Lane Absolute Return Fund returned -0.11% in October, outperforming the ASX200 Accumulation Index by +5.94%. The Fund has returned +12.04% over the past 12 months versus the Index's +2.94%.
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14 Nov 2018 - 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 | A key tenet of the Absolute Return Fund strategy is the focus on downside protection through careful selection of positions that are not only uncorrelated to broader equity markets, but also uncorrelated with each other. As a result, periods of strong outperformance against the market are usually observed when the market is going through periods of excessive weakness. This is backed up by the Fund's Sharpe and Sortino ratios since inception, 1.00 and 1.71 respectively, which, by contrast with the Index's Sharpe of 0.62 and Sortino of 0.85, emphasise the Fund's capacity to achieve superior risk-adjusted returns whilst ensuring investors' capital is protected. This is also supported by the Fund's down-capture ratio since inception of -34.93%, indicating that, on average, the Fund has significantly outperformed in the market's negative months. Harvest Lane noted a plethora of factors were identified as potential causes of the declines seen in October, including US interest rate concerns, fears of a US/China trade war, the start of a deflation in equity asset 'bubbles', emerging market currency crises, Brexit, and instability in the EU. They believe investors' heavy biases to risky long-only equity strategies is a major risk factor that is all too easily forgotten in a decade long bull market. They noted that volatility has only just moved back to more normal levels and equity markets are capable of much worse performance than has been seen in the low volatility environment of recent years. |
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Performance Report: Bennelong Twenty20 Australian Equities Fund
12 Nov 2018 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund has risen +15.07% over the past 12 months versus the ASX200 Accumulation Index's +13.97%. Since inception in November 2009, the Fund has returned +10.59% p.a. versus the Index's +8.00%.
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12 Nov 2018 - 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 | The Fund returned -1.20% over the September quarter versus the Index's +1.53%. The Fund's return was impacted by underperformance of the Fund's ex-20 holdings. Bennelong noted that over time, in light of the latest quarterly return, the Fund's quarter-to-quarter performances have averaged out to provide clients with very above-market returns. Key detractors over the quarter included Flight Centre, Costa Group, Reliance Worldwide and BWX Limited. Read the Fund's latest report for Bennelong's analysis of these companies' activities. Bennelong have neither a bearish or bullish outlook on the market. They see Australian equities to be relatively attractive, however, they still believe there is the need to remain selective. They remain constructive on the market for the following reasons - stock fundamentals look solid, valuations are relatively attractive and investor sentiment is supportive. They also believe there is always a need to be diligent and manage risk and thus have ensured the portfolio is well positioned on a risk/return basis. |
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Performance Report: 4D Global Infrastructure Fund
12 Nov 2018 - Australian Fund Monitors
The 4D Global Infrastructure Fund rose +0.2% in September, taking 12-month performance to +5.27% and annualised performance since inception in March 2016 to +10.72%.
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12 Nov 2018 - Performance Report: 4D Global Infrastructure Fund
By: Australian Fund Monitors
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| Fund Overview | The fund will be managed as a single portfolio of listed global infrastructure securities including regulated utilities in gas, electricity and water, transport infrastructure such as airports, ports, road and rail as well as communication assets such as the towers and satellite sectors. The portfolio is intended to have exposure to both developed and emerging market opportunities, with country risk assessed internally before any investment is considered. The maximum absolute position of an individual stock is 7% of the fund. |
| Manager Comments | The strongest performer in September was Brazilian Rail operator Rumo (+9.1%) on the back of the ANTT recommendation for the early renewal of one of its concessions. The weakest performer was global port operator DP World (-11.6%), impacted by increasing global trade tensions. 4D believe that, despite the ongoing posturing between China and the US, the trade talks will ultimately resolve. They also believe that, despite a softening in the global macro outlook, it does remain positive across the board and supportive of global port volumes. 4D remain fundamental buyers of DP World. Given the generally positive global macro environment, 4D remain overweight user pay assets which have a direct correlation to macro strength. However, ongoing geo-political concerns, plus near-term elections, sees them maintain core exposure to quality defensive utilities. |
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Performance Report: Touchstone Index Unaware Fund
9 Nov 2018 - Australian Fund Monitors
The Touchstone Index Unaware Fund has returned +16.43% over the past 12 months and +13.80% per annum since inception in April 2016.
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9 Nov 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 | At the end of the month the Fund held 21 stocks with a median position size of 4.5%. The portfolio's holdings had an average price/earnings of 15.8, EPS growth of 12.8%, tangible ROE of 19.3% and dividend yield of 4.6%. The Fund's cash weighting decreased to 4.5% from 7.1% at the end of August. 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: Newgate Real Estate and Infrastructure Fund
9 Nov 2018 - Australian Fund Monitors
The Newgate Real Estate and Infrastructure Fund has returned +11.93% per annum since inception in July 2013 versus the ASX200 Accumulation Index's +9.80%. This return has been achieved with slightly lower volatility.
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9 Nov 2018 - Performance Report: Newgate Real Estate and Infrastructure Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund's research use detailed analysis of the underlying assets integrated with financial analysis to determine a sustainable yield and fundamental DCF valuation for the security. Also the Fund believes in having a strong risk control framework. The Fund will also use trading strategies via rebalancing of core portfolio positions as well as taking advantage of shorter duration inefficiencies in markets caused by an imbalance in demand and supply for global REIT and Infrastructure securities. The Fund focuses on generating absolute returns after fees of 10 to 12% pa over the medium to long term. The long-short nature of the Fund combined with Newgate's rigorous investment process ensures returns generated by the Fund are largely independent of rising or falling markets. Newgate is focused on providing investment opportunities primarily within core, value-add, opportunistic and development sectors of direct property and across listed and unlisted real estate and infrastructure securities. The Fund's investment team consists of Tim Hannon, Andrew Lewandowski. |
| Manager Comments | Over the September quarter, the Fund returned -2.13%. Newgate noted that, over the quarter, the Fund has been impacted by the market's concerns over the escalation of trade conflict between the USA and China. Positive contributors included Japara Healthcare (JHC), Centuria Industrial REIT (CIP), Sydney Airport (SYD) and Updater (UPD). Detractors included Charter Hall Group (CHC), Mirvac Group (MGR) and Data Exchange (DXN). In their latest report, Newgate describe how the Fund benefited from share price declines in the aged care sector after the ABC's Four Corners report and the Prime Minister's subsequent announcement of a Royal Commission. They also discuss their views on Mirvac Group after the Fund's short position in the company failed to deliver. |
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Performance Report: Wheelhouse Global Equities Income Fund
8 Nov 2018 - Australian Fund Monitors
The Wheelhouse Global Equity Income Fund rose +0.76% in September, taking performance over the quarter to +6.85% and 12-month performance to +18.73%.
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8 Nov 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 Manager believes that the tailwinds that supported growth in global markets over the quarter, such as robust US earnings growth driven by the Trump tax cuts, continued accommodative monetary policy from the US Federal Reserve, and US technology sector outperformance, appear to be slowing. They noted that, as tailwinds become headwinds, the value of strategies that can both protect capital and deliver an income-driven source of real return will likely increase, particularly for investors that require a regular source of both income and real-return to fund their living expenses. The Wheelhouse Global Equity Income Fund is designed to deliver equity returns with higher income generation and active downside protection. As at the end of September, the Fund's performance was broadly in line with equities, outperforming for the year-to-date, but dragging a little in the September quarter. |
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Performance Report: DS Capital Growth Fund
7 Nov 2018 - Australian Fund Monitors
The DS Capital Growth Fund rose +2.1% over the September quarter, outperforming the ASX200 Accumulation Index by +0.6% and taking annualised performance since inception in January 2013 to +15.89%.
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7 Nov 2018 - 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 | DS Capital noted that, during the quarter, they were focused on earnings results. Their view is that, although business conditions were reasonable, it remained challenging to find organic growth and outlook commentary was cautious. Positive contributors included NEXTDC, Baby Bunting and Seek. Detractors included Eclipx and Experience Co. DS Capital sold their holdings in Baby Bunting and Seek, however, they noted they continue to like Seek and will look to reinvest at an appropriate time. The Fund's cash level ranged between 20% - 25% over the quarter. DS Capital noted the risk of a trade war continues to influence investors and will take time to play out. Domestically, they are monitoring deterioration in business conditions after July's political turmoil and the decision by some major banks to lift mortgage rates. They are also watching for signs of accelerating inflation that, together with resulting higher interest rates, will have various implications for asset markets. They also believe the Australian dollar is likely to remain under pressure as further rate rises are expected in the US while Australian rates remain flat. |
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Performance Report: Bennelong Australian Equities Fund
5 Nov 2018 - Australian Fund Monitors
The Bennelong Australian Equities Fund has returned +20.41% over the past 12 months versus the ASX200 Accumulation Index's +13.97%. Since inception in February 2009, the Fund has returned +14.20% per annum with an annualised volatility of 12.89%.
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5 Nov 2018 - Performance Report: Bennelong Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Bennelong Australian Equities Fund seeks quality investment opportunities which are under-appreciated and have the potential to deliver positive earnings. The investment process combines bottom-up fundamental analysis with proprietary investment tools that are used to build and maintain high quality portfolios that are risk aware. The investment team manages an extensive company/industry contact program which helps identify and verify various investment opportunities. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to the ASX-listed securities. The Fund typically holds between 25-60 stocks with a maximum net targeted position of an individual stock of 6%. |
| Manager Comments | Over the September quarter the Fund returned -2.3% versus the Index's +1.5%. In light of this, Bennelong emphasised that, over time, the quarter-to-quarter performances of the Fund have averaged out to provide clients with very attractive returns and expect that the Fund will continue to do so going forward. Overall, the companies in the portfolio reported strong results and gave reasonable guidance; one of the largest contributors for the quarter, and the largest portfolio position, was CSL Limited. However, in the case of a number of the Fund's larger positions, the market nevertheless reacted negatively which weighed heavily on the Fund's returns. Key detractors over the quarter included Costa Group, Flight Centre and Aristocrat Leisure. Read the Fund's latest quarterly report for their in-depth analysis and outlook for each of these companies. Bennelong noted they increased the Fund's weightings in Costa Group and Flight Centre during the quarter and remain invested in Aristocrat Leisure. Bennelong have neither a bearish or bullish outlook on the market. They see Australian equities to be relatively attractive, however, they still believe there is the need to remain selective. They remain constructive on the market for the following reasons - stock fundamentals look solid, valuations are relatively attractive and investor sentiment is supportive. They also believe there is always a need to be diligent and manage risk and thus have ensured the portfolio is well positioned on a risk/return basis. |
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Performance Report: Bennelong Kardinia Absolute Return Fund
2 Nov 2018 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund has returned +10.16% p.a. since inception in May 2006 versus the ASX200 Accumulation Index's +5.93%. This has been achieved with approximately half the market's volatility.
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2 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 | The Fund's return in September of -1.93% was impacted significantly by holdings in CSL and Aristocrat which offset good performance in mining stocks. Top contributors included Whitehaven Coal (+34bp contribution), Seven Group (+30bp), Rio Tinto (+29bp), Computershare (+10bp) and Independence Group (+9bp). Detractors included CSL (-60bp), Aristocrat Leisure (-41bp), Afterpay Touch (-24bp) and Qantas (-17bp). Net equity market exposure was decreased from 55.2% to 29.9% (64.5% long and 34.5% short), with the key changes being the sale of Viva Energy and Afterpay Touch, a lower weighting in CSL, and new short positions in financial and infrastructure stocks and Share Price Index Futures. |
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