NEWS
Performance Report: Paragon Australian Long Short Fund
9 Feb 2018 - Australian Fund Monitors
The Paragon Australian Long Short Fund fell -1.3% in January. Since inception in March 2013, the Fund has returned +19.9% per annum.
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9 Feb 2018 - 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 contributions from long holdings in Kidman, Echo, Cann Group, Wattle Health, Link Financial and Audinate, as well as the Fund's Lithium shorts, were offset by declines in the Fund's Cobalt holdings, Updater and Cimic. The latest report discusses Paragon's views on the Lithium and Cobalt markets. They note that, overall, the fundamental investment cases for both Lithium and Cobalt over the medium term have not changed. They believe that the Cobalt market will need to more than double by 2025, and the Lithium market will need to quadruple. |
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Performance Report: Bennelong Concentrated Australian Equities Fund
9 Feb 2018 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund rose +4.27% in December, outperforming the ASX200 Accumulation Index by +2.46%.
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9 Feb 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 | Top contributors over the quarter included BWX Limited, Experience Co., Costa Group, Aristocrat Leisure, Treasury Wine Estates and Motorcycle Holdings. Some of the largest detractors were Reliance Worldwide and Flight Centre. In addition, the Fund's underweight position in the Resources and Energy sectors detracted from the Fund's relative performance. Bennelong noted portfolio positioning has remained unchanged since the Fund's last quarterly report. The Fund has a heavy concentration to 'all weather' businesses selling relatively defensive products or services and a heavy concentration in global businesses. The Manager remains wary of domestic cyclicals such as retailers, media companies, builders and industrials. The Fund has very little exposure to the banks, commodities companies and selective exposure to bond proxies. The Manager also noted they're unexcited by most blue chips due to their lack of growth. |
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Performance Report: Insync Global Titans Fund
9 Feb 2018 - Australian Fund Monitors
The Insync Global Titans Fund fell -1.55% in December. The Fund has returned +16.60% after the cost of protection over the past 12 months, outperforming the benchmark (MSCI ex Aus) by +1.74%.
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9 Feb 2018 - Performance Report: Insync Global Titans 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 | Performance in December was driven by positive contributions from holdings in eBay, Twenty-First Century Fox, Comcast Corp, Reckitt Benckiser and Diageo. The main negative contributors were Zoetis Inc, Stryker Corp, Cognizant Tech Solutions, Oracle Corp and PayPal. 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. Over 50% of the Fund is currently protected using Insync's put protection strategy. |
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Performance Report: Qato Capital Market Neutral Fund
8 Feb 2018 - Australian Fund Monitors
The Qato Capital Market Neutral Fund returned -2.37% in December, with performance impacted by a long position in Qantas and short positions in Westfield and TPG Telecomm.
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8 Feb 2018 - Performance Report: Qato Capital Market Neutral Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund seeks to preserve capital and maximise absolute returns through active and constant risk management, targeting monthly a net market exposure of 0% to hedge broader market risks by generally holding up to 50 S&P/ASX-100 positions (up to 25 long positions & 25 short positions). Historically, the strategy has been uncorrelated to traditional asset classes with a negative beta to equity markets. Qato Capital's process is entirely systematic - stock selection and risk management are all employed in a rules based approach. Positions in Qato's long-portfolio and short-portfolio are rotated monthly dependent upon their Q-Score ranking. The strategy employs no financial leverage/gearing to purchase securities, no derivatives and no financial products to imitate leverage. |
| Manager Comments | Positive contributors in December included long positions in Alumina (+9.46%), Fortescue Metals (+6.09%), Iluka (+9.59%), Orica (+6.47%), Boral (+3.59%), Bluescope Steel (+12.93%), OzMinerals (+9.7%) and Origin (+5.49%). Negative contributors included long Caltex, short Oil Search, long Qantas, short Westfield and short TPG Telecomm. Qato's latest report briefly discusses risk appetite and the most likely catalyst for a correction. They noted institutions and investment banks abroad believe risk appetites have reached extreme levels, and that the 9-week RSI (a measure of how overbought the market is) reached its highest level in December 2017 since March 2009. Qato also noted that banks agree the most likely catalyst for a correction will be an increase in bond yields which, at the time of writing their December 2017 report, Qato believed wouldn't be far away should inflation continue to flow back into the economy. |
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Performance Report: 4D Global Infrastructure Fund
8 Feb 2018 - Australian Fund Monitors
The 4D Global Infrastructure Fund fell -1.56% in December, outperforming the FTSE 50/50 Infrastructure Index by +2.60%. The Fund has returned +22.03% over the past 12 months.
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8 Feb 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 for the month was US LNG transporter Cheniere Energy (+12.2%), driven by a jump in spot commodity pricing which supports Cheniere's underlying contracts and growth potential. The weakest performer in December was US integrated utility Sempra Energy (-10.4%). This was due in part to Sempra holding assets in California, with utilities in the state affected by weather-driven wildfires and resulting liability concerns, and partly due to the US Fed hike early in the month and Trump's tax reforms. The Manager's outlook for global listed infrastructure over the medium term remains positive. They note there has been a significant underinvestment in infrastructure around the world over the past 30 years and that public sector fiscal and debt constraints will limit governments' ability to respond, resulting in an increasing need for private sector capital as part of the funding solution. |
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Performance Report: Touchstone Index Unaware Fund
8 Feb 2018 - Australian Fund Monitors
The Touchstone Index Unaware Fund rose +1.20% in December, taking 12-month performance to +13.06% and annualised return since inception in April 2016 to +15.74%.
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8 Feb 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 | The Touchstone Index Unaware Fund primarily selects stocks from the S&P/ASX 300 Index and typically holds 10-30 stocks. It 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: KIS Asia Long Short Fund
7 Feb 2018 - Australian Fund Monitors
The KIS Capital Long Short Fund rose +1.60% in December, taking annualised performance since inception in October 2009 to +13.75% with a volatility of 5.27%.
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7 Feb 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 | The Fund is a catalyst focused fund whose objective is to generate absolute returns with low volatility and correlation to other asset classes. Trade selection and portfolio management are based on three distinct principals of: Liquidity, Transparency and Risk Management. KIS Capital looks to build a portfolio of 'winning' ideas with an identifiable and imminent catalyst and hedge unwanted market risk. |
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Performance Report: Pengana PanAgora Absolute Return Global Equities Fund
6 Feb 2018 - Australian Fund Monitors
The Pengana PanAgora Absolute Return Global Equities Fund returned -1.16% for December, with performance driven by the U.S. large cap strategy which underperformed.
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6 Feb 2018 - Performance Report: Pengana PanAgora Absolute Return Global Equities Fund
By: Australian Fund Monitors
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| Fund Overview | PanAgora believes the best way to find opportunities in the global markets is to combine fundamental analysis with robust quantitative techniques in order to filter the investment universe and select the investments. The Fund invests primarily in listed equity securities from a global universe of developed markets and a select group of emerging market countries. The Fund's objective is to seek absolute returns by identifying and exploiting multiple inefficiencies that may exist in global equity markets. These inefficiencies are primarily exploited through the use of a long/short equity strategy which aims to construct a portfolio that is generally neutral to market movements. As such the performance of the investment strategy is largely independent of the market's performance. The Fund seeks to achieve its objective by using a diversified set of strategies that have low correlation to one another. In addition, because many of these strategies are designed to generate profit under different market conditions, their combination is expected to result in more stable returns over time than any individual strategy in and of itself. |
| Manager Comments | In the long-term portfolio, positions in the U.S. detracted -1.29% for the month. The U.S. alpha model underperformed as growth and sentiment metrics disappointed. Consumer Discretionary (-0.47%) and Consumer Staples (-0.45%) were the largest sector detractors. International positions contributed +0.50% as value and momentum related factors performed well. On a country basis, Japan (+0.37%) and the UK (+0.34%) were the top contributors. The Fund's intermediate-term strategies were flat and short-term strategies detracted -0.21% due to the underperformance of the Analyst Days strategy and Index Reconstitution trades. |
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Performance Report: Collins St Value Fund
5 Feb 2018 - Australian Fund Monitors
The Collins St Value Fund returned +2.20% in December, outperforming the ASX200 Accumulation Index by +0.39% and taking annualised performance since inception in February 2016 to +15.43%.
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5 Feb 2018 - Performance Report: Collins St Value Fund
By: Australian Fund Monitors
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| Fund Overview | The managers of the fund intend to maintain a concentrated portfolio of investments in ASX listed companies that they have investigated and consider to be undervalued. They will assess the attractiveness of potential investments using a number of common industry based measured, a proprietary in-house model and by speaking with management, industry experts and competitors. Once the managers form a view that an investment offers sufficient upside potential relative to the downside risk, the fund will seek to make an investment. If no appropriate investment can be identified the managers are prepared to hold cash and wait for the right opportunities to present themselves. |
| Manager Comments | Collins St also noted that, despite the 'missed opportunity' from not investing in the mining cycle, they remain convinced that their investments in simple to understand companies will continue to generate great outcomes, and that the commodity space is simply too complex, volatile and expensive for Collins St to focus on. Collins St noted the Fund's returns so far are especially pleasing given the Fund's disconnect from what has been the key driver of the Australian stock market over the past two years - mining companies. |
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Fund Review: Insync Global Titans Fund December 2017
5 Feb 2018 - Australian Fund Monitors
Latest Fund Review on Insync Global Titans Fund is now available.
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5 Feb 2018 - Fund Review: Insync Global Titans Fund December 2017
By: Australian Fund Monitors
AFM Fund Review - December 2017 (pdf format)
INSYNC GLOBAL TITANS FUND
Attached is our most recently updated Fund Review on the Insync Global Titans Fund.
We would like to highlight the following:
- The Global Titans Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.
- Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.
- Emphasis on limiting downside risk is through extensive company research, the ability to hold cash and long protective index put options.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - December 2017 (pdf format)
