NEWS
Bennelong Long Short Equity Fund
4 Aug 2017 - Australian Fund Monitors
Bennelong's long short fund drops -1.42% in July, but still manages a return of 12.01% for the latest six months, and +17.56% calendar year to date
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4 Aug 2017 - 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 | The manager's outlook for markets remains cautious. A statistic that caught their eye during the month was the news that the infamous VIX Index or 'fear index' (formerly, the Chicago Board Options Exchange Volatility Index) reached its lowest ever level in its 27 year history causing them to wonder if such complacency justified? Their response: Not according to Howard Marks at Oaktree Capital, who in his latest memo noted: 'The uncertainties are unusual in terms of number, scale and insolubility in areas including secular economic growth; the impact of central banks; interest rates and inflation; political dysfunction; geopolitical trouble spots; and the long-term impact of technology.' |
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Touchstone Index Unaware Fund
1 Aug 2017 - Australian Fund Monitors
The Touchstone Index Unaware Fund ended the financial year up +17.03%, outperforming the ASX300 Accumulation Index by +3.21%.
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1 Aug 2017 - 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 | In June, positive performers included IAG (+6.6%), Resmed (+6.7%) and James Hardie (+6.7%). IAG's performance was principally driven by an upgrade to its FY17 earnings and increased confidence in earnings growth. Resmed rallied with positive momentum reported on its new product launches and rectification of recent product issues. James Hardie performed positively as the market gained confidence that the factors impacting margins for their US Fibre-Cement division should improve going forward. Negative contributors for the month included QBE (-8.5%), Wesfarmers (-6.0%) and Goodman Group (-5.9%). Touchstone maintains a positive outlook for Wesfarmers and Goodman Group, and expects that QBE will benefit from a recovery in the global insurance market and higher interest rates. Touchstone noted that volatility has edged back into markets as fears over tighter monetary policy and high valuations have clouded the outlook for the year ahead. The Manager believes that given the heightened uncertainty, the market remains very vulnerable to external shocks. As such, they remain cautious and have reflected this in their portfolio positioning. |
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Bennelong Twenty20 Australian Equities Fund
31 Jul 2017 - Australian Fund Monitors
The Bennelong Twenty20 Australian Equities Fund rose +1.07% in June, taking 12-month performance to +13.93%.
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31 Jul 2017 - 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 | Outperformance over the past quarter was largely explained by a number of the larger positions with active allocations, including Aristocrat Leisure which represented by far the largest contributor and is benefiting from management's five year journey to re-energise the business. Other contributors included Fisher & Paykel Healthcare, a manufacturer of breathing support devices, BWX, a manufacturer of skin care creams, and Reliance Worldwide, a manufacturer of plumbing products and water control valves. The largest detractor to performance was Domino's Pizza Enterprises, however, Bennelong believes the stock offers attractive longer term returns. Bennelong are concerned that a major issue with the Australian market approaching reporting season is earnings risk if companies miss the market's expectations. Based on company meetings and industry contact, their belief is that many corporates are doing it tougher than is appreciated by the market. If correct, the assumed E in the current P/E ratio (15.8x) is too high and in reality the PE is actually higher. However, the current attraction of equities depends on the future direction of interest rates. |
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Collins St Value Fund
28 Jul 2017 - Australian Fund Monitors
The Collins St Value Fund rose 6.13% in June, taking 12 month performance to +22.44%.
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28 Jul 2017 - 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 | The Manager noted that the Fund's PE ratio (based on the weighted average of all stocks in the portfolio) at the end of June was 9.21 whilst that of the market was 17.27, underlying the Fund's strategy of investing in businesses priced cheaply relative to the market. As at the end of June the Fund's cash holdings decreased to 22% from 28% at the end of May. Sirtex (ASX: SRX) contributed positively to the Fund's performance whilst the manager re-entered a position in Cash Converters (ASX: CCV) which had previously been closed out at a loss and had contributed negatively. The Manager believes that both companies remain well positioned for growth. Looking forward Collins St see a number of issues which cause them concern, including high market valuations, a stretched property market, and high levels of consumer debt. |
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Paragon Australian Long Short Fund
27 Jul 2017 - Australian Fund Monitors
The Paragon Australian Long Short Fund rose 0.4% in June, outperforming the S&P/ASX200 Accumulation Index by 0.23%.
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27 Jul 2017 - Paragon Australian Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Paragon believes that markets are not always efficient, exhibiting a common tendency to price securities well outside of their intrinsic value over the medium term. This market characteristic provides the opportunity for Paragon, an active manager with a flexible mandate, to generate superior investment returns over the longer term. Paragon believes that it is critical to understand both the companies and the industries in which they operate, in order to fully comprehend each investment opportunity. Accordingly, a fundamental approach to company research is taken. Assessing the potential downside is also paramount in framing the risk/reward trade-off for potential investments. |
| Manager Comments | The main contributors to the positive result in June were gains in Link Administration, James Hardie, Collins Foods, Updater and Audinate, plus short positions in Stockland and Metals X. At the end of the month the Fund had 36 long positions and 19 short positions. Many of the Fund's strongest performers from FY15 and FY16 partially retreated mainly as a result of market rotation, along with some specific issues, and citing as an example Netcomm Wireless, which had contributed 9% of the Fund's gross performance in FY16 (when the Fund returned a net 37%) giving back 1.7% in FY17. |
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NWQ Fiduciary Fund
27 Jul 2017 - Australian Fund Monitors
NWQ Fiduciary Fund returned +0.86% in June, taking the Fund's annualised performance since inception in May 2013 to +5.92%.
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27 Jul 2017 - 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 | Performance of the Fund's underlying managers was broad-based, with nine of the ten delivering a positive return. The Fund's returns were largely driven by its underlying Alpha managers, which collectively contributed +0.75% to overall performance. This performance was complemented by Beta managers, which contributed a solid +0.19%. |
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Affluence Investment Fund
25 Jul 2017 - Australian Fund Monitors
The Affluence Investment Fund had a strong June, increasing by 1.1%, taking performance since inception in December 2014 to 9.6% pa with volatility of only 3.1%.
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25 Jul 2017 - Affluence Investment Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund does not invest directly into any asset class, rather, it invests in investment managers which satisfy Affluence Funds Management's investment criteria; its investment philosophy is based on a formula developed by CEO/Portfolio Manager Daryl Wilson since the start of his career in 1999. The Fund targets total returns of at least 5% above inflation over rolling 3 year periods with volatility of returns less than 50% of the ASX200 Index. The Fund also aims to provide investors with a distribution yield of at least 5% p.a. To ensure appropriate diversity of managers and limit the potential for conflicts of interest, no more than 20% of the Fund will be invested with any one external manager. Affluence seeks to achieve the Funds' investment objective by choosing attractively priced investments overseen by quality managers. The Fund uses a number of processes to identify potential investments including quantitative screens for investments which meet historical performance, volatility and other criteria. They also use a number of external researchers and information sources to assist in this process. |
| Manager Comments | In their monthly performance report Affluence stated that valuations for most assets remain relatively high looking forward, but that the portfolio is well positioned for both rises and falls in asset and equity markets, as they continued to focus efforts on making the portfolio as resilient as possible. Notably for a Fund of Funds, Affluence do not charge a management fee, relying on performance fees which the manager feels provides a better alignment of interests with their investors. |
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Cyan C3G Fund
25 Jul 2017 - Australian Fund Monitors
The Cyan C3G Fund closed out the financial year on a strong note, rising 2.4% in June and taking the return for the year to 11.4% and 25% p.a. since inception.
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25 Jul 2017 - Cyan C3G Fund
By: Australian Fund Monitors
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| Fund Overview | Cyan C3G Fund is based on the investment philosophy which can be defined as a comprehensive, clear and considered process focused on delivering growth. These are identified through stringent filter criteria and a rigorous research process. The Manager uses a proprietary stock filter in order to eliminate a large proportion of investments due to both internal characteristics (such as gearing levels or cash flow) and external characteristics (such as exposure to commodity prices or customer concentration). Typically, the Fund looks for businesses that are one or more of: a) under researched, b) fundamentally undervalued, c) have a catalyst for re-rating. The Manager seeks to achieve this investment outcome by actively managing a portfolio of Australian listed securities. When the opportunity to invest in suitable securities cannot be found, the manager may reduce the level of equities exposure and accumulate a defensive cash position. Whilst it is the company's intention, there is no guarantee that any distributions or returns will be declared, or that if declared, the amount of any returns will remain constant or increase over time. The Fund does not invest in derivatives and does not use debt to leverage the Fund's performance. However, companies in which the Fund invests may be leveraged. |
| Manager Comments | Performance was driven by a number of positions including Medical imaging services provider, Capitol Health which rose 38% in June following the the new management team's capital raising to pay down debt, and the sale of its NSW assets. Adding to this a newer holding, MSL Solutions rose 34% in June, while the Fund's investment in Blue Sky Funds continued to provide solid gains as it hit new highs on the back of new institutional mandate wins. Finally the IPO of Kelly Group, a Sydney based consolidator of smaller accounting firms, made a sound market debut almost 30% above its $1.00 issue price. Despite this gain the Manager added to the initial position as the company continued its rise, ending the month at $1.42, providing a healthy gain for the Fund's investors. |
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Allard Investment Fund
24 Jul 2017 - Australian Fund Monitors
Allard's Asian focused long only, absolute return fund dips 2.42% in June, but still returns 16.56% over the previous 12 months.
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24 Jul 2017 - Allard Investment Fund
By: Australian Fund Monitors
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| Fund Overview | Allard's investment approach has remained consistent throughout their history: That is to invest prudently but proactively in well-managed businesses that achieve superior returns on capital in industries with long-term growth potential. The Manager uses both broad top-down guidance and detailed bottom-up analysis to identify suitable markets, industries and companies. Although long only investors, a critical factor in their strategy and performance is the ability to hold cash when they cannot find companies that meet their criteria or are at a sufficient discount to their valuations. |
| Manager Comments | The portfolio remains concentrated, reflecting the manager's high conviction approach, with 38% of NAV across the top 5 stocks, 14% allocated to the next five, leaving 27% allocated to the remaining holdings. Geographically the breakdown was heavily weighted to HK and China at 47%, followed by Singapore and India each representing approximately 12% each, and just 1% each to Indonesia and Vietnam. |
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MHOR Australian Small Cap Fund
24 Jul 2017 - Australian Fund Monitors
The MHOR Small Cap Fund returns +2.28% in June, to back up May's result of +3.24% as Small Caps outperformed Large Caps for the second consecutive month...
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24 Jul 2017 - MHOR Australian Small Cap Fund
By: Australian Fund Monitors
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| Fund Overview | MHOR looks for investment that exhibit the following set of characteristics: -Opportunity - to take advantage of growth and positive alignment with industry themes and trends. -Quality business - competitively advantaged product or service offering. -Financial flexibility - appropriately resourced to capture its opportunity. -Management - with the vision and capability to bring it all together. -Fundamentally undervalued. MHOR also considers labour standards, environmental, social and ethical considerations when making investment decisions but only to the extent that these factors impact the assessment of risk or return. The minimum suggested investment timeframe is 3-5 years. |
| Manager Comments | In June three of the Fund's largest positive contributions came from disruptive gaming company TopBetta Holdings (TBH), Imdex (IMD) a leading provider of drilling fluids and downhole instrumentation to the global minerals industry, and child care provider, G8 Education (GEM). The major detractor for the month was medical device company AirXpanders (AXP). Looking forward the Manager is of the view that many of the macro tailwinds which have driven global equities higher over the past six months appear broadly intact, including the US economic recovery, now in its seventh year, which shows no signs of faltering, (notwithstanding uncertainties surrounding 'Trumponomics'), economic data out of Europe continues to improve, while recent Chinese economic data has also surprised to the upside. |
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