NEWS
20 Apr 2021 - Fund Review: Bennelong Kardinia Absolute Return Fund March 2021
BENNELONG KARDINIA ABSOLUTE RETURN FUND
Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile.
- The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies.
- The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in May 2006 and also has significantly lower risk KPIs. The Fund has an annualised return of 8.75% p.a. with a volatility of 7.61%, compared to the ASX200 Accumulation's return of 6.19% p.a. with a volatility of 14.36%.
- The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Kristiaan Rehder and Stuart Larke have significant market experience, while Bennelong Funds Management provide infrastructure, operational, compliance and distribution capabilities.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - March 2021 (pdf format)
19 Apr 2021 - Performance Report: Frazis Fund
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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 | The Frazis Fund has risen +188.55% over the past 12 months vs AFM's Global Equity Index's +24.91%. Since inception in July 2018, the Fund has returned +29.86% p.a. vs the Index's +12.10%. The Fund has achieved an up-capture ratio since inception of 247%, indicating that, on average, the Fund has risen more than twice as much as the market during the market's positive months. The Fund has achieved a 12-month up-capture ratio of 499.1%. The Fund returned -9.1% in March. In their latest report, Frazis look back at what they wrote this time 12 months ago. At the time they said that they were highly optimistic. They wrote that if they'd been asked to describe a perfect situation for equities, their response would have been: '- a temporary shock, with early signs that the temporary shock was abating, - A 30-40% decline across major indices, with low quality small caps and cyclicals down twice as much, - A total derisking/move to cash/increase in short interest by both retail and professional investors alike, - Enormous fiscal and monetary easing, rates at zero, cash transfers to businesses and citizens around the world, with a dramatic increase in payments to the unemployed.' Looking forward, Frazis' view is that there is a lot going on under the surface. They believe the regime shift that began in April 2020 may have come to an end in February, and that the sharp change in spending patterns triggered last year when travel and dining budgets were cut to zero and consumer spending exploded will at least partly reverse. They also highlight the arrival of inflation and noted that they believe it will have unpredictable consequences. |
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19 Apr 2021 - Performance Report: Equitable Investors Dragonfly Fund
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| Fund Overview | The Fund is an open ended, unlisted unit trust investing predominantly in ASX listed companies. Hybrid, debt & unlisted investments are also considered. The Fund is focused on investing in growing or strategic businesses and generating returns that, to the extent possible, are less dependent on the direction of the broader sharemarket. The Fund may at times change its cash weighting or utilise exchange traded products to manage market risk. Investments will primarily be made in micro-to-mid cap companies listed on the ASX. Larger listed businesses will also be considered for investment but are not expected to meet the manager's investment criteria as regularly as smaller peers. |
| Manager Comments | Over the quarter the Fund returned +19.45% vs the Index's +4.26%. Throughout the quarter the Fund's greatest returns were made away from the ASX. There was the revaluation of the Fund's unlisted holding in digital diagnostics company Ellume, and also a surge in the price of NZ-listed tradie and field services app developer Geo (NZ: GEO). Back on the ASX, traffic monitoring group Redflex (RDF) did well for the Fund early in the quarter thanks to a takeover offer. The Fund returned -1.94% in March. March was a month in which most Fund investments made gains or held steady but three of the Fund's top nine holdings ticked backwards - despite positive developments that Equitable Investors elaborate upon in their latest report. Equitable Investors consider the current state of investment markets to be such that it is more important than ever to have an awareness of who the other shareholders are in any company and how they are likely to act. They believe that if the marginal buyers don't know what they are doing, they won't have the conviction to hold for the medium-to-longer term. |
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16 Apr 2021 - Hedge Clippings | 16 April 2021
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16 Apr 2021 - Performance Report: Bennelong Kardinia Absolute Return Fund
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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 capacity to significantly outperform in falling and volatile markets is highlighted by the following statistics (since inception): Sortino ratio of 1.24 vs the Index's 0.27, maximum drawdown of -11.71% vs the Index's -47.19%, and down-capture ratio of 48.66%. The Fund's down-capture ratio indicates that, on average, the Fund has fallen less than half as much as the market during the market's negative months. The Fund returned -0.36% in March. Positive contributors included Cyprium Metals, NAB, Bluescope Steel, Graincorp and Pentanet. Detractors included Zip Co, Fortescue, Proteomics and Nickel Mines. The Short Book also detracted from performance. Kardinia kept their net market exposure relatively steady at 68.4% (87.1% long and 18.7% short) with new positions including Cyprium and Webjet offset by reduced positions in some resource holdings and the sale of Independence Group. They maintain a bias towards stocks that benefit from a re-opening of economies scenario, with Banks, Resources and Technology the largest sector weights. |
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16 Apr 2021 - Managers Insights | Insync Fund Managers
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Chris Gosselin, CEO of Australian Fund Monitors, speaks with Monik Kotecha Chief Investment Officer at Insync Fund Managers. Insync Fund Managers operate two funds, the Insync Global Capital Aware Fund (hedged) and the Insync Global Quality Equity Fund (unhedged). The two funds have the same strategy, the only difference being that one is hedged and the other is unhedged. The Insync Global Capital Aware Fund was started in October 2009 and since then has returned +11.43% p.a. with an annualised volatility of 9.90%. Over the same period, the Insync Global Quality Equity Fund has returned +13.38% p.a. with an annualised volatility of 10.64%.
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16 Apr 2021 - Fund Review: Bennelong Long Short Equity Fund March 2021
BENNELONG LONG SHORT EQUITY FUND
Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.
- The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large-caps from the ASX/S&P100 Index, with over 19-years' track record and an annualised returns of 14.10%.
- The consistent returns across the investment history highlight the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market. The Fund's Sharpe Ratio and Sortino Ratio are 0.83 and 1.31 respectively.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - March 2021 (pdf format)
15 Apr 2021 - Performance Report: Bennelong Long Short Equity Fund
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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 Fund's Sharpe and Sortino ratios (since inception) of 0.83 and 1.31 respectively, by contrast with the Index's Sharpe of 0.39 and Sortino of 0.43, highlight its capacity to achieve superior risk-adjusted returns while avoiding the market's downside volatility. The Fund's significant outperformance in falling markets is demonstrated by the following statistics (since inception): worst month of -10.11% vs the Index's -20.65%, maximum drawdown of -23.77% vs the Index's -47.19%, and down-capture ratio of -162%. The Fund's down-capture ratio indicates that, on average, it has risen during the market's negative months. Bennelong noted the rotation into leveraged cyclicals which hit the Fund in February continued into the first half of March. The portfolio stabilised in the second half of March, ending the month down -5.95%. Contribution was spread across half a dozen sectors with none standing out. Contribution from the top and bottom pairs was similar in magnitude. |
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15 Apr 2021 - One Year On - What Did We Learn?
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One Year On - What Did We Learn? Marcus Padley, MarcusToday 29th March 2021 It is a year since the bottom of the market on March 23, 2020. Since then, the ASX 200 is up 54.44% if you bought at the absolute low and sold today. What a year of opportunity. The 54% is a fantasy of course - no-one bought at the bottom, or could be expected to have bought at the bottom and amazingly, if you bought just a week after the bottom, the market is up 26.7%, less than half the 54% - what a difference a week makes in volatile times. Here are some of the best and worst performers over the last year. Lets see if we can learn something from a year of pandemic hindsight. All these tables have been derived from our Marcus Today All Ordinaries spreadsheet. I have included the one-year performance column and a few other columns as you can see, in particular the PE, Yield and Revenue Growth. The reason for including those is to highlight how you simply would not have picked these stocks on basic fundamentals - the best performers are not necessarily profitable or cheap, and most of them offer no yield at all. TOP 100 - Top 20 performers in the biggest 100 stocks: TOP 100 - Worst 20 performers in the biggest 100 stocks: NEXT 100 - Top 20 performers in the next biggest 100 stocks: NEXT 100 - Worst 20 performers in the next biggest 100 stocks: ALL ORDINARIES - Best 20 performers in the All Ordinaries Index: ALL ORDINARIES - Worst 20 performers in the All Ordinaries 15 GOLDEN RULES FROM THE PANDEMIC - Here are some of the lessons from these lists. Observations about sharp market corrections and the recovery.
At the end of the day the pandemic year has been great for us as investors. It has been a year of fabulous opportunities. Hopefully you played the game. Look forward to the next great correction. Hopefully we`ll all have the vigilance, experience and courage to exploit it, not run from it. Funds operated by this manager: |
14 Apr 2021 - Performance Report: Cyan C3G Fund
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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 | After a run of positive months, the Fund returned -3.1% in March. Two strong performers during the month included Alcidion and Universal Biosensors, while some of the Fund's longer-term holdings including Swift Media, Readcloud, Mighty Craft and Quickstep retraced more than 10%, and a handful including Raiz, Vita Group and Kip McGrath experienced smaller declines. Cyan noted the majority of these stocks had posted significant gains in recent months, so last month's declines weren't unexpected. Cyan remains positive on the long-term positioning of these companies and stay committed to their investments unless there are significant negative fundamental changes. In the coming months Cyan expect some good news from their already-committed pipeline of IPO and pre-IPO positions in companies such as the Afterpay-backed venture capital company AP Ventures and influencer marketing platform Tribe. The Fund has enjoyed a strong start to April and Cyan are excited about a number of company specific opportunities that should play out in the coming months. |
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