Healthcare - An Attractive Opportunity

7 Jul 2020 - Alphinity Investment Management

Demand growth for healthcare services is not tied to the economic cycle, which all else being equal, has historically made healthcare companies attractive investments, particularly during cyclical downturns. This downturn has been somewhat...

Corporate bond investors should be careful what they wish for

6 Jul 2020 - Ardea Investment Management

Is central bank support for corporate bond markets truly unlimited? Our sense is decidedly not. Corporate bonds are not a natural asset for central banks to own and investors need to be aware of the risk that central bank...

Hedge Clippings | 03 July 2020

3 Jul 2020 - Australian Fund Monitors

June 30th saw the end of the 2020 financial year, and for the last six months of it, extraordinary market volatility: Firstly, one of the 10 sharpest quarterly declines in history, followed by one of the 10 sharpest rallies. We'd suggest...

3 Jul 2020 - Hedge Clippings | 03 July 2020

By: Australian Fund Monitors

Hedge Clippings | Friday, 03 July 2020

June 30th saw the end of the 2020 financial year, and for the last six months of it, extraordinary market volatility: Firstly, one of the 10 sharpest quarterly declines in history, followed by one of the 10 sharpest rallies. We'd suggest that's a "V" shaped recovery if ever we saw one. But that's the market. From where we sit, the economy is going to be a very different beast.

Tech rules! Actually money does, but where there's tech, it seems there's wealth. Tesla is now the most valuable automaker in the world, and today's paper says Afterpay is knocking on the door of the ASX Top 20.

Meanwhile medically, the pandemic - particularly in the USA, South America and other major population centres of the world - shows no real sign of abating, seemingly because people either can't, or won't, socially distance. And why would they when (unlike in Australia) their political masters seem to be actively encouraging themselves not to do so?

We even heard (surely this is folklore?) that in Alabama people are holding COVID parties with an entry fee, which is collected as a "pot" which is then "won" by the first person to test positive.

Insanity prevails!

Elsewhere the Chinese government has made its long-awaited move on Hong Kong, possibly hoping to do so under the cover of COVID. In turn, Australia (and other democracies) seem to have finally woken up to the concerns of the average Australian. Having been seduced by seemingly easy Chinese wealth for the past 15 or 20 years, we're seeing the inevitable drawback of that complacency.

Having seen Chinese agents of influence at work here and abroad, Australia is being firmly told not to even consider meddling in Chinese affairs by offering assistance or asylum to anyone wanting to leave, or flee, Hong Kong. The Chinese "absorption" of Hong Kong is complete. Next will be the democratic Republic of China, namely Taiwan.

How will Australia and the democratic world respond when (not if) that's next on the list?

Australia is eventually going to have to face the alternative of trade and wealth, or freedom. Maybe we've always been secretly aware of the threat, but lacked the vision, ability, resolution or inclination to take appropriate action. Just like the boiling frog.

News & Insights

Will COVID-19 Cripple the 4 Banks? by Marcel von Pfyffer, Arminius Capital

Surviving the Dividend Drought by Malcolm Whitten, Nikko Asset Management

Is There Something Systematically Wrong with Victoria's COVID-19 Performance? by Christopher Joye, Coolabah Capital Investments

Performance News

Insync Global Quality Equity Fund: +7.39% in May, +13.91% p.a. since inception in October 2009

Touchstone Index Unaware Fund: +4.93% in May, +6.09% p.a. since inception in April 2016

Delft Global High Conviction Strategy: +14.78% p.a. since inception in August 2011

Quay Global Real Estate Fund: +5.78% p.a. since inception in July 2014

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Is There Something Systematically Wrong with Victoria's COVID-19 Performance?

3 Jul 2020 - Christopher Joye, Coolabah Capital Investments

Our data scientists' analysis of Victoria's COVID-19 infection trajectory has unearthed a disturbing finding: it would appear that since April our southern neighbour has systematically underperformed the rest of Australia's key...

Surviving the Dividend Drought

2 Jul 2020 - Malcolm Whitten, Portfolio Manager & Senior Analyst, Equities, Nikko Asset Management

The nature of the post COVID-19 business operating environment is unclear. Consumer willingness to go out and employee caution and practicalities of a return to the office will weigh on consumption. Businesses have deferred...

Performance Report: Delft Partners Global High Conviction

1 Jul 2020 - Australian Fund Monitors

The Delft Global High Conviction Strategy has returned +14.78% with a volatility of +11.84% on an annualised basis since inception in August 2011. Over the same period, AFM's Global Equity Index has risen +13.50% p.a. with an annualised...

1 Jul 2020 - Performance Report: Delft Partners Global High Conviction

By: Australian Fund Monitors

Report Date	01 July 2020
Manager	Delft Partners
Fund Name	Delft Partners Global High Conviction
Strategy	Equity Long
Latest Return Date	May 2020
Latest Return	-0.17%
Latest 6 Months	-9.12%
Latest 12 Months	7.51%
Latest 24 Months (pa)	3.76%
Annualised Since Inception	14.78%
Inception Date	15 July 2011
FUM (millions)	AU$9.5
Fund Overview	The Global High Conviction Strategy seeks to outperform the MSCI World Index by 3-5% p.a. over rolling 5 year periods. The Fund invests in companies listed on major global developed market exchanges by combining 'fundamental' analysis with quantitative stock selection tools. There is typically a bias to large caps and a 'value' tilt resulting in higher dividend yield than the index. The quantitative model is proprietary and designed in-house. The critical elements are Valuation, Momentum, and Quality (VMQ) and every stock in the global universe is scored and ranked. Verification of the quant model scores is then cross checked by fundamental analysis in which a company's Accounting policies, Governance, and Strategic positioning is evaluated. The manager believes strategy is suited to investors seeking returns from investing in global companies, diversification away from Australia and a risk aware approach to global investing. It should be noted that this is a strategy in an IMA format and is not offered as a fund. An IMA solution can be a more cost and tax effective solution, for clients who wish to own fewer stocks in a long only strategy.
Manager Comments	The Delft Global High Conviction Strategy has returned +14.78% with a volatility of +11.84% on an annualised basis since inception in August 2011. Over the same period, AFM's Global Equity Index has risen +13.50% p.a. with an annualised volatility of 10.57%. The Strategy has achieved an average positive monthly return of +3.26% against the Index's +2.96%. The Strategy's Sharpe and Sortino ratios for performance since inception are 1.05 and 1.87. With respect to the Index's 10 best and worst months since the Strategy's inception, the Strategy outperformed in 6 out of 10 of the Index's worst months and 9 out of 10 of the index's best months.
More Information	View Fund's Profile View Manager's Report

Performance Report: Touchstone Index Unaware Fund

1 Jul 2020 - Australian Fund Monitors

The Touchstone Index Unaware Fund rose +4.93% in May, taking annualised performance since inception in April 2016 to +6.09% with an annualised volatility of 16.18%.

1 Jul 2020 - Performance Report: Touchstone Index Unaware Fund

By: Australian Fund Monitors

Report Date	01 July 2020
Manager	Touchstone Asset Management, a Bennelong boutique
Fund Name	Touchstone Index Unaware Fund
Strategy	Equity Long
Latest Return Date	May 2020
Latest Return	4.93%
Latest 6 Months	-18.07%
Latest 12 Months	-8.07%
Latest 24 Months (pa)	-0.14%
Annualised Since Inception	6.09%
Inception Date	04 April 2016
FUM (millions)	AU$4.4
Fund Overview	The Fund aims to deliver capital growth and a sustainable income stream to its investors by investing in a portfolio of primarily listed Australian shares and cash, aiming to provide a total return that exceeds the return of the S&P/ASX300 Accumulation Index by 2% p.a. (before fees and expenses) over a rolling 5 year period. 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 rose +4.93% in May, taking annualised performance since inception in April 2016 to +6.09% with an annualised volatility of 16.18%. The Fund's Sharpe and Sortino ratios for performance since inception are 0.37 and 0.35 respectively. At month-end, the Fund held 21 stocks with a median position size of 4.4%. The portfolio's holdings had an average forward year price/earnings of 20.8, forward-year tangible ROE of 9.8% and forward-year dividend yield of 2.6%. The Fund ended the month with a cash weighting of 10.5%, up from 7.4% at the end of April.
More Information	View Fund's Profile View Manager's Report

Is it Time to Invest in the Great Australian Dream?

1 Jul 2020 - Tim Carleton, Auscap Asset Management

COVID-19 has posed an incredible challenge to the Australian economy. Following broad stimulus measures, more recently Federal and State Government attention has narrowed to specific sectors. The highly cyclical housing construction sector...

Performance Report: Insync Global Quality Equity Fund

30 Jun 2020 - Australian Fund Monitors

The Insync Global Quality Equity Fund rose +7.39% in May, outperforming AFM's Global Equity Index by +5.29% and taking annualised performance since inception in October 2009 to +13.91% versus the Index's +10.70%. The Fund has returned...

30 Jun 2020 - Performance Report: Insync Global Quality Equity Fund

By: Australian Fund Monitors

Report Date	30 June 2020
Manager	Insync Fund Managers
Fund Name	Insync Global Quality Equity Fund
Strategy	Equity Long
Latest Return Date	May 2020
Latest Return	7.39%
Latest 6 Months	6.85%
Latest 12 Months	24.51%
Latest 24 Months (pa)	18.44%
Annualised Since Inception	13.91%
Inception Date	01 July 2018
FUM (millions)	AU$23.8234
Fund Overview	Insync's investment strategy is driven by fundamentals combined with active risk management with the aim of investing in high quality, large cap global companies at attractive prices. Insync looks for companies that can consistently pay rising dividends and earn high returns on invested capital. Insync aims to provide investors with long-term capital growth and some income. 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 typically of 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.
Manager Comments	The Insync Global Quality Equity Fund rose +7.39% in May, outperforming AFM's Global Equity Index by +5.29% and taking annualised performance since inception in October 2009 to +13.91% versus the Index's +10.70%. The Fund has returned +24.51% against the Index's +9.83% over the past 12 months. The Fund's capacity to protect investor capital in falling markets is highlighted by its Sortino ratio for performance since inception of 1.96 and down-capture ratio of 65%. Insync noted they continue to hold companies exposed to Megatrends which they believe will deliver sustainable profitable growth in a post-pandemic environment. Their view is that COVID-19 simply brought forward the demise of many businesses that were already in structural decline. The top three Megatrends in the portfolio by weighting as at the end of May were the 'Age Related Health Solutions' megatrend (15%), the 'Digitisation' megatrend (13%), and the 'Cashless Society' megatrend (10%). The Fund's top 5 holdings at month-end were PayPal, Adobe, JD Sports Fashion, S&P Global and Dominos.
More Information	View Fund's Profile View Manager's Report

Performance Report: Quay Global Real Estate Fund

29 Jun 2020 - Australian Fund Monitors

The Quay Global Real Estate Fund has returned +5.78% p.a. with an annualised volatility of 12.22% since inception in January 2016. In May the Fund returned -1.0% with currency providing a -1.4% drag.

29 Jun 2020 - Performance Report: Quay Global Real Estate Fund

By: Australian Fund Monitors

Report Date	29 June 2020
Manager	Quay Global Investors
Fund Name	Quay Global Real Estate Fund
Strategy	Real Estate
Latest Return Date	May 2020
Latest Return	-0.99%
Latest 6 Months	-17.03%
Latest 12 Months	-8.98%
Latest 24 Months (pa)	4.90%
Annualised Since Inception	5.78%
Inception Date	31 July 2014
FUM (millions)	AU$163.75
Fund Overview	Quay is a boutique investment management business established in 2013 with a focus on preserving and creating wealth for investors through investments in real estate securities. Quay uses a dual manager approach to the investment and portfolio management decision making process. This involves both Principals collaborating to determine significant portfolio investments and positions. 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	The Quay Global Real Estate Fund has returned +5.78% p.a. with an annualised volatility of 12.22% since inception in January 2016. In May the Fund returned -1.0% with currency providing a -1.4% drag. Returns were negatively impacts by the Fund's exposure to Hong Kong as the Chinese Communist Party announced new national security laws for the island. Quay's decision to maintain their exposure is a reflection of their investment process - identifying quality real estate, conservatively financed, with low dividend pay-out ratios and a return profile that exceeds Quay's long-term return requirement of CPI + 5%. Quay noted that, considering global real estate has lagged the general equity market recovery, and given that the operating environment was generally better than expected, they saw an opportunity to redeploy cash across their preferred names, as well as top up on sectors that had been hit hardest (Healthcare and Retail). For long-term investors, Quay's view is that valuations look very attractive at current levels, however, their biggest concern remains access to capital and rent collection. To date these concerns have been allayed as more companies reported over the month.
More Information	View Fund's Profile View Manager's Report

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7 Jul 2020 - Healthcare - An Attractive Opportunity

6 Jul 2020 - Corporate bond investors should be careful what they wish for

3 Jul 2020 - Hedge Clippings | 03 July 2020

3 Jul 2020 - Is There Something Systematically Wrong with Victoria's COVID-19 Performance?

2 Jul 2020 - Surviving the Dividend Drought

1 Jul 2020 - Performance Report: Delft Partners Global High Conviction

1 Jul 2020 - Performance Report: Touchstone Index Unaware Fund

1 Jul 2020 - Is it Time to Invest in the Great Australian Dream?

30 Jun 2020 - Performance Report: Insync Global Quality Equity Fund

29 Jun 2020 - Performance Report: Quay Global Real Estate Fund

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