Fund Review: Bennelong Long Short Equity Fund July 2019

13 Aug 2019 - Australian Fund Monitors

Latest Fund Review for the Bennelong Long Short Equity Fund is now available. The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large-caps from the ASX/S&P100 Index...

Performance Report: Bennelong Kardinia Absolute Return Fund

12 Aug 2019 - Australian Fund Monitors

The Bennelong Kardinia Absolute Return Fund returned +0.42% in July, taking annualised performance since inception in May 2006 to +9.26% with an annualised volatility of 7.03%.

12 Aug 2019 - Performance Report: Bennelong Kardinia Absolute Return Fund

By: Australian Fund Monitors

Report Date	12 August 2019
Manager	Kardinia Capital, a Bennelong boutique
Fund Name	Bennelong Kardinia Absolute Return Fund
Strategy	Equity Long/Short
Latest Return Date	July 2019
Latest Return	0.42%
Latest 6 Months	5.88%
Latest 12 Months	-3.57%
Latest 24 Months (pa)	1.30%
Annualised Since Inception	9.26%
Inception Date	01 May 2006
FUM (millions)	AU$110.39
Fund Overview	The Fund consists of a concentrated long/short portfolio typically comprising 20 to 50 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. On average since inception the Fund's exposure has averaged 40% net long. There is a slight bias to large cap stocks on the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 5% to 10% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position. 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 Bennelong Kardinia Absolute Return Fund returned +0.42% in July, taking annualised performance since inception in May 2006 to +9.26% with an annualised volatility of 7.03%. By contrast, the ASX200 Accumulation Index has returned +6.54% p.a. with an annualised volatility of 13.19% over the same period. The Fund's Sortino ratio of 1.38 versus the Index's 0.30 and down-capture ratio of 40.11% highlight the Fund's focus on avoiding the market's downside over the long-term. July's return was driven by gold, industrials and key healthcare stocks. Top contributors included A2 Milk, Evolution, Northern Star, Magellan Financial Group, CSL and Polynovo. Detractors included Next Science, Nearmap, Rio Tinto and Audinate Group. The largest detractors were a short position in Share Price Index Futures and the individual short book. Net equity market exposure was increased from 24.9% to 40.5% (73.3% long and 32.8% short), with the key changes being a new long position in Westpac and increased weightings in Commonwealth Bank, James Hardie, Xero, A2 Milk and Macquarie Group. This was partly offset by the sale of NAB and Next Science and four new individual stock shorts in the financials and resources sectors.
More Information	Fund Profile Manager's Report AFM Research Reports

Hedge Clippings | 09 August 2019

9 Aug 2019 - Australian Fund Monitors

Last week's Hedge Clippings noted that President Trump was keen to show his Chinese counterpart that he had the upper hand in the ongoing tariff war by slapping a 10% tariff on a further $300 bn of Chinese imports to the US effective...

9 Aug 2019 - Hedge Clippings | 09 August 2019

By: Australian Fund Monitors

Hedge Clippings | Friday 09 August, 2019

Last week's Hedge Clippings noted that President Trump was keen to show his Chinese counterpart that he had the upper hand in the ongoing tariff war by slapping a 10% tariff on a further $300 bn of Chinese imports to the US effective September 1, with the threat of increasing in stages to 25%. Whilst China certainly has more to lose than America in the tariff war, it didn't take long for President Xi to respond, not in kind, but by using his currency weapon.

This graphic courtesy of the BBC indicates the battle so far - and we'd expect there's a way to go yet:

The picture doesn't include the latest $300 bn, but it certainly shows Trump has a larger arsenal. Or something sounding like it.

Equity markets reacted dramatically with a savage sell-off, only to rebound equally rapidly over the course of the week, which probably only goes to show how skittish markets are. However, it also indicates the potential for Trump's tariffs skirmish to escalate into something much more dangerous, including to Australia, is significant.

Closer to home AMP was front and centre in the news with their annual results, accompanied by a capital raising easily digested by institutional investors, and apparently oversubscribed three times. Whilst Hedge Clippings is not a stock analyst, we would still consider that there is a long way to go before AMP recovers to its former glory days, if ever. Whilst some investors (as above) are obviously showing faith in the new management going forward, others are shunning, or redeeming funds from AMP products, whilst disgruntled AMP advisers are considering, or have already instigated, legal action.

AMP's woes are symptomatic of the changes and disruption taking place within the financial services sector, further exaggerated by technology, regulation, and the ongoing drive to reduce fees wherever possible. The vertically integrated product manufacture/distribution model so eagerly adopted by David Murray (ironically) and destroyed last year by the Hayne Royal Commission, will result in losers, but also in opportunities for those prepared and able to take them.

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Performance Report: Bennelong Long Short Equity Fund

9 Aug 2019 - Australian Fund Monitors

The Bennelong Long Short Equity Fund returned +6.92% in July, outperforming the ASX200 Accumulation Index by +3.98% and taking annualised performance since inception in February 2002 to +15.17% versus the Index's +8.55%.

9 Aug 2019 - Performance Report: Bennelong Long Short Equity Fund

By: Australian Fund Monitors

Report Date	09 August 2019
Manager	Bennelong Long Short Equity Management, a Bennelong boutique
Fund Name	Bennelong Long Short Equity Fund
Strategy	Equity Market Neutral
Latest Return Date	July 2019
Latest Return	6.92%
Latest 6 Months	6.15%
Latest 12 Months	0.19%
Latest 24 Months (pa)	4.41%
Annualised Since Inception	15.17%
Inception Date	01 January 2003
FUM (millions)	AU$386.2
Fund Overview	Bennelong Long Short Equity Management applies a qualitative stock selection process to construct a diversified portfolio of paired securities based on relative value. The Bennelong Long Short Equity Management strategy invests primarily in the S&P/ASX 100 and is dollar neutral at cost. 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 Bennelong Long Short Equity Fund returned +6.92% in July, outperforming the ASX200 Accumulation Index by +3.98% and taking annualised performance since inception in February 2002 to +15.17% versus the Index's +8.55%. The Fund's Sortino ratio of 1.48 versus the Index's 0.50 and down-capture ratio of -163.51% highlight the Fund's capacity to perform well in falling markets. During the month the Fund experienced a favourable balance of fundamental news. In addition, Bennelong noted appetite for higher yield stocks moderated, which was a tailwind for returns. They believe the elimination of the dividend in two ASX200 companies experiencing operating headwinds is a reminder that yield is no certainty in the equity markets. At the sector level Financials were the Fund's top contributor while Consumer Discretionary was the greatest detractor. The number of positive pairs exceeded the negative. The contribution of the Fund's negative pairs was modest.
More Information	Fund Profile Manager's Report AFM Research Reports

Another Trade War - This Time Without The US

9 Aug 2019 - Marcel von Pfyffer, Arminius Capital

With all the news about the Trump Administration's trade disputes with China, Japan, Canada, Mexico, and the EU, the ordinary investor probably hasn't noticed one trade war which doesn't involve the US but could have serious consequences...

Performance Report: Paragon Australian Long Short Fund

8 Aug 2019 - Australian Fund Monitors

The Paragon Australian Long Short Fund rose +9.4% in July, outperforming the ASX200 Accumulation Index by +6.46% and taking annualised performance since inception in February 2013 to +10.87% versus the Index's +9.22%.

8 Aug 2019 - Performance Report: Paragon Australian Long Short Fund

By: Australian Fund Monitors

Report Date	08 August 2019
Manager	Paragon Funds Management
Fund Name	Paragon Australian Long Short Fund
Strategy	Equity Long/Short
Latest Return Date	July 2019
Latest Return	9.40%
Latest 6 Months	25.82%
Latest 12 Months	1.97%
Latest 24 Months (pa)	9.67%
Annualised Since Inception	10.87%
Inception Date	28 February 2013
FUM (millions)	AU$40.2
Fund Overview	The Paragon Fund is a concentrated long/short Australian listed equities product that is fundamentally driven with a focus on the industrial and resource sectors. Paragon's unique investment style, comprising thematic led idea generation followed with an in depth research effort, results in a concentrated portfolio of high conviction stocks. Conviction in bottom up analysis drives the investment case and ultimate position sizing: * Both quantitative analysis - probability weighted high/low/base case valuations - and qualitative analysis - company meetings, assessing management, the business model, balance sheet strength and likely direction of returns - collectively form Paragon's overall view for each investment case. * Paragon will then allocate weighting to each investment opportunity based on a risk/reward profile, capped to defined investment parameters by market cap, which are continually monitored as part of Paragon's overall risk management framework. The objective of the Paragon Fund is to produce absolute returns in excess of 10% p.a. over a 3-5 year time horizon with a low correlation to the Australian equities market.
Manager Comments	The Paragon Australian Long Short Fund rose +9.4% in July, outperforming the ASX200 Accumulation Index by +6.46% and taking annualised performance since inception in February 2013 to +10.87% versus the Index's +9.22%. Positive contributors came from gold holdings including Alacer Gold, as well as iSignthis, Xero, Agrimin and a short position in Pilbara. Paragon believe the move in gold, particularly the moves in their gold longs, are still in their infancy. Paragon noted they continue to be very constructive on gold, especially A$ gold. They added that gold particularly benefits from accommodative monetary policy (namely low and falling cash rates), quantitative easing (QE), falling bond rates (namely negative or approaching negative real rates) and global market volatility, all four of which arose in the last month. Paragon believe the best returns will be made in identifying key stocks that meet particular criteria: Emerging economic project developments such as RED 5 (discussed in their latest report); High-cost operating and/or leveraged mid-cap producers such as Perseus and Westgold; and Growing large-cap producers such as Northern Star and Alacer Gold (discussed in their latest report).
More Information	Fund Profile Manager's Report

5 Beliefs to Hold When The Market is Tanking

8 Aug 2019 - Dean Fergie, Cyan Investment Management

Navigating volatile markets is always challenging. Correction: navigating bearish markets is challenging; navigating bullish markets is usually pretty enjoyable. We've had it great in 2019; it's been the best start to a calendar...

New Funds on Fundmonitors.com

7 Aug 2019 - Australian Fund Monitors

Here are some of the latest additions to our database. Follow the links to view each fund's profile, where you'll have access to their offer documents, monthly reports, historical returns, performance analytics, rankings, research,...

7 Aug 2019 - New Funds on Fundmonitors.com

By: Australian Fund Monitors

New Funds on Fundmonitors.com

Below are some of the funds we've recently added to our database. Follow the links to view each fund's profile, where you'll have access to their offer documents, monthly reports, historical returns, performance analytics, rankings, research, platform availability, and news & insights.

Firetrail Absolute Return Fund

Inception date: 14 March 2018
Strategy: Equity Market Neutral
Geographic mandate: Australia/Global
Investor type: Wholesale & Retail

Minimum initial investment: AU$20,000
Distributions: 6 Monthly
Management fee: 1.5%
Performance fee: 20%

View Profile

Firetrail Australian High Conviction Fund

Inception date: 14 March 2018
Strategy: Equity Long
Geographic mandate: Australia/NZ
Investor type: Wholesale & Retail

Minimum initial investment: AU$20,000
Distributions: 6 Monthly
Management fee: 0.95%
Performance fee: 15%

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Janus Henderson Australian Fixed Interest Fund

Inception date: 31 August 1994
Strategy: Fixed Income
Geographic mandate: Australia
Investor type: Retail

Minimum initial investment: AU$25,000
Distributions: Quarterly
Management fee: 0.47%
Performance fee: Nil

View Profile

Lakehouse Global Growth Fund

Inception date: 01 December 2017
Strategy: Equity Long
Geographic mandate: Global
Investor type: Wholesale & Retail

Minimum initial investment: AU$100,000
Distributions: Annually
Management fee: 1.3%
Performance fee: 15.0%

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Lakehouse Small Companies Fund

Inception date: 15 November 2016
Strategy: Equity Long
Geographic mandate: Australia/NZ
Investor type: Wholesale & Retail

Minimum initial investment: AU$100,000
Distributions: 6 Monthly
Management fee: 1.3%
Performance fee: 15.0%

View Profile

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Hedge Clippings | 02 August 2019

2 Aug 2019 - Australian Fund Monitors

With the US Federal reserve cutting interest rates for the first time in 11 years overnight - the last easing being an early Christmas present way back in 2008 - it was yet another sign that what The Donald wants, The Donald usually gets.

2 Aug 2019 - Hedge Clippings | 02 August 2019

By: Australian Fund Monitors

Hedge Clippings | Friday 02 August, 2019

With the US Federal reserve cutting interest rates for the first time in 11 years overnight - the last easing being an early Christmas present way back in 2008 - it was yet another sign that what The Donald wants, The Donald usually gets.

But not always. No sooner had Donald advised that the Fed's easing was the first in a series (as he had wanted), than Fed Chairman Jerome Powell contradicted him by saying:

"We're thinking of it essentially as a mid-cycle adjustment to policy. I'm contrasting it there with the beginning, for example, the beginning of a lengthy cutting cycle. That's not what we're seeing now. That's not our perspective or outlook."

No wonder the markets were confused! One wonders exactly where the "mid-cycle adjustment to policy" terminology came from, or for those wondering what the next move is, how to factor those comments into their investment decisions. As a result, markets that should have been buoyed by lower interest rates were left decidedly underwhelmed, although while the consensus seems to be that there will be at least one more cut in the US before this year is out, they weren't banking on it.

At the same time Trump flagged the potential for further tariff action against the Chinese, no doubt just to remind everyone that, as far as he's concerned, he holds the upper hand in the trade war.

From Australia's perspective the expectation from economists is certainly that there is at least one more cut of 0.25%, and possibly a further one after that, before the RBA is finished. Obviously what happens in the US will have some impact on that outcome, but so will the effect of the past two cuts and the stimulus provided by tax refunds which should start to flow through.

Elsewhere overnight news came through that the U.K.'s new prime minister had lost his first by-election (that didn't take long!), taking his parliamentary majority down to a minuscule, and minimum, of one. Boris is quite happy, it appears, to take the UK out of the EU with a no deal Brexit, which might just be a better outcome than a general election resulting in a Corbyn Labour government.

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The winners and losers of a more sustainable approach to plastics

1 Aug 2019 - Ramoun Lazar, Equity Analyst at Firetrail Investments

Demand for convenience has seen plastic use multiply and today plastics are fundamental to many aspects of daily life. As consumers we interact with plastics many times a day. Whether it be drinking water from a PET bottle, eating yoghurt...

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13 Aug 2019 - Fund Review: Bennelong Long Short Equity Fund July 2019

12 Aug 2019 - Performance Report: Bennelong Kardinia Absolute Return Fund

9 Aug 2019 - Hedge Clippings | 09 August 2019

9 Aug 2019 - Performance Report: Bennelong Long Short Equity Fund

9 Aug 2019 - Another Trade War - This Time Without The US

8 Aug 2019 - Performance Report: Paragon Australian Long Short Fund

8 Aug 2019 - 5 Beliefs to Hold When The Market is Tanking

7 Aug 2019 - New Funds on Fundmonitors.com

2 Aug 2019 - Hedge Clippings | 02 August 2019

1 Aug 2019 - The winners and losers of a more sustainable approach to plastics

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