NEWS
Pengana Australian Equities Market Neutral Fund
23 May 2013 - Australian Fund Monitors
The Pengana Australian Equities Market Neutral Fund delivered -0.9% for April and has an annualised return of 8.82% since inception in September 2008.
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23 May 2013 - Pengana Australian Equities Market Neutral Fund
By: Australian Fund Monitors
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| Manager Comments | Two of our largest long positions in April were BC Iron and Skilled Group, while two of our largest short positions were Macquarie Atlas Roads Group and AWE. Following on from March, Momentum (see chart below) was again the best performing investment theme in our model for the month followed by Earnings Revisions and Quality. Value failed to deliver in April and remains out of favour with a market that is firmly focused on Equity income via low risk(beta), large cap, and high dividend yielding stocks. With Momentum capturing share price movements that are based on previous performance, it provides a technical component to our mostly fundamental model. The market is now starting to pay attention to the fundamental Earnings Revisions and Quality components of our model, and the outstanding issue is when the market will start to factor in the fundamental or “true Value” of companies as they continue to stretch further into areas of over and under valuation across the defensive and cyclical sectors. |
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8IP Asia Pacific Partners Fund
22 May 2013 - Australian Fund Monitors
The 8IP Asia Pacific Partners Fund delivered -1.17% during April bringing its six month performance to 21.57%.
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22 May 2013 - 8IP Asia Pacific Partners Fund
By: Australian Fund Monitors
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| Fund Overview | There is a relatively low number of individual securities in the Fund which may result in periods of high volatility. Ideally, investments should be made for a minimum of five years so that short term volatility may be offset by high capital growth over time. Companies are chosen using an active, bottom-up approach with particular attention paid to valuation and the sustainability of return on equity. The Fund takes a long term view when investing. Companies of all sizes are considered for inclusion in the Fund. The Fund invests in a mix of both developed and emerging markets. Investments in emerging markets may carry risk associated with delivery difficulties, failed or late settlement of market transactions and the registration and custody of securities is more complex. The lack of liquidity and efficiency in these markets may mean that from time to time the Fund may experience more difficulty in purchasing or selling securities than it would in a more developed market. |
| Manager Comments | After five months of strong gains, a number of stocks in the Fund ran into profit taking. During the month, we re-initiated a position in KWG Property Holdings Limited, a Chinese property company. Recent weakness in the share price provided an opportunity to buy after the strong performance by Chinese property stocks in 2012. Having recently visited six companies in the sector, it is clear that end-user demand is strong and interest costs have fallen sharply. In fact, demand for corporate bonds issued by Chinese property companies is the strongest we have ever seen. This bodes well for the performance of the shares over coming years. Largest sector exposures were financials, real estate and consumer discretionary. |
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Pengana Asia Special Events (Onshore) Fund
21 May 2013 - Australian Fund Monitors
The Pengana Asia Special Events (Onshore) Fund returned 1.31% during April and had a twelve month return of 8.23%.
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21 May 2013 - Pengana Asia Special Events (Onshore) Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund seeks to profit from trading securities which are primarily subject to corporate events or from trading-related securities which the Investment Manager believes are mispriced by the market. The Fund invests in securities that are listed on Asian stock markets and other markets where related securities may be listed and in securities which are listed on markets outside of Asia where more than 70% (by assets or earnings) of the underlying business originates from an Asian country. The Fund aims to generate consistently positive returns which have a low correlation to the Asian stock markets. The objective is to generate 10-20% pa with a standard deviation of 6-10% |
| Manager Comments | Japanese, Singaporean and Malaysian positions contributed significantly to the positive performance over the month as M&A activity picked up. Capital Management was the most successful strategy for the Fund, with Earnings Surprise, M&A and Stubs Trades also making meaningful contributions. Short index futures positions negatively impacted on performance as Asian markets generally rose strongly over the month. The Fund maintained an average net and gross exposure of 16% and 164% respectively. Largest month-end net exposures were China, Japan and Indonesia and biggest gross exposure by strategy was Merger and Acquisitions. April was very eventful led by a significant pick up in M&A activity and the earnings seasons in some markets. Japan was the most active M&A market in Asia, accounting for 6 of the 14 new deals during the month. Interestingly, as a sign of returning corporate confidence, 2 of the biggest Asian deals for the year were announced in April. Leading the table was the stake increase in Hindustan Unilever by parent Unilever Plc. Within the consumer space as well CP ALL, the operator of over 5,000 7-Eleven stores in Thailand, announced a takeover of Thai hypermart operator Siam Makro. A fall in commodity prices, led by the unexpected collapse of gold prices, resulted in significant volatility in resource stocks during the month. The falls did not adversely affect the risk arbitrage spreads the Fund was involved in. |
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BlackRock Australian Equity Market Neutral Fund
20 May 2013 - Australian Fund Monitors
The BlackRock Australian Equity Market Neutral Fund had a sound April returning 2.18%, bringing its 12 month return to 8.71%.
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20 May 2013 - BlackRock Australian Equity Market Neutral Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund's portfolio primarily consists of long and short Australian equity positions. The Fund may also invest in other funds managed by BlackRock. Derivative securities, such as futures, forwards, swaps and options, can be used to manage risk and return Key insights into the investment process include: Analyst Expectations, Relative Valuation, Earnings Quality, Market Signals and Timing. Short-Term return enhancing opportunities including: Dividend reinvestment plans, Manging index changes, Managing cash flows and Arbitrage, Initial public offerings and Seasoned Equity Offerings and Off Market Buybacks. |
| Manager Comments | The S&P/ASX 200 rose 4.5% (4.5% accumulation) in April to reach its highest level since June 2008. This was largely driven by the seemingly insatiable appetite for yield, with high yield stocks outperforming and Australian Government bonds rallying strongly. Resources, however, slumped further amidst weaker than expected US and Chinese economic data and softer commodity prices. Domestically, the under-performance of resource stocks was most notable amongst gold stocks following the spectacular fall in the gold price. Small capitalisation miners with higher leverage to commodity prices were also hit particularly hard, and a number of mining service companies issued profit warnings. The search for yield was well evidenced by the remarkable turnaround (+9.7%) of WPL on the day it announced it will pay a special dividend and raise its dividend payout ratio. The portfolio benefited from the resource under-performance due to a tilt toward producers versus explorers, with significant contribution coming from short positions in Kingsgate Consolidated, Newcrest Mining and Oz Minerals, amongst others. The yield theme also proved profitable via our exposure to property trusts and telecoms. Elsewhere, the portfolio also had positive contributions from stock selection in domestic cyclicals, such as Flight Centre, Trade Me, Super Retail and Qantas. Losing stocks generally came from the same sectors, with long positions in Resolute Mining and St Barbara amongst the largest detractors. |
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Auscap Long Short Australian Equities Fund
17 May 2013 - Australian Fund Monitors
The Auscap Long Short Australian Equities Fund had a strong month recording 9.83% during April 2013.
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17 May 2013 - Auscap Long Short Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund focuses on fundamental long and short investments. The Fund may utilise a multi-strategy approach if short term opportunities to increase returns, hedge the portfolio, protect capital or minimise volatility are found. The Fund is a high conviction fund and the combined portfolio will typically have 25-45 positions, investing primarily in stocks in the ASX200. The Fund may be net long, short or neutral depending on the strategies employed at the time. The Fund may hold cash so that it is in a position to take advantage of market volatility and compelling investment opportunities as and when they arise. The Fund may be geared up to 200% gross long or short and up to 150% net long or short. |
| Manager Comments | The Fund returned 9.83% net of fees during April 2013. This compares with the benchmark return of 0.25%. Average gross capital employed by the Fund was 178.0% long and 48.5% short. Average net exposure over the month was +129.5%. At the end of the month the Fund had 33 long positions and 11 short positions. The Fund’s biggest exposures at month end were spread across the consumer discretionary, financials, telcos, industrials and materials sectors. The Fund had an unusually strong month in April. The Manager would caution investors against any expectation of monthly returns in this order of magnitude. A significant portion of the monthly return was due to the Fund’s overweight exposure to companies with strong competitive advantages and sustainable earnings that provide investors with a good dividend yield and growth that is anticipated to exceed inflation over coming years. These investments performed very strongly during April,and while the Manager expects them to continue to contribute positively to the Fund over the next few years, one should not expect the sort of monthly capital gains experienced in April. The other main contributor to the Fund’s performance was a short position across a small number of gold stocks that have constituted at most around 10% of the Fund’s capital at any point during the month. It is very unusual to have a few positions that move in line with expectations as quickly as they did during the month. Between the start of the month and the middle of the month, when the short positions were closed, the average price fall across these positions was 34% and provided the Fund with a positive 2.8% return. |
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Pengana Australian Equities Fund
16 May 2013 - Australian Fund Monitors
The Pengana Australian Equities Fund had a strong April 2013 returning 3.51%, with its twelve month return 25.91%.
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16 May 2013 - Pengana Australian Equities Fund
By: Australian Fund Monitors
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| Manager Comments | As at April 30th, cash (including notes and preference shares) represented 29% of the Fund. The top five holdings by value were: DUET Group, ANZ Bank, Telstra, NAB and Caltex. The largest positive contributors to the month’s performance included ANZ, Telstra, NAB, DUET Group, Resmed and Woolworths. The only detractors of any consequence (and nevertheless small) were Seven Group and XRF. The Fund acquired a new holding in AMP. In addition, the Fund deployed cash into existing holdings including Caltex, DUET Group, Seven Group, ANZ, Tatts Group, Mermaid Marine and Ainsworth Gaming. The Fund’s exposure to non-Australian dollar earnings streams (inclusive of companies with global earnings profiles such as Resmed and News Corporation, NZ based companies and US dollar exposure) stands at 15%. The Fund also trimmed its holdings in News Corporation. Robust share prices have narrowed the Fund's investable opportunity set. In addition business activity levels continue to be muted with many sectors reporting evidence of a deteriorating operating environment. The re-rating of many companies’ share prices may be due to the (not immaterial) impact of a lower cost of money environment and the resulting positive effect on long duration assets (particularly off a low base) rather than the improvement in the outlook for revenues and earnings. Australian businesses are still fighting cyclical and structural factors such as a cautious consumer, the impact of a lack of confidence in the Government’s policy decisions (exaggerated by a prolonged election campaign), the increasing effects of a strong Australian dollar on domestic business’ competitive position and growing uncertainty in the mining and related sectors. |
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Insync Global Titans Fund
15 May 2013 - Australian Fund Monitors
The Insync Global Titans Fund returned 1.63% for April 2013 bringing its twelve month return to 16.41%
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15 May 2013 - Insync Global Titans Fund
By: Australian Fund Monitors
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| Manager Comments | Most global equity markets rose in April, with the S&P 500 closing at a new all-time high, despite sub-par economic conditions prevailing in most parts of the developed world. Continued quantitative easing and negative real interest rates are exerting a powerful influence on the pricing of financial assets, but at the same time are also increasing risks within the financial system. The Manager notes that markets can run further, perhaps much further, but as valuations become extended and bullish sentiment for equities becomes more and more the consensus view, the need for vigilance and portfolio protection becomes greater. This can sometimes lead to short term relative under-performance versus equity indices but is done for the purpose of preserving capital and generating long term positive returns. Momentum following in the pursuit of short term relative performance often results in significant long term losses. The Fund seek to generate strong positive returns by investing in companies that can grow even in a tough operating environment and, the higher the market goes, the more we would look to hedge market risk. The unit price increased by 1.6% in April. The biggest positive contributions came from Sanofi, Coach, Roche, Walt Disney and Accenture. In the case of Coach, the shares of the luxury handbag manufacturer jumped by over 17% during the month on the back of solid quarterly earnings as revenue growth gained momentum in the US and China. The Fund's geographic distribution of investment, by listing, is North America 39.7%, Europe 26.4%, UK 26.3% and cash and puts 7.6%. In terms of the Fund's underlying metrics the Manager notes that the average market cap of equities in the portfolio is A$99.1bn with a weighted avg forecast dividend yield of 2.90%. The weighted avg forecast PE ratio is 15.4x and weighted avg ROE 21.3%. The Fund has no hedging in place at the moment. |
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Morphic Global Opportunities Fund
14 May 2013 - Australian Fund Monitors
The Morphic Global Opportunities Fund had sound April 2013 returning 2.80% and its six month return to 12.99%.
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14 May 2013 - Morphic Global Opportunities Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund’s top stock contributors this month came mostly from Japan, led by long term holdings in HR services outsourcing company Relo and lease financer Century Tokyo. Also helping in Japan were Karaoke equipment maker Daiichikosho and two baskets, comprising three Japanese drug stores and two Japanese tyre producers. A recent Japanese purchase, low cost home builder Arnest One also achieved high returns, although this was partly offset by a short position in two other home builders established to hedge the exposure. Other positive contributions came from Korean cable shopping network GS Home Shopping, Turkish steel producer Kardemir, a collection of US financials, and a long-short Macau gaming stock position. Most of the underperformance in the Fund was due to long positions in two individual stocks, a basket of commodity related investments and partial reversals in previous gains on a handful of unpaired short positions. Shorting proved difficult in a month with such a strong underlying surge in global markets. The Manager closed out all its short equity positions other than the long-short pairs set up for hedging purposes mentioned above, but only after reporting losses that eroded somewhat previously profitable trades in a Hong Kong retailer and a pair of European power generators. From a macroeconomic perspective, the month saw a tug-of-war between deteriorating economic data battling investor optimism caused by expanded global money printing. Liquidity would appear to have the upper hand so far. The Manager expects this to persist and has slightly lifted Fund exposures to emerging market and commodities. However confidence remains fragile and vigilance is required for any sign this stance requires review. The Fund remains un-hedged into Australian dollars. |
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Monash Absolute Investment Fund
13 May 2013 - Australian Fund Monitors
The Monash Absolute Investment Fund returned 1.13% for April 2013 bringing its since inception return (July 2012) to 18.56%.
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13 May 2013 - Monash Absolute Investment Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund places a high priority on capital preservation, and have an absolute return focus in accepting market risk. The Manager employs a comprehensive approach to making investment decisions utilising value, growth and discounted cash flow styles. The portfolio is somewhat concentrated and the manager looks to diversify the portfolio across industries and themes rather than staying near an index. The portfolio may at times have a large amount of cash or other protection. |
| Manager Comments | The manager has commented on the following investments; G8 Education (GEM) continued to climb. This month it was up another +16.3%. GEM owns and operates 167 childcare centres in Australia and has interests in another 69 centres in Singapore. Exiting the Flight Centre / Wotif pairs trade (FLT/WTF). Despite a rising market for industrial cyclicals the Fund managed to make money from shorting Wotif, which dropped -2.7% while invested and also made money from owning Flight Centre which rose and made +4.6% over the same period. Southern Cross Electrical Engineering (SXE) was down -15.9%, getting caught in the fall with all mining services companies and resource companies generally. At the end of the month the portfolio had nine Outlook Driven stocks, seven Event Driven stocks and one Pairs Trades. Gross exposure was 69% and net exposure was 67%. |
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Aurora Fortitude Absolute Return Fund
10 May 2013 - Australian Fund Monitors
The Aurora Fortitude Absolute Return Fund had a sound April 2013 with a return of 1.68% bringing the twelve month return to 5.24%.
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10 May 2013 - Aurora Fortitude Absolute Return Fund
By: Australian Fund Monitors
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| Manager Comments | Investors searching for dividend income aggressively bought Finance, Telco and Consumer related companies which resulted in a 6.7% rally in the All Industrials Index. Ongoing concerns regarding slowing Chinese growth and the impact on commodity prices saw the All Resources Index fall 3.7%. The net result was a 4.5% return for the S&P/ASX 200 Accumulation Index. The most significant contribution (0.77%) came from the recovery in the Australian Infrastructure Fund. The fund released an update on the completion of asset sales and the timing of capital returns to unit holders. A standout among larger resources companies was the 8.3% total return from Woodside Petroleum. This was largely in response to the announcement of a special dividend and increased dividend payout ratio which was music to the ears of yield hunters. There continues to be some supply of short dated hybrid instruments as investors continue to switch into new issues and ordinary shares. The manager continues to seek alpha in this area with the knowledge that returns will accelerate as maturity approaches. |
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