NEWS
Monash Absolute Investment Fund
26 Apr 2013 - Australian Fund Monitors
The Monash Absolute Investment Fund returned 2.00% during March and its six month return to 17.17%.
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26 Apr 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 | At the end of the month the portfolio had nine Outlook Driven stocks, nine Event Driven stocks and two sets of Pairs Trades. Gross exposure was 71% and our net exposure was 61%. The portfolio continues to avoid well covered defensives, preferring cash if there is no better alternative. It has no Telstra, consumer staples or utilities. However, the manager would be happy to invest in yield stocks with reliable growth at the right price as a result the Fund owns only one bank, NAB (apart from a CBA/Westpac pair trade). At the other end of the risk spectrum, there are no large miners and the Fund continues to look for more growth stocks with compelling valuations. |
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Allard Investment Fund
24 Apr 2013 - Australian Fund Monitors
The Allard Investment Fund was impacted by the weaker Australian dollar, falling 2.1% for the month.
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24 Apr 2013 - Allard Investment Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund's performance is notable for its low level of volatility with five year annualised volatility of 9.7% as compared to the MSCI Asia Pacific ex Japan volatility over the same period of 14.8%. In terms of geographic exposures the Fund was allocated; China/Hong Kong 29.7%, Singapore 12.5%,Korea 9.7%, India 6.3% and others 2%. Notably cash and fixed income was 31.7% of the portfolio. In terms of industry the largest exposure was financial services 15.7% followed by conglomerates 12.2%, telecomms 8.0% and retail 6.4% with other sectors 26%. The Fund's top 5 holdings are 36.4% with the next five holdings 15.7%. |
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Auscap Long Short Australian Equities Fund
23 Apr 2013 - Australian Fund Monitors
The Auscap Long Short Australian Equities Fund recorded a strong return of 1.46% over March, well above the Fund's benchmark return of 0.25%.
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23 Apr 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 | Average gross capital employed by the Fund was 161.7% long and 45.2% short. Average net exposure over the month was +116.5%. At the end of the month the Fund had 29 long positions and 11 short positions. The Fund’s biggest exposures at month end were spread across the consumer discretionary, industrials, property trust (financials subset), healthcare & materials sectors. The Fund’s positive performance was a result of exposure to a number of particular sectors. On the long side, the Fund was invested in select property trusts, telcos and utilities for their strong growing dividends and earnings certainty. The Fund also had positions in the media and consumer discretionary space as a play on a slowly recovering east coast economy. On the short side the Fund had select positions in the healthcare space where high expectations had not been met through the reporting season. The Fund has largely avoided sectors with a high degree of uncertainty and low visibility around future earnings, such as the mining sector. |
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Magellan Global Fund
22 Apr 2013 - Australian Fund Monitors
The Magellan Global Fund recorded a return of 1.92% during March 2013 taking the 12 month performance to 19.78%.
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22 Apr 2013 - Magellan Global Fund
By: Australian Fund Monitors
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| Manager Comments | The five largest stocks in the portfolio at the end of March were; Google Inc 6.1%, Tesco Plc 5.8%, Microsoft Corp 5.7%, Lowe's 5.3% and eBay Inc 5.2%. The top ten holdings were 52% of the portfolio. Over the quarter, all stocks held within the portfolio produced positive local currency returns. Within the top ten holdings, the three stocks with the strongest returns in local currency were Novartis (+22%), Target Corp (+16%) and McDonalds (+14%) while the three stocks in the top ten holdings with the weakest local currency returns were eBay (+6%), Lowes (+7%) and Microsoft (+8%). The significant changes to the portfolio during the quarter were the result of active portfolio management regarding relative valuation and opportunity cost. The Fund sold the entire position of General Mills which had appreciated materially since investment and purchased a new stock, Microsoft which is trading well below our assessed intrinsic value. The Microsoft position was subsequently increased to the top ten holdings during the quarter. The portfolio remains fully invested, reflective of the manager's comfort with the current macroeconomic environment and subsequent view that it remains an attractive time to be investing in a select portfolio of extremely high quality multinational companies. The manager remains focused on prudent portfolio construction with emphasis on the avoidance of aggregation of risk within the portfolio and believe that it is likely to exhibit substantially less downside risk than the market in the event that global markets deteriorate materially. Within the current macro environment the manager sees value in high quality companies exposed to certain investment themes. The portfolio has material exposure to the following themes: - Emerging market consumption growth via investments in multinational consumer franchises. - The move to a cashless society. There continues to be a strong secular shift from spending via cash and cheque to cashless forms of payments, such a credit cards, debit cards, electronic funds transfer and mobile payments. - Internet/e-commerce convergence. There are a number of internet enabled businesses that have very attractive investment characteristics with increasing competitive advantages. - US housing Recovery. A recovery in new housing construction should drive a strong cyclical recovery in companies exposed to US housing and also provide a strong boost to the overall economy. - US interest rates normalising over the next 3-5 years as the US economy recovers. |
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Platinum Unhedged Fund March 2013 performance report
18 Apr 2013 - Australian Fund Monitors
The Platinum Un-hedged Fund returned 0.69% during March 2013 and 8.69% pa since inception.
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18 Apr 2013 - Platinum Unhedged Fund March 2013 performance report
By: Australian Fund Monitors
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| Fund Overview | The Fund's Portfolio will typically have about 90% exposure to stocks. The Fund's Portfolio is constructed in accordance with 'Platinum's Investment Methodology', except that no market risk management of either markets or currencies will be undertaken. The geographic disposition of the assets will determine the Fund's currency exposure. The Fund's Portfolio is constructed by the senior analysts of Platinum's investment team under one analyst's chairmanship. Since inception, the Portfolio has generally held 50 stocks with limited commonality to the Platinum International Fund. On account of the relatively concentrated nature of the Portfolio, holdings that carry great conviction will generally be larger than in the Platinum's risk managed products (i.e. the other Platinum Trust Funds). The Fund may use Derivatives to achieve long equity exposure. |
| Manager Comments | The Fund is 94% invested (with no shorting) and its major exposures are 29.6% North America an 26.3% to Japan. Major sector exposures are to Information Technology (19.9%), Consumer Discretionary (15.6%) and Financials (14.2%). Exposures to Utilities and Telcos are both under 2% of the portfolio. Notably the two largest exposures are to Microsoft at 4.6% and Toyota at 3.3%. The manager's recently released quarterly report notes that while the Fund is built one stock at a time for the purpose of investor communication it is useful to group some of these holdings by theme. Currently these themes include; US capital spending renaissance driven by a globally competitive supply of natural gas, Explosive growth in mobile data, The rise of local emerging world consumer giants, Consumer globalisation - western brands, retailers and service providers positioned for global growth, Post-patent cliff pharmaceuticals and personalised medicine, Japanese relation driven by a broad consensus on the need for change, Gold- a hedge against a self-reinforcing cycle competitive quantitative easing (QE) from the three large developed world currency blocs. The manager's outlook for markets notes that there is some complacency creeping back into markets in the face of data disappointments, particularly, in the Japanese and European periphery. However Platinum remains cautiously optimistic that a combination of a continued recovery in US investment spending and loosening global monetary policy will be sufficient to offset a moderate level of global fiscal tightening. |
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BlackRock Australian Equity Market Neutral Fund
17 Apr 2013 - Australian Fund Monitors
The BlackRock Australian Equity Market Neutral Fund records a return of 1.29% during March and 7.69% for the twelve months to March 2013.
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17 Apr 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/ASX200 rose 6.8% (8.1% accumulation) over the March quarter, but finished March down -2.7%, the worst month for the market since May 2012. There was some profit taking across much of the industrials after a very strong quarter, with the Cypriot banking crisis renewing global nervousness about the fragility of the European financial system. March also saw continued weakness in the resources sector due to uncertainty over the Chinese growth outlook and fears that rising commodity supply over the next two years could drive much weaker commodity prices. Domestically the economy showed some muted signs of strength, with improvements in consumer confidence, housing market activity and labour data causing the RBA to pause its easing cycle. Domestic cyclicals, especially consumer discretionary stocks, continued to outperform in March on anticipation of a turnaround in consumer spending. The search for yield was another theme that continued into March, concentrated largely in banks (+16.4%). The February reporting season highlighted companies’ focus on cost cutting, with margin expansion driving significant stock specific earnings improvements. The portfolio was largely unaffected by the global macro themes this quarter, however the Fund was caught in the first half of January by the sharp rally in specific domestic cyclical sectors (building materials, diversified financials) on anticipation of a domestic recovery. Performance since then has been dominated by stock specifics. The contribution from industry and risk factors was positive, while security specific returns detracted value over the quarter. |
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Optimal Australia Absolute Trust
16 Apr 2013 - Australian Fund Monitors
The Optimal Australia Absolute Trust had a flat return for March 2013 and a return of 1.37% for the year-ended March.
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16 Apr 2013 - Optimal Australia Absolute Trust
By: Australian Fund Monitors
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| Fund Overview | The Fund's bias is likely to be net long under normal market conditions, with the core strategy being to construct a portfolio of listed equity securities priced at levels that do not adequately reflect their underlying value. The Fund will seek to boost returns and limit potential market downside by selective short selling of individual stocks which are priced at levels that are viewed as materially above their underlying value. The Fund will also use certain trading strategies both within its core portfolio (through rebalancing stock weights and overall market exposure in response to price movements) and in certain other situations (typically of a shorter-duration and/or opportunistic nature) with the objective of further increasing returns. |
| Manager Comments | Australian equities gave back part of their recent strong gains in March, and underperformed most other developed world equity markets. The Trust finished the month with a flat return. The manager comments that they had felt markets were due a pause, and maintained low net exposure for most of the month. Further they comment that investors need to be clearly aware that equity markets remain in thrall to central bank bond-buying and the consequent strangulation of interest rates. The impact of these policies on economic growth is unconvincing, but they have certainly served to distort liquidity flows and capital allocation on a grand scale. This has come as a boon to equity markets, which have re-rated earnings yields and dividend yields downwards in step with falling bond yields. But, in the absence of real growth, equity markets may be worshipping a false god. This environment is dangerous from the perspective of capital preservation, and increasingly so, because it requires wilful suspension of any risk consideration by equity investors other than “relative value” as measured against a highly artificial bond/cash yield construct. The manager has previously written at length about the unusually narrow breadth of market leadership in Australia, and the unusual concentration of returns in a handful of defensive/yield leaders. These trends continued through most of March, with Financials finishing the month flat, and Materials down another 10.5%. On a rolling year basis, Financials are up 29% and Materials are down 15%, while Consumer Staples are up 30%, Telcoms 37%, and Healthcare 43%. The manager comments that with an investment process grounded to a large extent in fundamental valuation, they are unable to buy grocery retailers at between 18-20x forward earnings, with low and declining earnings growth, with asset level ROIC that has already been rebased up sharply, and with the prospect of increasing competition and regulatory risk. Similarly, they could not regard dividend yield sourced from highly-leveraged financial equity featuring 70%+ payout ratios, astonishingly low credit loss provisions, and price-to-book multiples of 2-3x as a logical substitute for fixed income yield, even ignoring the apples/oranges duration mismatch. Yet it has been just those investments that have clearly paid, but, again, to an overwhelming extent, only due to the revaluation of yield. The performance gap between defensive industrials and resources stocks continues to confound the manager. This gap has reached levels unprecedented in Optimal's experience, at least for those time intervals when Chinese demand data points seem to be stabilising, and when the market has already worked itself into lather over well-advertised supply additions in the bulk commodity group. Major contributors to the Trust’s return for the month by industry sector included: Longs (-0.26% attribution) Positive: transport, media, gold, banks Negative: resources, energy, REITs. Shorts (0.29% attribution) Positive: REITs, staples, index futures Negative: gaming, diversified financials. |
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Insync Global Titans Fund
15 Apr 2013 - Australian Fund Monitors
The Insync Global Titans Fund recorded a return of 1.17% during March and 14.50% for the year to end March 2013.
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15 Apr 2013 - Insync Global Titans Fund
By: Australian Fund Monitors
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| Manager Comments | Global equity markets were mixed in March, with rises in the US and Japan offset by subdued European markets impacted by events in Cyprus, and by falls in the Chinese and HK markets. US data continues to be consistent with moderate economic growth, with the US corporate sector more inclined to hoard cash than invest. Europe remains mired in recession, with the Eurozone unemployment rate rising to 12% in February (over 19 million people), the highest rate ever recorded since the EU formed. China’s economy continues to grow but the rate of growth is likely to be lower than it was in the past decade. Markets are being held up by quantitative easing in more parts of the world now, with real growth hard to come by. Only the very best companies are likely to prosper in this sort of environment. The Fund’s unit price increased by 1.2% in March. The solid performance was driven by positive contributions coming from Sanofi, Reckitt Benckiser, Wyndham, BAT and IBM. The biggest detractor to performance was Oracle, which announced lower than expected quarterly earnings on the back of a problematic hardware transition. Insync’s approach is to focus on investing in exceptional businesses with high Return on Invested Capital, strong free cash flow, solid balance sheets, attractive valuation and a long track record of returning cash to shareholders through increasing dividends and share buy-backs. At month-end the Fund's investments had a weighted forecast yield of 2.68%, a PE ratio of 15.5 times and a Return on Equity of 21.5%. There was no currency hedging in place at the end of March. |
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Platinum International Fund
12 Apr 2013 - Australian Fund Monitors
The Platinum International Fund recorded a return of -0.61% over March 2013 and 11.01% over the preceding 12 months.
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12 Apr 2013 - Platinum International Fund
By: Australian Fund Monitors
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| Fund Overview | Typically, the Fund's portfolio will have 50% or more net exposure to stocks. The Fund's portfolio is constructed in accordance with Platinum's Investment Methodology. |
| Manager Comments | The Fund is 92% long and 12% short individual shares and indices with cash and liquids at 8% for a net invested position of 80%. The market moved upward in March however $A appreciation saw the MSCI World Index flat in $A terms. Despite concerns over Cyprus markets like France, Germany and the UK were all up 1%. The US market rose 4% on the back of stronger economic data like manufacturing, payroll and industrial production. Emerging markets fell 2% as money flows preferred developed markets and China (-5%). Equities in Japan continued to move higher, up 5%, and the Yen continued its fall on talk of the BoJ using monetary policy to re-inflate the country's declining economy. The manager notes that consistent out-performance and relative over-weight position of Japanese equities continues to contribute to Fund performance. |
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Morphic Global Opportunities Fund
11 Apr 2013 - Australian Fund Monitors
The Morphic Global Opportunities Fund had a sound performance over March 2013 returning 0.99% and 9.34% over the previous six months.
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11 Apr 2013 - Morphic Global Opportunities Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund amplified its holding in Wells Fargo through a series of short dated call options ahead of the unveiling of a US regulatory report on the capacity of the industry and individual banks to absorb economic shocks. The Manager was confirmed in its expectation that positive results would drive a sharp re-rating, as they have in the past. The Fund also made further gains on a short position in a Hong Kong listed global retailer and its long position in Irish listed cardboard box maker Smurfit Kappa. Stock losers were led by Chinese electric bike battery maker, Tianneng Power, where the market reacted badly to signs of margin pressure despite strong sales growth. The Fund also saw losses in India’s J&K Bank; and Hong Kong property company Emperor and US car parts maker TRW. All except J&K were exited during the month. Gains on market index exposures to Mexico and Turkey were slightly more than offset by losses in Thailand, China and Hong Kong. All of the latter were closed out in the month. Market tone was again dominated by uncertainty in Europe, this time caused by negotiations for a financial bail-out for Cyprus, which included a controversial levy on local bank depositors. As a precaution the Manager trimmed the Fund’s overall exposure, especially to Europe and the Euro, when the Cyprus bail-out terms were first announced. However this proved costly as markets shrugged off these concerns, and the US hit new highs towards the end of the month. Although the Manager partially rebuilt the Fund’s market exposure as its initial concerns about the ramifications of the Cyprus ‘rescue’ package seemed overblown, the Fund’s net investment level remained slightly lower at month end than at the beginning. Within this, the Fund is overweight Japan and the US, and underweight Europe. The Manager’s conviction about the sustainability of recent gains is ebbing as global market returns become increasingly dependent on the US despite deteriorating earnings revisions and economic data there. The Fund remains un-hedged into Australian dollars. The Manager believes slowing mining capital expenditure and falling commodity prices limit the risk of the dollar breaking out of its current range of US$1.02 to US$1.05 even if the RBA makes no further rate cuts. Some of the fund’s yen and Euro exposure is hedged into US dollars. |
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