NEWS
Aurora Fortitude Absolute Return Fund
9 Apr 2013 - Australian Fund Monitors
The Aurora Fortitude Absolute Return Fund returns 0.42% for February 2013 and 3.97% for the prior 12 months, ahead of the RBA cash rate.
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9 Apr 2013 - Aurora Fortitude Absolute Return Fund
By: Australian Fund Monitors
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Manager Comments | The S&P/ASX200 Accumulation Index finished down ‐2.21% in March putting an end to a nine month positive streak. Within the Aussie Index, Australian banks continued to perform relatively well and again it was resources that lead the market lower. Of note,both BHP and RIO fell by more than 10%. Concerns out of Cyprus, namely the treatment of bank deposits, and the possible ramifications for other debt ridden European economies forced risk back into the spotlight. Commodity price declines also weighed heavily on our market as lower demand lead to lower spot pricing. The manager makes the following comments regarding each of the strategies; Convergence was the best performing strategy for the month (+0.26%). The Wesfarmers position was the biggest contributor again due to an increase in the value of the protection as the share price fell in line with the market. Long/Short generated a loss for the month (‐0.10%). Gains from holding a long position in Treasury Wines were offset by losses from being long Newcrest Mining and Downer EDI. Mergers and Acquisitions added +0.12% for the month. The best performers were Real Estate Capital Partners USA Property Trust and Challenger Infrastructure Fund. The protective Options strategy was also a small detractor for the month (‐0.04%). Volatility around the Cyprus situation produced good returns, but as the market grew more comfortable with the situation and the Aussie market approached a four day holiday weekend option prices were marked down aggressively. The Yield book provided a positive return of +0.17%. All hybrid instruments were positive for the month but the Macquarie Convertible Preference Security was the biggest contributor with only three months left to run until redemption or conversion, subject to some mandatory conversion conditions. |
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Bennelong Kardinia Absolute Return Fund
9 Apr 2013 - Australian Fund Monitors
The Bennelong Kardinia Absolute Return Fund had a positive month returning 1.42% for March 2013 and 14.40% for the preceding 12 months.
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9 Apr 2013 - Bennelong Kardinia Absolute Return Fund
By: Australian Fund Monitors
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Fund Overview | The Fund consists of a concentrated long/short portfolio typically comprising 30 to 40 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. There is a slight bias to large cap stocks in the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. The Fund was launched on 17th August 2011 following the resignation of Portfolio Managers Mark Burgess and Kristiaan Rehder from Herschel Asset Management in late July 2011. While at Herschel Burgess and Rehder had managed the Fund under the name of the Herschel Absolute Return Fund. As a result management of the Fund was transferred to Kardinia Capital, a new boutique fund manager 65% owned by Burgess and Rehder, with the balance owned by Bennelong Funds Management. The Fund's investment strategy and prior track record remains intact. |
Manager Comments | The Australian All Ordinaries Accumulation Index fell 2.2% in March with events in Cyprus and the terms of its bail out affecting investor sentiment. The Australian equity market was particularly weak, under-performing global peers as the mining sector was weighed down by falling commodity prices, and negative sentiment related to property tightening measures in China. The Australian dollar finished the month higher at US$1.04. Most US economic readings surprised on the upside, however Chinese data revealed moderating manufacturing activity combined with higher inflation. This weighed on commodity prices with Resources (-9.6%) the weakest performing sector for the month. Consumer Discretionary (+2.4%), Utilities (+0.7%) and Financials (+0.7%) held up well, whilst Materials (-9.6%), Energy (-3.4%) and REITs (-2.7%) fell sharply. The Bennelong Kardinia Absolute Return Fund rose 1.42% in March. Share price index future contracts hedging long exposure, Sirius Resources, Mayne Pharma and Bank of Queensland were all significant contributors to performance, whilst long positions in Rio Tinto, Oil Search and GPT were the largest detractors. The Fund’s net equity market exposure (including derivatives) was progressively reduced to 36.7% (67.9% long and 31.2% short). |
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Bennelong Long Short Equity Fund
8 Apr 2013 - Australian Fund Monitors
The Bennelong Long Short Equity Fund had a strong March (2013) recording 0.69% and 15.46% for the previous 12 months.
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8 Apr 2013 - Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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Manager Comments | The manager notes that stock markets took a breather in March as investors reassessed the outlook after strong returns for several months. European sovereign risks flared again as did concerns about policy tightening in China. The resulting decline in the resources sector pulled the Australian market lower with the ASX 200 finishing 2.7% lower despite global markets posting small gains (MSCI +1.9%). Fund performance was slightly positive due to gains from our shorts in the Materials sector, particularly profit downgrades in the Chemical sector. This was somewhat offset by losses in our short book in Consumer Discretionary. The fund was active in the Energy, Resources and Transport sector during the month. Despite positive global monetary policy settings there has recently been a large divergence in performance between the Resources sector (-11% ytd) and the rest of the market (+5% ytd) and investors will need to consider this when forming views on the growth outlook. The domestic economy has stabilised and the prospect of a majority government by year-end may provide confidence to the business sector. The domestic earnings picture is still sluggish though and ultimately needs to improve for stocks to push higher. |
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K2 Select International Absolute Return Fund
5 Apr 2013 - Australian Fund Monitors
The K2 Select International Absolute Return Fund delivers a sound performance of 0.7% in February 2013 and 10.6% over the previous 12 months.
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5 Apr 2013 - K2 Select International Absolute Return Fund
By: Australian Fund Monitors
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Manager Comments | Regional performance in global equities was relatively mixed, with positive returns in the US and Japan offset by falls in S. Korea, China and Hong Kong. In the US data continues to be consistent with a moderate economic recovery. In stark contrast, Europe remains in its own world of pain. Inconclusive Italian elections and a banking “bail-in” in Cyprus are uncomfortable reminders of a crisis which is far from over. It is no surprise that March PMI’s for the Eurozone fell further and reflect ongoing recessionary conditions in the region. While the data in China remains broadly consistent with moderate economic recovery, the market focus was firmly on the reform agenda of the new administration. There seems to be an increasing acceptance by key policymakers of a further moderation in medium term growth while urgently needed reforms in the financial system are implemented. The fund chose to actively reduce exposure to equity markets during the month of March to just below 90% for the first time since September the 6th 2012. While not calling for an imminent correction the manager is conscious that markets have moved a long way in a short period, and having captured most of that upside felt it was prudent to lower exposure. Regionally performance during the month was broad based for the fund, with the main negative coming from the strengthening AUD where the fund is currently only 50% hedged. A correction in the short term certainly can’t be discounted, especially as investors approach the traditional “sell in May” seasonal weakness. The risks are well known, high sovereign debt levels lead to increasingly difficult fiscal decisions ahead for most developed nations, where welfare budgets in particular are running at unsustainable levels. Nevertheless in spite of these risks, it is important to keep focused on the medium term fundamentals for equities, which remain compelling in the manager's opinion. |
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Allard Investment Fund
4 Apr 2013 - Australian Fund Monitors
The Allard Investment Fund reports a return of 1.4% for February 2013 and 11.8% for the preceding 12 months.
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4 Apr 2013 - Allard Investment Fund
By: Australian Fund Monitors
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Manager Comments | The Fund's longer term record shows an above benchmark return over 3, 5 and 7 years with volatility 70% of the Index benchmark (MSCI Asia-Pacific ex Japan in $A). The Fund's cash holdings have acted to improve performance in draw-downs and dampen volatility. The portfolio is well diversified with 27.7% of holdings in China/HK and 11.8% in Singapore. Cash is currently at 34.4% and the Australian exposure is 2.2%. Sector exposure is also well diversified with large exposures to financials, conglomerates and utilities. The top 5 holdings are 35.2% of the portfolio. |
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Perpetual Wholesale SHARE-PLUS Long-Short Fund
3 Apr 2013 - Australian Fund Monitors
The Perpetual Wholesale SHARE-PLUS Long-Short Fund records a return of 5.25% for February 2013, a notable return for a long-short fund in buoyant market, and 32.17% for the 12 months to February.
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3 Apr 2013 - Perpetual Wholesale SHARE-PLUS Long-Short Fund
By: Australian Fund Monitors
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Fund Overview | Perpetual researches companies of all sizes using consistent share selection criteria. Perpetual's priority is to select those companies that represent the best investment quality and are appropriately priced. In determining investment quality, investments are carefully selected on the basis of four key investment criteria: -conservative debt levels -sound management -quality business and -in the case of industrial shares, recurring earnings In addition, Perpetual aims to take short positions in Australian shares that it believes will fall in value. The Short positions are determined based on each stock's expected returns and the investment constraints (designed to reduce the risks associated with taking short positions). Derivatives may also be used in managing the fund. The Fund's investment universe allows it to invest from time to time directly or indirectly in stocks listed on sharemarket exchanges outside Australia. To help manage the risk profile of the Fund relative to the Australian stockmarket, exposure to stocks listed outside of Australia is limited to 20% and is generally hedged to the Australian dollar to the extent reasonably practical. |
Manager Comments | The Australian equity market, as measured by the S&P/ASX 300 Accumulation Index, rose by 5.3% during February. Equity markets continued their strong start to the year, with most regional bourses now firmly in bull market territory. Whilst some markets faltered late in the month due to concerns over US monetary and fiscal policy and an inconclusive Italian election, the Australian market pushed on to new 4 year highs. The local market was buoyed by an earnings season which, on the balance, met or beat market expectations. As a whole, industrial stocks (+6.9%) outperformed resource stocks (+0.4%), while large cap stocks (+4.9%) outperformed small cap stocks (+0.9%). In major company news, a predominantly positive reporting season dominated the headlines. The outlook in some sectors remains challenging,but those companies that were able to offer upbeat guidance were strongly rewarded by the market. Cost reductions remained a familiar theme, as investors continue to wait for signs of meaningful top line revenue growth. The Fund’s largest overweight positions include general insurer Insurance Australia Group, rail freight operator Aurizon and casino operator Crown. Insurance Australia Group is a market leader and operates in a duopoly in personal lines. Aurizon operates three main businesses including coal, freight, and network services primarily involved in the transportation of coal from mine to port. The Fund is underweight ANZ and Commonwealth Bank. The largest short positions in the Fund at the end of the month were Worley Parsons and CFS Retail Trust. The Fund is currently positioned 120.0% long (including cash) and 20.0% short. Whilst the outlook is improving, global markets remain hampered by a level of political and economic uncertainty. The Australian market is not immune from these forces; however, during periods of uncertainty and volatility, patient investors are often presented with the opportunity to acquire very high quality companies at attractive valuations. The portfolio manager believes there are a number of such opportunities at present, although these opportunities are becoming fewer. Further, recent interest rate cuts have also increased the relative attractiveness of sound, fully franked dividend streams offered by quality equities in comparison to declining term deposit rates. |
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Whitehaven SPC Correlation Fund
2 Apr 2013 - Australian Fund Monitors
The Whitehaven SPC Fund recorded a February 2013 return of 0.42% with the annual return 18.69%, a solid return in a very low volatility environment.
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2 Apr 2013 - Whitehaven SPC Correlation Fund
By: Australian Fund Monitors
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Manager Comments | February saw continuing strength in risk assets with ongoing global expansive monetary policy , a perception Japanese equities have bottomed and possible global equity short covering as debate intensifies on whether the great rotation from bonds to equities has started. The fund's strategies are by design defensive. In other words the fund returns are best when markets are volatile. This normally occurs when equity markets are falling. This relationship with volatility is demonstrated by the fund's high correlation with the VIX volatility index (59%). Over 2013 volatility has fallen and is approaching lows not seen since before the GFC in 2007. This is the dominant explanatory factor as to why the fund returns are more muted this year compared to its previous track record. However, it’s worth noting that the fund’s trading style has still generated positive returns while other defensive assets have fallen substantially in 2013. |
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SGH ICE February Performance Report
28 Mar 2013 - Australian Fund Monitors
The SGH ICE fund records performance of 1.17% over February 2013 and 32.67% over the prior twelve months well ahead of the ASX Small Cap Industrial Index of 19.42%.
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28 Mar 2013 - SGH ICE February Performance Report
By: Australian Fund Monitors
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Fund Overview | The investment manager believes that key intangible assets (such as Brands, Patents, Licenses, Logistical capability,a Captive client base) are the most difficult to replicate and that these key assets enable companies to entrench their products/services in the marketplace. |
Manager Comments | The December reporting season saw a continuation of the trend of SGH ICE franchise companies reporting more certain growth. The portfolio reported 12% pa median earnings growth as opposed to the overall market median of -9%. The fund's February return was below relevant benchmarks as most of the companies had recorded strong price gains leading into the reporting season.Top 5 contributors over the month were Seek, REA Group, Seven, Acrux and Amcom. Aurizon's results disappointed leading to a reduced weighting in the portfolio. Amongst others the fund also reduced it's holding in Seek and REA despite strong results as the share prices had moved up reducing future IRR potential |
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K2 Asian Fund
27 Mar 2013 - Australian Fund Monitors
The K2 Asian Fund delivers 2.11% during February and 18.33% over the preceding 12 months.
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27 Mar 2013 - K2 Asian Fund
By: Australian Fund Monitors
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Manager Comments | The K2 Asia Absolute Return Fund returned 2.11% for the month of February. The MSCI Asia Pacific ex. Japan (AUD) returned 2.82% (+1.49% in local currency). February delivered another solid return led by The Philippines (+7.8%), Indonesia(+7.7%) and Australia (+5.2%). Eroding the quality of the region’s move was the performance of the Hong-listed China H-Shares which, at their low fell 8.5%, before partially recovering to end down 5.7%. After a near 35% run over the previous 5 months, sellers focused on China’s re-acceleration and the fear of policy tightening measures owing to high credit growth and a strong property market. Over February the Fund’s net exposure ranged between 95-100%. Despite solid equity market returns over the past six months, expectations of continued fund inflows into global equity markets and the region in particular, coupled with still modest valuations and progressive upgrades to earnings forecasts all continue to underpin the Fund's rationale for a high exposure. Net inflows into emerging market equity funds have been some of the strongest in almost a decade and have been well spread across a number of markets. The Fund will continue to run high exposure while positive momentum prevails in economic growth and earnings and while valuations sit at healthy discounts to long term averages, all elements which are compelling underweight investors to progressively redirect capital into Asia, notably China. With regards to China the Fund is holding a high weighting so long as the upward momentum in earnings forecasts is supported by favorable economic momentum. Concern over possible policy tightening has some credence given the high levels of new credit finding its way into the economy and given the propensity of excessive new credit to find its way into speculative activities. This is the key domestic issue to monitor. The hedge against the Fund’s USD-linked exposure remains in place. While the hedge neutralizes currency movements in those markets in which it is employed, in February the overall strength in the currencies the fund invests in resulted in a net positive contribution from currency. |
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Platypus Australian Equity Fund February 2013
26 Mar 2013 - Australian Fund Monitors
The Platypus Australian Equity Fund records a return of 3.1% over February and 18.74% over the previous 12 months.
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26 Mar 2013 - Platypus Australian Equity Fund February 2013
By: Australian Fund Monitors
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Manager Comments | In terms of negative impacts on the portfolio the manager notes that Western Areas was a drag on relative performance as the nickel price remained depressed. While not owning National Australia Bank, was a notable drag on the month’s alpha, nil positions in other large cap names like Newcrest Mining, Telstra and Rio Tinto contributed to February’s performance. Amongst the stocks owned, CSL was the biggest contributor to performance followed by Codan, a new addition to the portfolio. While the fund's under-performance was driven mainly by stocks not in the portfolio, Industrials and Financials sectors were the other notable drags on performance.On the positive side, Consumer Discretionary, Information Technology and a nil weighting in Telecommunication Services added to relative performance during February. New positions in the month included Amcor, Acrux, Woodside, Realestate.com, Codan and JB Hi-Fi. Caltex was sold, monetizing a profitable trade, Aurizon (nee QR National) was also sold after they delivered earnings below expectations as was TWE after their 2013 guidance was underwhelming relative to our expectations. The balance of the month’s trading activity involved topping up in stocks such as Blackthorn Resources, Fortescue Metals Group and Sirtex Medical, funded from selling down positions in BHP, Oil Search, Westpac, Ramsay Healthcare, Resmed, News Corp and Flight Centre. In terms of valuation, the market is neither cheap nor expensive. If the manager's moderately bullish stance on the earnings upgrade cycle is correct, we would expect the market to remain at around present valuations. While cognizant of the fact that after strong price returns, the likelihood of a short term pullback increases, for longer term investors the manager's view is that on balance, Australian equities represent value at these levels and as a domestic investor, you are still being paid to hold equities. |
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