NEWS
19 Sep 2018 - Performance Report: Bennelong Concentrated Australian Equities Fund
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| Fund Overview | The overriding objective of the Concentrated Australian Equities Fund is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings, while satisfying our stringent quality criteria. Bennelong's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The portfolio typically consists of 20-35 high-conviction stocks from the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to ASX-listed securities. Derivative instruments are mainly used to replicate underlying positions and hedge market and company specific risks. |
| Manager Comments | At the end of the month the Fund's weightings had been increased in the Discretionary, Health Care, IT and Financials sectors, and decreased in the Consumer Staples, Industrials and Materials sectors. The Fund aims to invest in a concentrated portfolio of high quality companies with strong growth outlooks and underestimated earnings momentum and prospects. By comparison with the Fund's benchmark (ASX300 Accumulation Index), the portfolio's holdings, on average, have a higher return on equity and lower debt/equity (Premium Quality), higher sales growth and higher EPS growth (Superior Growth), as well as higher price/earnings and lower dividend yield (Reasonable Valuation). |
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18 Sep 2018 - Performance Report: NWQ Fiduciary Fund
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| Fund Overview | The Fund aims to produce returns, after management fees and expenses of between 8% to 11% p.a. over rolling five-year periods. Furthermore, the Fund aims to achieve these returns with volatility that is a fraction of the Australian equity market, in order to smooth returns for investors. |
| Manager Comments | NWQ noted there was a high degree of dispersion in the returns of the underlying managers in August. This illustrates the diversified nature of the Fund with the constituent managers employing a broad array of hedged equity strategies. This dispersion is also reflective of the heightened level of stock market volatility that is typical of reporting season. NWQ mentioned the earnings announcements were particularly favourable for the Fund's Alpha allocation, which made a strong contribution to overall performance (+1.17%). |
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17 Sep 2018 - Do Falling House Prices Affect AREIT Investors?
14 Sep 2018 - Happy 10th Birthday, GFC!
14 Sep 2018 - Performance Report: Glenmore Australian Equities Fund
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| Fund Overview | The main driver of identifying potential investments will be bottom up company analysis, however macro-economic conditions will be considered as part of the investment thesis for each stock. |
| Manager Comments | The Glenmore Australian Equities Fund rose +5.94% in August, outperforming the ASX200 Accumulation Index by +4.52%. Since inception in June 2017, the Fund has returned +38.85% p.a. versus the Index's +12.93%. Adjusting for risk, the Fund's Sharpe ratio for performance since inception is 3.67 versus the Index's 1.69, highlighting the Fund's capacity to achieve significantly superior risk-adjusted returns than the market. Looking at the downside, the Fund's Sortino ratio of 12.02 versus the Index's 1.34, along with the Fund's down-capture ratio since inception of -123.45%, emphasise the Fund's focus on avoiding downside losses (a negative down-capture ratio indicates that the Fund, on average, has achieved positive performance in the market's negative months). |
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14 Sep 2018 - Hedge Clippings, 14 September, 2018
GFC turns 10, Hedge Funds Rock turns 17!
10 years on from the collapse of Lehman Brothers, the trigger that fired a bullet that was to become known as the Global Financial Crisis, and there are a number of voices warning that whilst everything in the garden may seem rosy, there are worries that markets are heading for further turbulence.
As the recent AFM Insights article from Arminius Capital explains, the US equity market has risen by 350% from its March 2009 low, but the real growth has been in debt, thanks to central banks flooding the system with credit, and allowing eager corporate and individual borrowers to take advantage of impossibly low interest rates.
Other voices are spreading the same cautionary tale. At this week's Australian AIMA (Alternative Investment Management Association) conference, a number of respected voices, including Regal's Philip King, warned of the dangers of the valuations of some growth stocks which he fears will be unsustainable in due course.
While King is warning of the danger, he is also looking forward to the opportunity - or opportunities - which will present themselves on the short side. Given the track record of Regal's various funds, which have provided twelve-month returns of between 28% and 74%, and annualised returns ranging from 13% to 35% over a long period which included the GFC, albeit with commensurate volatility, it would be well worth listening to King's voice of experience.
The AIMA conference was followed by last night's 17th annual Hedge Funds Rock event, which combined recognition of the best performing managers across eight categories, along with raising funds for well worth charities, including Redkite which supports the families of children with cancer - with the total raised over 17 years now well over $2 million. Like the industry itself, this event has evolved over the past 17 years from a bunch of managers letting their hair down at Sydney's legendary Basement, through to last night's excellent event for almost 500 held at the Westin's Ballroom.
The award for the individual contribution to the Australian hedge fund industry went to Bronte Capital's John Hempton. For those not aware, Hempton's skills have been particularly evident in uncovering dodgy, if not fraudulent, accounting, and shorting overvalued companies. One person who will not be impressed either by the industry's recognition of Hempton, or by his expertise on the short side, would be Harvey Norman's Gerry Harvey, who once again this week came out spitting chips about the level of short sales in his beloved company.
Without going into the rights or wrongs of short selling, Hedge Clippings' view is that the best way to avoid short sellers is to clean up one's balance sheet, have accurate and transparent accounts, and focus on managing the business at hand (and in Harvey's case that means retailing, not farming). Of course that doesn't cover the situation of short sellers of stocks that are considered vastly overvalued, but if anything they are helping to ensure that valuations don't become even further stretched.
13 Sep 2018 - Bennelong Twenty20 Australian Equities Fund August 2018
BENNELONG TWENTY20 AUSTRALIAN EQUITIES FUND
Attached is our most recently updated Fund Review on the Bennelong Twenty20 Australian Equities Fund.
- The Bennelong Twenty20 Australian Equities Fund invests in ASX listed stocks, combining an indexed position in the Top 20 stocks with an actively managed portfolio of stocks outside the Top 20. Construction of the ex-top 20 portfolio is fundamental, bottom-up, core investment style, biased to quality stocks, with a structured risk management approach.
- Mark East, the Fund's Chief Investment Officer, and Keith Kwang, Director of Quantitative Research have over 50 years combined market experience. Bennelong Funds Management (BFM) provides the investment manager, Bennelong Australian Equity Partners (BAEP) with infrastructure, operational, compliance and distribution services.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - August 2018 (pdf format)
12 Sep 2018 - Performance Report: Bennelong Long Short Equity Fund
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| Fund Overview | 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 a record +10.59% in August, the Fund's best month since inception in January 2003. The Fund has returned +28.97% over the past 12 months with an up-capture ratio of +103.97% and a down-capture ratio of -149.86% (a negative down-capture ratio indicates that the Fund, on average, has risen during the market's negative months). Since inception, the Fund has returned +16.77% p.a. versus the Index's +8.32%. |
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11 Sep 2018 - Fund Review: Bennelong Long Short Equity Fund August 2018
BENNELONG LONG SHORT EQUITY FUND
Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.
- The Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large-caps from the ASX/S&P100 Index, with over 15-years' track record and an annualised returns of over 16%.
- The consistent returns across the investment history indicate the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market. The Fund's Sharpe Ratio and Sortino Ratio are 1.02 and 1.72 respectively.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - August 2018 (pdf format)
10 Sep 2018 - Performance Report: Insync Global Capital Aware Fund
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| Fund Overview | 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 of typically 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. At times, Insync may consider holding higher levels of cash if valuations are full and it is difficult to find attractive investment opportunities. When Insync believes markets to be overvalued, it may hold part of its resources in cash, or use derivatives as a way of reducing its equity exposure. Insync may use options, futures and other derivatives to reduce risk or gain exposure to underlying physical investments. The Fund may purchase put options on market indices or specific stocks to hedge against losses caused by declines in the prices of stocks in its portfolio. |
| Manager Comments | Positive contributions from the Fund's holdings in Alphabet, Microsoft, Amadeus IT and Visa helped offset the Fund's losses, underlining Insync's strong approach to portfolio construction. Insync noted the Fund's core holdings remain, including Facebook. In Insync's view, Facebook exemplifies Insync's disciplined process and unique methodology of assessing ROIC and utilising Megatrends (Insync's unique investment process). Insync believe Facebook remains an excellent quality growth investment. Insync remain positive about their stock holdings and believe they will continue to benefit from global Megatrends. Insync's valuation approach, which seeks to capture the long-term growth of these companies, continues to show a valuation discount. They noted they continue to invest in companies with strong growth prospects and which are less sensitive to market fluctuations. Should the market continue to perform, the Fund will participate in the rally, however, the Fund is also prepared in the event the market suffers a significant correction. |
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