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 16-years' track record and an annualised returns of 15.11%.

• The consistent returns across the investment history highlight 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 0.90 and 1.45 respectively.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - February 2019 (pdf format)

The see-saw equity market has been making things difficult for fund managers over the past 6 months - they found the last quarter of 2018 tough enough as the market tanked under the pressure of US investors' reaction to 10-year bond rates at 3.25%, and locally the side effects Hayne Royal Commission. Subsequently the ASX rebounded 6% in February as 10-year US bond returns retreated to yield 2.75%, just as many fund managers reset their portfolios to be more defensive and risk averse.

Of course not helping markets are the multiple geopolitical and associated economic issues they're facing: Brexit is getting closer and closer to the wire without a solution; Europe's economy is slowing partly as a result of Brexit, and partly due to China's slowdown; Trump's mega arm wrestle with Xi isn't going as well as he'd like to tweet, with evidence that it is hurting the US economy as well and possibly as much as China's; and finally the Donald might be realising that negotiating with Korea is not as easy as simply comparing and bragging about the size of his button.

While on the subject of China, an article today on Bloomberg's "Five Things To Start Your Day" (well recommended if you don't already receive it) citing the exodus of Chinese property buyers as the main cause of the property downturn in Australia (having bid it up in the first place), and elsewhere around the globe. Whilst that may be a major reason, so is the banks' tightening of loan eligibility (or possibly just applying what was there in the first place) along with the impending end of 5-year fixed-term interest-only mortgages being switched to principal and interest loans; low wages growth, in turn leading to poor retail sales figures as consumers' confidence is eroded and they pull their collective heads in.

For the property market it is somewhat of a perfect storm, and coming at the end of an extended period of double digit annual growth, bound to fall further. Whilst not property experts, Hedge Clippings would suggest the worst for the property market is not over yet, particularly with the imminent potential of a change in government, and with it the introduction of restrictive negative gearing rules amongst other goodies.

BENNELONG KARDINIA ABSOLUTE RETURN FUND

Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile.

• The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with over ten-year track record. 

• The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in May 2006 and also has significantly lower risk KPIs. The Fund has an annualised return of 9.22% p.a. with a volatility of 7.12%, compared to the ASX200 Accumulation's return of 5.98% p.a. with a volatility of 13.35%.

• The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while Bennelong Funds Management provide infrastructure, operational, compliance and distribution capabilities.

For further details on the Fund, please do not hesitate to contact us.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - February 2019 (pdf format)

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.

Australian Fund Monitors

ATTACHED FILESAFM Fund Review - February 2019 (pdf format)

It's been a mixed week of general news, with the Australian equity market recovering some of last year's late sell off by rising over 5% in February, courtesy in particular of the banking sector which rallied (in relief?) over 8%. It's worth remembering, however, that CBA for instance is still a long way from regaining sight of $100.

The Trump/Kim show is set for round 3 at least, but it was never going to be a straightforward negotiation. Kim's not easy, and Trump's well… Trump. Maybe he wanted to get back to Washington as quickly as possible to speak to his ex-solicitor, Steve Cohen. Markets will stay nervous, but understanding that a war starting in 1949 and which has yet to have a truce signed is not going to be fixed by a couple of high profile summit meetings. There'll be a resolution…. in due course.

Unlike Brexit, which is heading for goodness knows what? A hard exit? Disaster, although some look forward to it. A negotiated exit? Looking increasingly unlikely as the EU has the whip hand, or acceptable to many in Westminster or the UK at large. A second referendum? The first was an error of judgement, the second if held would probably result in a reversal, and a lot of unhappy Brexiteers.

In China, factory output hit a three-year low dipping below the all-important 50 level. That's a problem for Australian companies dependent on China, and not only in the resources sector such as BHP and RIO. Think Blackmores, who didn't see China's buyers coming and, by their own admission, didn't see them going either. Irrespective of the ongoing trade talks, factory output is down because consumer spending is down or slowing, particularly at the luxury or discretionary level.

And finally, on to funds management and financial services: We read with interest that Advisor Ratings are to publish Financial "Advisor" rankings. Great idea, but it will be difficult to accurately focus on their quality of advice, rather than only providing an orange or red flag for those surveyed (assuming they take part) who fall short. However, it will hopefully weed out some who shouldn't be in the industry. Along with the HRC's call for all advisors to have to declare their affiliations with, or ownership by, a financial institution or product issuer, this will at least provide consumers with some warning.

The dictionary lists synonyms for "advisor" as "counsellor, mentor, guide, consultant, confident, guide, aide, helper" etc. The bottom line is that an "advisor" must be able to declare they're independent, or not be permitted to use the term. If not, they risk being classified as being in product distribution, business development or sales. Such advisors should also be required to declare which products they have affiliations with and justify each product's inclusion on any recommendation or recommended product list.