NEWS
20 Mar 2017 - Pengana Absolute Return Asia Pacific Fund
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| Fund Overview | The Fund will usually hold 40 to 80 positions and will be well diversified across the various event strategies. In keeping with the absolute return focus the Manager will eliminate market risk where appropriate by hedging market and foreign currency risks. Since inception the Fund has averaged a net equity market exposure of ~10%. Sizing of an investment position will depend on the expected risk adjusted returns while taking account the liquidity and volatility of the stock. In addition, the maximum potential loss on any one position should be greater than 0.5% of the NAV and the position should not exceed 30% participation of stressed volume assuming a $200m NAV. Other criteria considered are ability to hedge and the availability of pair candidates as well as the average bid-ask size. For M&A strategies average long position is 3 to 5.5% and average short position 2 to 5%. |
| Manager Comments | The M&A sub-strategy posted a positive performance of +1.3% after gaining 1.1% in January. The biggest positive contributor was the position in Television Broadcasts Ltd TVB, which gained 14% and contributed 40 basis points to performance. The Fund's position in Yingde Gases contributed 22bp to performance, gaining 13% over the month. The Capital Structure strategy was the main negative contributor, generating a loss of -0.9% for the month. The bulk of the poor performance stemmed from the positions in Korean Preference vs Ordinary shares. |
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18 Mar 2017 - Hedge Clippings
He may not fit the presidential mould, but the market likes the President
The US market is continuing to be buoyed overall by the "Trump Effect", albeit that certain sectors are benefiting considerably more than others. That's life in general, and it is certainly going to be life under this president. Any sector related to the $1 trillion intended to be spent on new infrastructure projects are looking positive. On the other side of the ledger, Trump's move against Obamacare, renewable energy and others are going to suffer.
As a result of the overall Trump Effect the US market has seen a significant upward trend, with hardly a pause, let alone a pull back, over the past three months. In fact since Trump won the November election, the US market hasn't had a one day fall of 1%. As a result volatility, as measured by the VIX index sits currently at 11.21, although that's fractionally higher than the 10.58 it touched at the end of January. Not even a 0.25% rate rise announced during the week in the US was able to upset Trump's rally, which has also reached across the Atlantic as the British market set a new record high overnight.
Compare the VIX to the PC (Political Correctness) Index which the Tweeting Mr Trump has sent into overdrive! In fact, we wonder if Trump is the beneficiary, or benefactor, of the Twittersphere?
Closer to home local funds managers have been making the headlines over the past couple of weeks. Bronte Capital's John Hempton won both the war of words with and bragging rights over Pershing Square's Bill Ackman based his short in US pharmaceutical company Valeant. Meanwhile, Russel Pillemer's Pengana Capital seems to have pulled off a coup with their bid (in conjunction with WH Soul Pattinson) for listed fund manager Hunter Hall, winning the backing of Hunter Hall's board.
Most in the industry are still wondering why founder and CIO Peter Hall chose to sell a 19.9% stake in Hunter Hall to Soul Patts back in December for $1 a share, way below the then market price, although he has since agreed to sell them the balance of 24% for a more respectable market price of $2.60 a share. If nothing else he did trigger the bidding war which ensued, will hardly be left penniless, and according to the Financial Review is committed to "making the world a better place", so overall not a bad result for him either.
From Pengana's perspective, the deal looks like one with excellent synergy. They add an additional $900m in funds under management to their current $2.2b without having to cannibalise their existing suite of managers, with a similar target client base of premium investors, while gaining a foothold in the increasingly interesting ethical investing space.
We're not sure how ethical investing fits with The Donald's casino empire, but we think investors will like it.
Bennelong Long Short Equity Fund returned +2.07% in February, to take the annualised return since inception to 16.47% p.a.
Paragon Australian Long Short Fund returned -5.0% for the month of February and +9.96% for the latest 12 months. The Fund has an annualised return since inception of 13.63% p.a.
APN AREIT Fund rose +3.02% in February, to take the latest 12 months return to +8.68%. The S&P/ASX 300 Property Trust Accumulation Index also gained in February, returning +4.13%. Since inception in January 2009, the Fund has an annualised return of 16.71% p.a.
Allard Investment Fund increased 0.75% for the month of February. The Fund has gained +18.54% over the latest 12 months, taking the annualised return since inception to 9.03% p.a.
Bennelong Kardinia Absolute Return Fund returned +0.25% in February, taking the annualised return since inception to 11.07% p.a.
Cyan C3G Fund returned +0.1% in February, taking the Fund's one year return to 22.44%. Since inception, the Fund's has an annualised return of 26.16% p.a.
APN Asian REIT Fund returned -0.19% in February, outperforming the Bloomberg Asia REIT Index which returned -0.81%, by 0.62%. Since inception, the Fund has an annualised return of 13.99% p.a.
Quay Global Real Estate Fund increased +3.1% for the month of February and +4.84% for the prior 12 months. The Fund has an annualised return since inception of 15.35% p.a. Global real estate returned +1.8% for the month in AUD terms, with around 3.2% in underlying stock returns, while the stronger AUD deduced -1.4%.
Totus Alpha Fund fell -0.46% in February, to take the latest 24 months return to +23.02%. Since inception in April 2012, the Fund has an annualised return of 19.63% p.a.
Bennelong Twenty20 Australian Equities Fund increased 2.03% in February and 18.2% over the latest 12 months.
NWQ Fiduciary Fund returned -0.35% in February, to bring the annualised return since inception in May 2013 to +5.87% p.a.
Optimal Australia Absolute Trust returned -0.98% in February, a rare negative month for one of the most consistent performers, to take the annualised return since inception to 8.11% p.a.
FUND REVIEWS released this week: Bennelong Long Short Equity Fund; Bennelong Kardinia Absolute Return Fund;
And on that note, have a great, and if you're in Sydney, a wet and windy weekend.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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17 Mar 2017 - Optimal Australia Absolute Trust
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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 | During the earning season, Woolworths, APN, Vocus and CSL contributed positively to the Fund's performance. However, this contribution was undone by Orocobre, which again cut production guidance. On the short side of the portfolio, the positions in Materials and Telco generated solid returns, although this contribution was largely offset by the drag from stronger defensives, Financials, and index futures. The investment team retains a cautious position with respect to net market exposure and continues to look for stock opportunities. |
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16 Mar 2017 - Fund Review: Bennelong Kardinia Absolute Return Fund February 2017
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 11.07% p.a. with a volatility of 7.16%, compared to the ASX200 Accumulation's return of 5.32% p.a. with a volatility of 13.97%.
- 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.
AFM Fund Review - February 2017 (pdf format)
16 Mar 2017 - 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 | There was a high degree of dispersion in the performance of the Fund's underlying managers in February. The Fund's Alpha managers combined to make a modest contribution to performance (+0.12%). However, the Fund's overall performance was weighed down by the performance of the Beta managers combined, to post a negative contribution of -0.41%. It remains the view of NWQ that there exists further potential for destructive equity and bond market volatility in the coming months, and therefore, the portfolio continues to remain overweight to the Alpha or market neutral strategies. |
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15 Mar 2017 - Totus Alpha Fund
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| Fund Overview | The Fund is a long/short investment fund principally investing in listed entities, commodities, futures and options in Australia and internationally. The Fund is not a market neutral fund and accordingly may switch between net long positions and net short positions. The Fund may use short sales and derivatives. Gearing may be used to enhance returns and the Fund may be geared in excess of 100% of the Fund's Net Asset Value. There is a limit to net exposure of 150%. |
| Manager Comments | Top contributors in February were long positions in Ramsay +0.46%, Aristocrat +0.30% and Westpac +0.29%. Biggest detractors were short positions in Estia -0.50% and Blue Sky -0.39%, and a long position in Adairs -0.48%. As of 28 February, the Fund had a net exposure of 42.7% and a gross exposure of 171.2%. The Fund held 99 positions (44 long and 55 short). |
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15 Mar 2017 - Bennelong Twenty20 Australian Equities Fund
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| Fund Overview | The Fund is managed as one portfolio but comprises and combines two separately managed exposures: 1. An investment in the top 20 stocks of the markets, which the Fund achieves by taking an indexed position in the S&P/ASX 20 Index; and 2. An investment in the stocks beyond the S&P/ASX 20 Index. This exposure is managed on an active basis using a fundamental core approach. The Fund may also invest in securities expected to be listed on the ASX, securities listed or expected to be listed on other exchanges where such securities relate to ASX-listed securities.Derivative instruments may be used to replicate underlying positions and hedge market and company specific risks. The companies within the portfolio are primarily selected from, but not limited to, the S&P/ASX 300 Accumulation Index. The Fund typically holds between 40-55 stocks and thus is considered to be highly concentrated. This means that investors should expect to see high short-term volatility. The Fund seeks to achieve growth over the long-term, therefore the minimum suggested investment timeframe is 5 years. |
| Manager Comments | In terms of relative performance, the ex-20 stocks within the portfolio kept pace with the market. Reporting season was generally kind to these stocks. There were a number of solid results, such as BWX and Breville Group that beat expectations, and which were well received by the market. There were also some that were slightly softer than expected, including ARB and Dominos. Aristocrat, one of the Fund's largest positions, was the largest contributor to the Fund's performance over the month. |
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14 Mar 2017 - Quay Global Real Estate Fund
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| Fund Overview | The Fund will invest in a number of global listed real estate companies, groups or funds. The investment strategy is to make investments in real estate securities at a price that will deliver a real, after inflation, total return of 5% per annum (before costs and fees), inclusive of distributions over a longer-term period. The Investment Strategy is indifferent to the constraints of any index benchmarks and is relatively concentrated in its number of investments. The Fund is expected to own between 20 and 40 securities, and from time to time up to 20% of the portfolio maybe invested in cash. The Fund is $A un-hedged. |
| Manager Comments | The largest contributors to the month's return were Stag Industrial (up +12% in local currency terms) and Equity Lifestyle Properties (US). The smallest contributors (mainly due to their low portfolio weights) were RLJ Lodging (US) and Camden Living (US). Apartments (18%), Storage (11.6%) and Industrial (11.5%) were the most heavily weighted sectors in the portfolio. The Fund holds around 10% in cash as the investment team looks for better entry prices or new opportunities. |
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13 Mar 2017 - Fund Review: Bennelong Long Short Equity Fund February 2017
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 large-caps from the ASX/S&P100 Index, with over fourteen-year track record and annualised returns of 16.47% p.a.
- 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 0.99 and 1.64 respectively.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - February 2017 (pdf format)
13 Mar 2017 - APN Asian REIT Fund
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| Fund Overview | Pete Morrissey and Corrine Ng are the Portfolio Managers of the Fund. Morrissey has over 15 years financial markets experience and joined APN in 2006. Previously, he worked at Lonsec and also managed an internationally focused private investment fund as well as spending several years as an analyst in the UK for Nomura, amongst others. He has also completed Masters level academic research papers on both commercial real estate cycles and global property cycles. Ng also has a strong background in property and REITs in Australia, Asia and the North American markets. Prior to joining APN, Ng worked for Aviva Investors (Senior Investment Analyst, North America Real Estate Securities Team) and Goldman Sachs & Co (Vice President, Goldman Sachs Asset Management Real Estate Securities Team) in New York. The Fund aims to deliver a competitive yield with lower risk than the market. The underlying stocks are selected based on a highly disciplined investment approach that focuses on the fundamentals and number of valuation approaches. The universe is expected to be dynamic as new IPO's, other corporate actions take place and / or corporate governance improvements at country or REIT level bring new stocks into focus. The Fund focuses on passive rental earnings derived from well managed Asian REITs listed in mature capital markets and will not invest in infrastructure, property development companies or stocks with a 'loose association with property'. The Fund provides access to a wide spread of property-based revenue streams that are specifically analysed, selected and weighted with the aim of delivering strong and sustainable income returns. The Fund is an unhedged product. The Fund is suited to medium to long term investors seeking a relatively high income and some capital growth over the long term. |
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