NEWS

10 Aug 2018 - Performance Report: Touchstone Index Unaware Fund
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| Fund Overview | The portfolio is constructed using Touchstone's Quality-At-a-Reasonable-Price ('QARP') investment process. QARP is a fundamental bottom-up process, however, it also incorporates a top-down risk management framework designed to successfully manage the portfolio during varying market conditions and economic cycles. The Touchstone Fund is concentrated, typically holding between 15-20 stocks. No individual stock will ever make up more than 10% of the portfolio at any one time. The Investment Manager may temporarily exceed the exposure limits of the Fund occasionally, particularly during periods of market volatility, to allow for holdings in excess of this 10% limit where the increase in value of the underlying security is due to market movement. The Fund may also hold between 0-50% of the portfolio in cash. The Fund has a high level of associated risk, therefore, the minimum suggested investment time-frame is 5 years. |
| Manager Comments | At the end of the month the Fund held 21 stocks with an median position size of 4.4%. Overall, the portfolio's holdings had an average price/earnings of 15.7, EPS growth of 15.7%, tangible ROE of 22.5% and dividend yield of 4.8%. The Touchstone Index Unaware Fund primarily selects stocks from the S&P/ASX 300 Index and typically holds 10-30 stocks. It seeks to invest in reasonably priced, good quality companies with a significant share of expected returns coming from sustainable dividends. |
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9 Aug 2018 - 25% further downside for Telstra?

8 Aug 2018 - THE MAGIC FLUTING: CREATING SUSTAINABLE VALUE IN EUROPEAN PACKAGING

7 Aug 2018 - Performance Report: Bennelong Kardinia Absolute Return Fund
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| Fund Overview | The Fund's discretionary investment strategy commences with a macro view of the economy and direction to establish the portfolio's desired market exposure. Following this detailed sector and company research is gathered from knowledge of the individual stocks in the Fund's universe, with widespread use of broker research. Company visits, presentations and discussions with management at CEO and CFO level are used wherever possible to assess management quality across a range of criteria. Detailed analysis of company valuations using financial statements and forecasts, particularly focusing on free cash flow, is conducted. Technical analysis is used to validate the Manager's fundamental research and valuations and to manage market timing. A significant portion of the Fund's overall performance can be attributed to the attention and importance given to the macro economic outlook and the ability and willingness to adjust the Fund's market risk. |
| Manager Comments | The Fund fell -0.77% in June, hurt by Bennelong's cautious positioning in response to escalating trade tensions. Positive contributors included Macquarie Group (+34bp contribution), Whitehaven Coal (+29bp), CYBG (+22bp), ANZ (+19bp) and Costa Group (+16bp). A short position in Share Price Index Futures (-152bp contribution) was the biggest detractor for the month given the strong market. The individual short book (-38bp) also detracted from performance, with shorts in energy, consumer and REIT stocks all contributing negatively. Other detractors included long positions in Ausdrill (-50bp), Mineral Resources (-25bp), APA Group (-21bp) and Netwealth (-17bp). Net equity market exposure (including derivatives) was increased late in the month from 12.9% to 40.3% (82.1% long and 41.8% short), with the addition of A2 Milk, ANZ, Magellan, Westpac and Xero, and a reduction in the Fund's short position in Share Price Index Futures contracts as well as some bond proxy and consumer stocks. Bennelong noted this was partly offset by the sale of Ausdrill, Janus Henderson, Kidman Resources and RCR Tomlinson. |
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6 Aug 2018 - Tomas Capital Annual Letter

6 Aug 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 | The Fund returned +13.81% over the quarter, outperforming the Index by +5.34%. The Fund benefited from strong returns from some of its largest holdings; CSL, Reliance Worldwide and Aristocrat Leisure. Bennelong noted these names typify the kind of stocks in which they seek to invest, all are high quality growth companies that proved again this quarter to have better than expected earnings prospects. The Fund is a concentrated portfolio of BAEP's highest conviction stock ideas. It is 'index unaware' and thus able to avoid large benchmark weights if considered appropriate. Over the quarter the Fund's underweight position in the banking sector (less than 1% of the portfolio) contributed to relative performance. |
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3 Aug 2018 - Hedge Clippings, 3 August 2018
David Murray takes (yet another) tilt at ASIC
David Murray's antipathy towards ASIC goes back a long way so it was always going to be interesting to see if he would temper his comments once he took the chair at AMP.
Far from being conciliatory, this week he upped the argument considerably, whilst conveniently forgetting, or more correctly ignoring, the fact that AMP's track record with the regulator is less than exemplary.
For example, the chairman and board lying to ASIC is not something one would really like to have on one's corporate tombstone - or CV.
Neither is charging investors for services not received, nor consistently favouring in-house and underperforming products, and thereby making a mockery of the term "independent financial advice".
One presumes that David Murray's approach to ASIC follows the line that the best form of defence is "attack, attack, attack", or that other well tried defence, "deny, deny, deny".
There's no doubting that the level of compliance and regulation required by ASX listed companies (and unlisted ones if it comes to that) is significantly greater than it once was, but how each one implements ASIC's guidance can vary from company to company. What is quite obvious is that AMP's previous chair and the board took a very detailed and hands-on approach to management, and as the record shows, quite simply failed in the execution.
Going forward expect more entrenched criticism of ASIC from David Murray, but what will now be interesting will be who he appoints as CEO, and how they both manage to change the culture, practice and business model at AMP (assuming Murray intends to do so).
The market and the AMP share price will no doubt tell the story over time.
Meanwhile, next week sees a resumption of the Hayne Royal Commission, this time around focusing on the Superannuation sector. No one is likely to be surprised (although they might be shocked) at the revelations that will no doubt be exposed.

3 Aug 2018 - Performance Report: 4D Global Infrastructure Fund
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| Fund Overview | The fund will be managed as a single portfolio of listed global infrastructure securities including regulated utilities in gas, electricity and water, transport infrastructure such as airports, ports, road and rail as well as communication assets such as the towers and satellite sectors. The portfolio is intended to have exposure to both developed and emerging market opportunities, with country risk assessed internally before any investment is considered. The maximum absolute position of an individual stock is 7% of the fund. |
| Manager Comments | 4D Infrastructure noted June was a difficult month for the Fund's emerging market exposure, hit by currency concerns on the back of rising US rates as well as geo-political issues around trade wars and elections. However, 4D Infrastructure's opinion is that the fundamentals for these names remain solid. The strongest performer for June was China Resources Gas, up +19.3% as the gas conversion theme continues to develop in China. The weakest performer was Chinese toll road operator Anhui Expressway, down -13.7% which the manager expects was driven by concerns around the trade wars with the USA. Given the global macro environment, 4D Infrastructure remain overweight user pay assets which have a direct correlation to macro strength. However, the Fund maintains core exposure to quality defensive utility assets due to ongoing geo-political concerns. |
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2 Aug 2018 - Caught in the Crossfire

31 Jul 2018 - Performance Report: Newgate Absolute Return Fund
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| Fund Overview | The investment manager uses an initial screening process to highlight securities within their target investment universe where there are likely to be errors in market expectations and where they could change to impact security prices. A detailed research process is then undertaken and integrated with financial analysis to determine a sustainable yield and fundamental discounted cash flow valuation for each security. The investment manager's analysis of a security will involve a review of potential key drivers such as operational outlook, inflation and interest rate expectations, regulatory environment, tax structuring, position in capital expenditure cycle and capital structure. The goal is to understand how a company is positioned in terms of its growth and risk profile. The Fund does not undertake a long range forecasting or attempt to arrive at a precise conclusion about a company's long term valuation. Instead, the investment team seeks to understand the fundamental agents of change impacting a company and its environment and use this to determine how they will impact a company's economics and market perception of value. The Fund intends to use leverage to enhance returns to investors and has a policy of limiting leverage to 50%. The Fund may make use of derivatives, mainly to reduce risk or gain exposure to other types of investments. |
| Manager Comments | The Newgate Absolute Return Fund ended the financial year up +41.00% versus the Index's +13.01%. The Fund has returned +22.38% per annum since inception in August 2016, outperforming the Index by +11.78% on an annualised basis. The Fund's Sharpe and Sortino ratios for performance since inception, 1.68 and 4.15 respectively, highlight the Fund's ability to achieve superior risk-adjusted returns whilst ensuring investors' capital is protected. In addition, the Fund's cumulative down-capture ratio since inception emphasises the Fund's ability to perform well in falling markets. |
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