NEWS
13 Jun 2016 - 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 | Aristocrat Leisure, TPG Telecom, Pilbara Minerals and CSL all made significant positive contributions whilst Share Price Index Futures contracts (hedging long positions), BHP Billiton and BWX were the largest detractors from performance. Net equity market exposure (including derivatives) remained fairly stable at 32.1% (52.1% long and 20.0% short). Click below to read the latest Fund Report. |
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13 Jun 2016 - Fund Review: Meme Australian Share Fund May 2016
Meme Australian Share Fund
Attached is our most recently updated Fund Review on the Meme Australian Share Fund.
We would like to highlight the following aspects of the Fund;
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The Meme Capital Management is a Perth-based boutique Fund Manager, established in 2012 and manages the Meme Australian Share Fund.
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The Fund specializes in technical and quantitative strategies to identify investment opportunities expected to provide both positive price appreciation and relative price out-performance over the medium to long term.
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The Fund's objective is to outperform the S&P/ASX All Ordinaries Accumulation Index over rolling three-year periods, through investing in ASX listed securities outside the S&P/ASX 20. The Fund only takes long positions and does not use derivatives.
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Since inception the Fund has an annualised return of 20.48% p.a., versus the Index's return of 8.81% p.a.
AFM Fund Review - May 2016 (pdf format)
11 Jun 2016 - Hedge Clippings
World Bank cuts 2016 growth forecast from 2.9% to 2.4%
Hedge Clippings sometimes wonders at those really smart people who are tasked with producing economic forecasts. Why can't they ever seem to get it right? OK, we accept that it's not an easy job, but a 50 basis point cut since their previous forecast issued in January suggests they need to take a look out of the window, or even take a walk in the street.
To make matters worse the overview on their website included the warning (if you didn't need it) that their "projections are subject to substantial downside risks, including additional growth disappointments in advanced economies or key emerging markets and rising policy and geopolitical uncertainties". That sounds to us like hedging their bets, with the likelihood that at some time in the next few months they will announce further (downward) adjustments. They'd better get a move on, because the year is almost half gone already, so the margin for error is getting slimmer by the day.
To be fair these are difficult times, and there are a significant number of risks out there. It seems that Janet Yellen and the US Fed have put off a rate rise in the immediate future, while in Germany of all places, that European powerhouse of industrial growth, yields have finally slipped into negative territory.
And talking of false or wildly hopeful expectations, how either of Australia's two political parties expect the electorate to believe that the budget can be brought back into surplus within the next five years, or for that matter the next ten, without a major overhaul of both spending and taxation, neither of which are politically acceptable to a significant proportion of the population, never ceases to amaze us.
On a completely different and unrelated note and nothing to do with the World Bank, economic forecasts, or unrealistic politicians, Mohammed Ali sadly passed away last week-end. Among all the articles that were written was one by Peter FitzSimons which (probably correctly) blamed boxing for our heroes' condition, and ultimately his untimely end. However, Fitzy missed the point that without boxing it is unlikely that Cassius Clay would have ever emerged onto the world stage, and we would all have been worse off as a result.
So as a tribute to a real hero, a couple of quotes out of the thousands from the man who rightly claimed to be the "greatest" - in many senses of the word, in and out of the ring:
"Impossible is just a big word thrown around by small men who find it easier to live in the world they've been given, than to explore the power they have to change it. Impossible is not a fact. It's an opinion. Impossible is not a declaration. It's a dare. Impossible is potential. Impossible is temporary. Impossible is nothing."
And another:
"Don't count the days, make the days count."
RIP
APN Asian AREIT Fund rose 4.57% for the month of April, compared to the BBAREIT Index's return of 5.68%. Since inception, the Fund has an annualised return of 17.19% p.a.
Insync Global Titans Fund returned 0.7% in April, taking annualised return since inception in October 2009 to 9.2%.
Meme Australian Share Fund rose 5.43% for the month of May, to take latest 12 months return to 22.93%.
Cyan C3G Fund returned +5.70% in May 2016. Over two years since inception, the Fund has an annualised return of 35.07% p.a.
Jamieson Coote Bonds Active Fund rose 1.19%, against the Bloomberg Australian Government Bond Index which returned 1.37%.
The Paragon Fund rose 7.0% for the month of May to take annualised return over 3 years since inception to 22%.
Optimal Australia Absolute Trust returned 2.29% to take annualised return since inception in 2008 to 9.22% p.a; standard deviation of just 3.68%, and a Sharpe ratio of 1.53.
Bennelong Long Short Equity Fund rose 7.58% in May, outperforming the ASX 200 Accumulation Index by 4.49%, while taking 12-month performance to 31%, and annualised performance over 13 years to 18%.
FUND REVIEWS released this week: APN Asian REIT Fund; Insync Global Titans Fund;
And on that note, have a great weekend.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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10 Jun 2016 - 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. |
| Manager Comments | Company fundamentals dictated the strong Fund return. Specific pairs that contributed to performance included: 1) long Aristocrat / short Tabcorp, with Aristocrat rallying 29% following a strong trading update and outlook as it continues to gain market share from competitors in Australia and the US; 2) long Macquarie / short IOOF, with Macquarie reporting a solid FY16 profit while IOOF lowered its earnings guidance; and 3) long Qantas / short Flight Centre where Flight Centre guided profit lower. Click below to read the Fund Manager's commentary and market outlook. |
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9 Jun 2016 - The Paragon Fund
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| Fund Overview | Paragon believes that markets are not always efficient, exhibiting a common tendency to price securities well outside of their intrinsic value over the medium term. This market characteristic provides the opportunity for Paragon, an active manager with a flexible mandate, to generate superior investment returns over the longer term. Paragon believes that it is critical to understand both the companies and the industries in which they operate, in order to fully comprehend each investment opportunity. Accordingly, a fundamental approach to company research is taken. Assessing the potential downside is also paramount in framing the risk/reward trade-off for potential investments. |
| Manager Comments | Key positive contributors for May included longs in the lithium holdings, as well as Mayne Pharma, Smartgroup and Yowie. This was offset by the short positions in a rising market. At the end of the month, the Fund had 31 long positions and 13 short positions. Click below to read the latest monthly report. |
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9 Jun 2016 - 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 | The Fund maintained a net short market exposure for the month of May, averaging 16% of NAV and therefore enjoying no benefit from the market. However, the Fund's stock selection worked well and the long positions made a net contribution of over 4%, with some solid gains in their high-conviction positions in alternative energy, food, media, and banks. Click below to read the latest Fund monthly report. |
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8 Jun 2016 - Cyan C3G Fund
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| Fund Overview | Cyan C3G Fund is based on the investment philosophy which can be defined as a comprehensive, clear and considered process focused on delivering growth. These are identified through stringent filter criteria and a rigorous research process. The Manager uses a proprietary stock filter in order to eliminate a large proportion of investments due to both internal characteristics (such as gearing levels or cash flow) and external characteristics (such as exposure to commodity prices or customer concentration). Typically, the Fund looks for businesses that are one or more of: a) under researched, b) fundamentally undervalued, c) have a catalyst for re-rating. The Manager seeks to achieve this investment outcome by actively managing a portfolio of Australian listed securities. When the opportunity to invest in suitable securities cannot be found, the manager may reduce the level of equities exposure and accumulate a defensive cash position. Whilst it is the company's intention, there is no guarantee that any distributions or returns will be declared, or that if declared, the amount of any returns will remain constant or increase over time. The Fund does not invest in derivatives and does not use debt to leverage the Fund's performance. However, companies in which the Fund invests may be leveraged. |
| Manager Comments | The majority of companies in the Fund delivered positive performances, the most notable contributors included Afterpay +50%, BlueSky +14%, Abundant Produce +33%, OPUS Group +17% and Primary Opinion +24%. Animoca Brands -12% and Speedcast -13% were the largest negative contributors for the month. Presently, the Fund has a growth focus with an average forward PE of ~18x. The Fund currently holds 28 individual stocks with the largest holding not exceeding 7% of the total value. At the end of May, the Fund held in excess of 25% in cash. Click below to read the latest Fund Manager's Report. |
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8 Jun 2016 - Jamieson Coote Bonds Active Fund
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| Fund Overview | JCBAF seeks to establish a mid to long term core portfolio using both domestic and global macroeconomic analysis. This is overlaid with a number of valuation indicators and international market intelligence from a global network of market moving investors, including central bankers and hedge funds, to construct an optimal indexed portfolio allocation at any given time. The Fund recognises short term oscillations driven by technical factors and supply dynamics create opportunities within short term pricing cycles, which can generate significant alpha when managed within a risk adjusted framework. The Fund aims to outperform its index using duration and curve management at appropriate times in the pricing cycle whilst retaining a core long. The JCB Active Fund gives direct access to the management team whilst providing portfolio balance with increased capital stability and a fixed income streams with both income and principle repayment secured by the Australian or State Governments. |
| Manager Comments | The Fund maintained some steepening exposure in the 3yr and 5yr area vs 10yr part of the curve as the Fund Managers believed that the RBA would cut rates, which proved correct. The Fund managed added duration immediately on the announcement and as such produced index returns running only 79% of the index duration risk (delta) through this major market move. Since then the Fund has lightened their duration exposures. The curve flattened late in the month causing small decay vs index into month end (-0.17% net). Spread positions remained very short dated in AAA names only. Click below to read the Fund Manager's market outlook. |
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7 Jun 2016 - Meme Australian Share Fund
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| Fund Overview | The Fund's investment strategy seeks to identify low-risk entry opportunities and then build positions in these stocks. Once established in the portfolio, individual stock holdings are maintained for as long as their long-term upward trend remains intact and while they continue to make positive contributions to portfolio growth. Positions are reduced and ultimately closed out as their trends become exhausted or as their relative long-term performance against the broad market weakens. The Fund believes that longer time frame investments also provide a number of advantages. The effect of false signals and 'noise' which attend shorter term time frames is mitigated by only attending to signals which are confirmed by our longer term assessments. Also, the Fund gains exposure to the more expansive price trends which can last for months and years, allowing dividends and distributions received during this time to further enhance portfolio returns. |
| Manager Comments | The five most positive contributors to the fund's performance were Infigen Energy, Galaxy Resources, Orocobre Limited, Clean Teq Holdings, and Fisher & Paykel Health, while the five most negative contributors were Gascoyne Resources, Structural Monitors, Emerchants Limited, Doray Minerals and Alumina Limited. Allocations to ASX100 stocks reduced from about 18% to 15.5% of the Fund's holdings while stocks outside the ASX200 continue to account for the bulk of the portfolio's holdings, increasing to about 65% of the Fund's value. By month-end, the total number of portfolio stocks remained steady at 85 separate holdings and the portfolio remained fully invested with cash at less than 1%. Click below to read the latest Fund Manager's commentary on the Fund. |
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3 Jun 2016 - Fund Review: Insync Global Titans Fund April 2016
INSYNC GLOBAL TITANS FUND
Attached is our most recently updated Fund Review on the Insync Global Titans Fund.
We would like to highlight the following:
- The Fund's unit price increased 0.70% in April. The performance was driven by positive contributions from our holdings in Medtronic, Zimmer Holdings, BAT and Time Warner Inc. The main negative contributors were McGraw-Hill and Microsoft. The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside.
- The Global Titans Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.
- Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.
- Emphasis on limiting downside risk is through extensive company research, the ability to hold cash and long protective index put options.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - April 2016 (pdf format)
