SUPERVISED HIGH YIELD FUND

Attached is AFM's updated Fund Review on the Supervised High Yield Fund.

We would like to highlight the following aspects of the Fund:

• The Supervised High Yield Fund (SHYF) has a 6 year track record investing in fixed interest investments. The Investment strategy aims to deliver returns with zero correlation to equity markets by investing in debt securities with minimal default probability and offering a premium return above the risk free rate.
• The Fund is managed by Philip Carden whose experience in debt and capital markets spans over 32years, including time with JB Were's Capel Court Securities and Macquarie Bank, where he was the Executive Director responsible for the Debt Markets Division.
• SHYF is an Alternative Income fund which invests in Global and Australian debt markets, with all foreign currency receivables hedged back to Australian dollars.
• The Fund utilises a top down analysis of the economic environment and market to screen and identify debt market opportunities which it believes offer low risk with high yield. The next stage is the development of a risk matrix and investment strategy, following which detailed research is undertaken on specific investment opportunities which meet the pre-defined criteria established in the investment strategy.
• Prior to approving an investment for the Fund each potential investment is subject to two stress tests. The first of these is for credit and default risk, in which the investment is stress-tested to ensure that in a worst case economic environment it can repay 100% of its principal and interest obligations case scenario for the asset by examining the highest margin over the risk rate that the investment has previously experienced in a crisis situation. Any decline in value under the stress test that exceeds 10% of the Fund's value is avoided The second test examines market risk.  In this case Carden looks at the worst case scenario for the asset by examining the highest margin over the risk rate that the investment has previously experienced in a crisis situation.  Any decline in value under the stress test that exceeds 10% of the Fund's value is avoided.

Australian Fund Monitors

ATTACHED FILESSupervised High Yield Fund AFM Review December 2015 (pdf format)

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 returned -1.90% for the month of December. The performance was driven by positive contributions from our holdings in Medtronic, Microsoft, McDonald's and Roche. The main negative contributors were Oracle, Time Warner and Comcast. 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.

Australian Fund Monitors

ATTACHED FILESInsync Global Titans Fund AFM Monthly Report - December 2015 (pdf format)

QATO Capital Market Neutral Long/Short Fund

Attached is our most recently updated Fund Review on the QATO Capital Market Neutral Long/Short Fund.

We would like to highlight the following aspects of the Fund;

• Qato Capital is a Melbourne-based boutique fund manager backed by single family office, Larkfield Funds Management.
• Qato has a systematic, market-neutral strategy which invests exclusively in S&P/ASX 100 stocks.
• The QATO Capital's Q-score process captures and quantifies six broad fundamental factors, which assess multiple underlying sub-categories. Those companies with the top score (quality companies) are included in the "long" portfolio, those with the lowest score are sold short.
• The Fund seeks to preserve capital and maximise absolute returns through active and constant risk management, targeting monthly a net market exposure of 0% to hedge broader market risks through 30 S&P/ASX-100 positions (15 long & 15 short equally-weighted positions).
• Qato Capital's process is entirely systematic - stock selection and risk management are employed in a rules based approach. The Fund employs no financial leverage/gearing to purchase securities, no derivatives and no financial products to imitate leverage.

Australian Fund Monitors

ATTACHED FILESQato Capital AFM Fund Review December 2015 (pdf format)

Jamieson Coote Bonds Active Fund

Attached is our most recently updated Fund Review on the Jamieson Coote Bonds Active Fund

We would like to highlight the following aspects of the Fund;

• Jamieson Coote Bonds is a Melbourne-based Boutique Manager launched in December 2014.
• The Founders, Charles Jamieson and Angus Coote bring over 30 years of international experience dealing with central banks, hedge funds and real money managers.
• The Jamieson Coote Active Bond Fund is a long-only macroeconomic investment fund, investing in Australian Dollar denominated bonds backed by AAA and AA+ rated Government, Semi (State) Government and Supranational agencies.
• The Fund Objective is to out-perform the Bloomberg Australian Government Bond Index through active management in a sound risk-framework and usually holds around 20 bond securities of varying maturities.

Australian Fund Monitors

ATTACHED FILESJCBAF AFM Fund Review December 2015 (pdf format)

Welcome back - but not to a great start to the New Year!

Not a great start to the New Year is probably an understatement in anyone's language. Whether it is equity prices across the globe, commodity prices, a refugee crisis in Europe threatening widespread economic, security and social problems, or the Chinese authorities hamfisted approach to stablising markets, the news has been dismal to say the least - unless you're a motorist filling the car at a nearby petrol station, or taking advantage of lower airline prices.

At the current time the ASX200 is down around 5.5% since the start of the year, for a fall of around 12.5% over the past 12 months, having at one stage during the month looked even worse. Ugly to say the least, and while not wishing to forcast more gloom and doom, it does seem that volatility will remain entrenched across the globe for some time to come. To what extent the US rate rise late last year has had anything to do with equity market weakness in difficult to fathom given it has been clouded, or at least overshadowed by the exteme volatility and weakness in Chinese markets.

So if we can't (or don't want to) forcast the future beyond the obvious, let's look back at the previous year, as we usually do at this time: Over the 12 months to December 2015 the ASX200 absolute return struggled to gain 2.56%, while excluding dividends  the ASX200 recorded a loss of -2.13%. Probably the only reason it performed as well as it did was the unquenchable thirst for yield that those two statistics indicate.

Over the other side of the Pacific the S&P500 fell -1.58% or on an accumulation basis it rose a paltry 1.38%.

Not unsurpisingly the Equity based hedge and absolute return fund sector out-performed underlying markets significantly - with the average performance of all funds in AFM's database (unweighted for size) up 12.49%. Non equity funds, including credit, fixed income, commodites and FX for example, fared less well, but still managed a return of just over 4% for the year. Almost 80% of all funds - equity and non equity - outperformed the ASX200, and only 12% finished the year in negative territory. 

As usual the spread of performances was dramatic, and after stripping out the top and bottom 1% of funds, ranged from -10% to +55%. From a strategy perspective equity based funds such as Market Neutral (+14.82%), Active Long Only (+14.2%), Long/Short (+13.22%), and 130/30 (+10.34%) all performed well, while at the other end of the scale, only two strategies, Commodities/CTA and Managed Futures, averaged negative returns.

Some highlights are shown below, or for full details follow the link to www.fundmonitors.com 

Performance updates and reviews received this over the past couple of weeks included the following PERFORMANCE UPDATES:

Bennelong Long Short Equity Fund rose 6.22% in December, to bring latest 12-month return to 37.14%.

For the month of December, the Meme Australian Share Fund gained 4.40% compared to the ASX200 Accumulation Index's return of 2.73%, an outperformance of 1.67%.

Optimal Australia Absolute Trust recorded net return of -0.1% to bring the year 2015's return to +8.05%.

The Paragon Fund returned 0.3% for the month of December, to take latest 12 month return to 16.44%.

Bennelong Kardinia Absolute Return Fund rose 1.74% in December, to bring annualised performance since inception 12.74% p.a.

Totus Alpha Fund rose 4.5% net of fees in December taking the latest 12 month return to 53.40%.

NWQ Fiduciary Fund returned +2.22% for the month of December, to bring latest 12 month return to 17.18%.

Pengana Absolute Return Asia Pacific Fund rose 0.72% for the month, outperforming the HFR Event Driven Index which closed down -0.9%, by 1.62%.

Signature Quantitative Fund rose 2.50% for the month of December, to bring annualised performance since inception to 10.40% p.a.

Morphic Global Opportunities Fund returned -2.48% in December to bring latest 12 month return to 9.08%.

APN Asian REIT Fund returned -0.48% in December. Since inception, the Fund has an annualised return of 15.97% p.a.

Freehold Absolute Return Fund  delivered a positive 1.95% for the month of December.

Jamieson Coote Bonds Active Fund rose 0.25% in December.

APN AREIT Fund  rose 4.67% in December to bring annualised return since inception to 17.73% p.a.

Laminar Credit Opportunities Fund returned +0.66% for the month of December.

Qato Capital Market Neutral Long/Short Fund rose 2.70%, compared to the S&P/ASX 100 Price Index, which returned 2.40%.

Supervised High Yield Fund produced a return of +0.37% for the month of December, to bring annualised performance since inception to 9.68% p.a.

Insync Global Titans Fund returned -1.90% for the month of December, to take the latest 24 months to 18.72%.

KIS Asia Long Short Fund rose 2.90% for December, outperforming the AFM Asia Pacific ex-Japan Index by 4.32%

FUND REVIEWS released this week: Meme Australian Share Fund; Bennelong Long Short Equity Fund; Optimal Australia Absolute Trust; Bennelong Kardinia Absolute Return Fund; Totus Alpha Fund;  Morphic Global Opportunities Fund; Pengana Absolute Return Asia Pacific Fund; APN Asian REIT Fund

And on that happy note it's good to be back, and as always I trust you have a safe and enjoyable week-end.

Regards,

Chris
CEO, AUSTRALIAN FUND MONITORS

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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.

APN Asian REIT Fund

Attached is our most recently updated Fund Review on the APN Asian REIT Fund.

We would like to highlight the following aspects of the Fund;

• APN is an ASX-listed fund manager specialising in property investment, with an investment team of six. Established in 1996, APN now has FUM of $A2.1bn including four REIT (Real Estate Investment Trust) funds.
• The APN Asian REIT Fund (Fund) is a property securities fund that invests in a quality portfolio of Asian REITs, listed on the securities exchanges of the Asian Region, with the ability to hold some cash and fixed interest investments. 
• 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 can include 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 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.
• APN's Asian REIT Fund invests in a portfolio of 25-40 listed Asian REITs with a core philosophy of investing in properties with a sustainable rental income streams.
• The Fund has delivered an annalised return of 15.97% p.a., since inception in July 2011 with standard deviation of 9.37% p.a. The Sharpe and Sortino ratios are 1.32 and 2.39 respectively.

Australian Fund Monitors

ATTACHED FILESAPN Asian REIT Fund AFM Fund Review December 2015 (pdf format)