NEWS
28 May 2015 - Fund Review Pengana Absolute Return Asia Pacific Fund April 2015
PENGANA ABSOLUTE RETURN ASIA PACIFIC FUND
Attached is our most recently updated Fund Review on the Pengana Absolute Return Asia Pacific Fund.
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The Pengana Absolute Return Asia Pacific Fund ("PARAP") was established in 2008 by portfolio managers Antonio Meroni and Vikas Kumra. The Fund is a feeder fund into a Cayman Islands AUD share class fund.
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The Fund invests both long and short in Asia Pacific equities, including in Australian and New Zealand, after a stock specific "event" has either occurred or been announced and the portfolio aims to be uncorrelated to the underlying equity markets. A combination of the Manager's experience, thorough research and continuous back- testing identify the most attractive of these events.
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Risk controls include limits on individual positions as well as gross and net exposure. Limits are in place for option exposure and cash borrowing, with stop loss limits on individual positions. Overall the manager is looking to derive returns from the event strategies as opposed to any currency or market exposures.
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The Fund returned +3.87% for the month, compared to the HFR Event Driven Index which closed +0.5%. The month saw significant volatility in China/ Hong Kong (H Shares) after CSRC allowed Chinese mutual funds to access Hong Kong markets which significantly impacted holding company discounts and A/H share spreads. Performance was diversified across our M&A, Capital Management and Stubs sub strategy. The Fund used this opportunity to reduce our gross exposure and overall net to 210% and 15.7% respectively.
For further details on the Fund, please do not hesitate to contact us.
Pengana Absolute Return Asia Pacific Fund AFM Fund Review April 2015outperformance of 0.35%.
27 May 2015 - Morphic Global Opportunities Fund
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| Manager Comments | The biggest contribution to performance for the Fund was the overweight index position in China. Chinese stocks continue to do well as monetary policy is eased further as the government tries to moderate what is now clearly a slowing in the long term growth rate. The Fund expects much of the newer money to prefer to buy the Hong Kong listed shares of major Chinese companies for convenience, and because of the significant price gap that is now apparent. The main detractors from performance were two long held positions in Axis Bank from India and US fund manager Ameriprise. Axis reported excellent results but has been caught up in a general slide in Indian stocks. Ameriprise reported results below market expectations and there was hit by worries about tougher rules in the US financial advisory industry. We believe these are temporary concerns and Ameriprise actually stands to benefit from these legislative changes in the USA. Click below to read the complete April 2015 Fund Report. |
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27 May 2015 - Avenir Value Fund
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| Fund Overview | The Fund will invest in securities where Avenir believes the company is simply mis-priced and deeply undervalued and offers significant potential for revaluation. The Fund will also invest in companies that are subject to specific corporate events such as mergers, acquisitions, restructurings, recapitalisations, spin-offs, demergers, management change, distressed situations, and other sharply delineated corporate events. The Fund will also selectively invest in short positions in companies where Avenir believes the company is significantly overvalued or where the company's business model is broken or structurally challenged. |
| Manager Comments | The Fund's notable Sharpe and Sortino ratios are 1.04 and 1.77 respectively since inception in August 2011. At month-end, the Fund's geographical disposition was 46.1% US, 13.7% Asia, 12.9% Western Europe, 1% Australia, 11.4% other and 15.4% cash. The top 10 holdings were 62% of NAV. Click below to read the April 2015 Fund Report |
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26 May 2015 - Fund Review: Bennelong Long Short Equity Fund April 2015
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 cap stocks from the ASX/S&P100 Index, with over twelve year track record and annualised returns of 17.33%.
- The consistent returns across the investment history indicates 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 1.05 (Index 0.36) and 1.75 (Index 0.40) respectively.
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Fund performance in April was flat (0.03%), with no major changes to the Fund's positioning. Across the portfolio, The number of profitable pairs exceeded the number of losing pairs; 17 positive, 14 negative. The Fund's strongest positive contributors were Long Caltex / Short Metcash, Long QBE / Short Suncorp and Long Challenger / Short ANZ. On the negative side, the three largest setback were Long Seek / Short Fairfax, Long Resmed / Short Ansell and Long Brambles / Short Sydney.
26 May 2015 - Laminar Credit Opportunities Fund
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| Fund Overview | The Fund may also invest in derivatives for hedging purposes. The portfolio of the Fund comprises primarily Investment Grade holding of 75% of the Fund's assets. Benchmark allocations are Australasia 50% to 100%, North America 0% to 50% and Europe 0% to 50%. Currency hedging may take place depending on benefits to the Fund. |
| Manager Comments | Laminar has been vocal about avoiding tier 1 securities and as bank stocks have sold off over the last couple of weeks, tier 1bonds have followed. For higher yielding assets, Laminar's preference has been RMBS, which continues to perform extremely well with low volatility and steadily rising prices. The Fund will maintain a healthy allocation to these assets Click on the link below to read the latest Fund Manager's Report. |
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25 May 2015 - KIS Asia Long Short Fund
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| Fund Overview | Whilst the Fund's primary strategy is focused on long/short equities, the ability to retain discretionary powers to allocate across a number of other investment strategies is reserved. These strategies may include, but not be limited to: convertible bond investments, portfolio hedging, equity related arbitrage, special situations (e.g. merger arbitrage, rights offerings, participation in international public offerings and placements, etc.). The Fund's geographic focus is Asia excluding Japan, but including Australia). The Fund may invest outside of this region to the extent that: 1. The investment decision is driven from the Asian region or; 2. The exposure is intended to mitigate risk or enhance return from factors external to the Asian region. |
| Manager Comments | Majority of the month's return came from the Long Short Strategy, contributing 355bp. In April the spotlight was on the Hong Kong (HK) and China equity markets. The Hang Seng China Enterprises Index (HSCEI) rallied 17% while the Shanghai Composite (SHCOMP) gained 20%. The Fund finally saw some serious volume in the Southbound Connect flows after a lackluster start back in November. With such an extraordinary rise in Chinese and HK stocks over the past 6 months, investors are starting to look at potential excesses in the market. Margin lending is the biggest focus and the Fund has and will continue to do work around this issue. Elsewhere April was fairly quiet. For the month ahead, investors, will be questioning the 'sell in May' seasonality. Australia has a budget to hand down that is unlikely to cause fireworks, but can have some impact on certain sectors. Click below to read the complete Fund Manager's Latest Report. |
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25 May 2015 - The Paragon Fund
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| Fund Overview | Paragon accepts that markets are not always efficient in pricing information into securities and that no one investment style works in every stage of the investment cycle. Subsequently Paragon adopts a top down thematic led approach to identify companies exhibiting sustainable or improving returns on capital driven by volume growth, pricing power and competitive advantages. Paragon utilises both quantitative analysis to provide probability weighted high/low/base case valuations and qualitative analysis in assessing management, the business model and likely direction of returns. Paragon will allocate assets to each investment opportunity based on a risk/reward profile. Positions have defined investment parameters and risk limits, which are then monitored on an ongoing basis. |
| Manager Comments | Key drivers of the Paragon Fund's performance for April included solid returns LNG Ltd, Oz Minerals, Mayne Pharma and Metals X. Short positions across USD exposed companies also contributed. At the end of the month the fund had 29 long positions and 13 short positions. Click below to read the complete Fund Manager's commentary. |
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22 May 2015 - Hedge Clippings
Two different views of China
There appear to be two different views when it comes to the outlook on China: In Thursday's Australia Financial Review Louis-Vincent Gave of Hong Kong's GaveKal Dragonomics outlined why he describes himself as a "massive China bull". The article went on to explain that Gave believes the global investment community is underexposed to Chinese stocks and bonds, and as a result will be compelled to increase its exposure over the coming 3 years as Chinese financial assets begin to be included more fully in the global benchmarks that passive, and many active institutional investors track.
That certainly could occur, and one should never ignore markets which rise on the back of the pure weight of money which either has to invest, or can find little reason not to. For an example of the latter, just consider the recent bull run in Australian bank and high yielding shares. However it doesn't necessarily mean that the fundamentals of the underlying Chinese economy, or the companies operating there are investment grade or secure.
Taking the other view is this article entitled China is Choking on its Own Debt which drew attention to the release earlier this month of the People's Bank of China's (PBoC) first quarter Monetary Policy Report. The report somewhat alarming given the authoritative source, in that it points out that:
- China has too much debt
- The government has relied too heavily on investment for growth
- Credit expansion is no longer possible
- The economy is inevitably decelerating as a result
If all of that is alarming in itself, so is the reason that the report received so little media exposure: Given that the conclusions are not new for most avid watchers of China the fact that it has yet to be published in an English language version perhaps suggests why didn't hit the headlines, most probably because the Chinese government didn't want it to.
As the article points out the PBoC website has somewhat of a history of being less than transparent when it comes to posting English language versions of articles, citing April as an example when 32 stories were posted in Chinese while only 12 made it to the English version. There are many conspiracy theorists who believe that the level of influence exerted by the Chinese government on economic statistics are, not to put it too mildly, relatively well controlled.
Which of the two opinions play out in the future remained to be seen, and to be fair the Chinese authorities' manipulative attitudehas been known to work in the long run. However a combination of the above, and anecdotal evidence of massive margin lending at street level as well as corporate, will keep the risk factor high.
Specific results received this week include the following LATEST PERFORMANCE UPDATES:
Bennelong Long Short Equity Fund performance in April was flat (0.03%), however long term performance remains sound with since inception (Jan 2003) returns of 17.33% pa (Index 8.56%) and a volatility of 11.79% (Index 12.86%).
The Pengana Absolute Return Asia Fund had a strong performance of 3.87% for the month of April, bringing the annualised return since inception to 11.43%.
Allard Investment Fund increased 1.50% during the month of April, to bring the Fund's last twelve month performance to 27.08%.
FUND REVIEWS released this week: Monash Absolute Investment Fund; Optimal Australia Absolute Trust; and Bennelong Kardinia Absolute Return Fund.
25-27 May 2015 - Digital Marketing for Banking and Financial Services Summit
15 September 2015 - AIMA Australia Hedge Fund Forum 2015
And Now for Something Completely Different: A few weeks ago we presented a link which allowed you to find out what song was the number one hit on the day when you were born. On the same tack (but completely different!) is this link which allows you to review what was hitting the headlines around the world on the day you were conceived! I have to admit to checking my own parents out, and came to the conclusion that there was strong possibility that I was conceived because they were simply bored. So I checked using my wife's birth date and got a very different result - which in the interests of discretion (and marital harmony) I won't reveal.
However I hope you enjoy your journey of discovery.
And on that note, enjoy the week-end.Kind regards,
Chris
CEO
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22 May 2015 - 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 | In comparison the HFR Event Driven Index closed +0.50%. The month saw significant volatility in China/ Hong Kong (H Shares) after CSRC allowed Chinese mutual funds to access Hong Kong markets which significantly impacted holding company discounts and A/H spreads. Performance was diversified across the M&A, Capital Management and Stubs sub strategies. The Fund used this opportunity to reduce their gross exposure and overall net to 210% and 15.70% respectively. Forty percent of the Fund's monthly gross exposure by strategy was in M&A followed by Capital management at 24.80%. Whereas the country exposure as percentage (%) of NAV was most in Hong Kong/China with gross of 75.50% and Japan of 36.80%. Click below to read the complete Fund Manager's Report |
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22 May 2015 - Allard Investment Fund
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| Manager Comments | The Fund portfolio was invested 75% in equities and 25% in cash and fixed income. There has been little change since the prior month, in terms of the industry and geographic breakdown of the portfolio. The Fund continues to be most exposed to Financial Services at 18.30%, Conglomerates at 10.90% and Telco's at 11.10%. The geographic breakdown was Hong Kong / China at 43.00%, Singapore 10.90% and Korea 9.70%. The top 5 holdings had 42.00% concentration of the portfolio and 16.50% in the next 5 holdings. Click below to review the latest Fund Manager's Report. |
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