NEWS
2 Sep 2015 - Fund Review: Supervised High Yield Fund July 2015
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.
Supervised High Yield Fund AFM Review July 2015 (pdf format)
1 Sep 2015 - Fund Review Pengana Absolute Return Asia Pacific Fund July 2015
PENGANA ABSOLUTE RETURN ASIA PACIFIC FUND
Attached is our most recently updated Fund Review on the Pengana Absolute Return Asia Pacific Fund.
- 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.
- 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.
- 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.
- Since inception, the Fund has an annualised return of 10.63% p.a., compared to the AFM's Asia Pacific Index of 6.62%. The Fund has achieved this with lower volatility of 5.84% (Index 11.85%).
For further details on the Fund, please do not hesitate to contact us.
Fund Review: July 2015 (pdf format)
1 Sep 2015 - Freehold Absolute Return Fund
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| Fund Overview | The Fund's research use detailed analysis of the underlying assets integrated with financial analysis to determine a sustainable yield and fundamental DCF valuation for the security. Also the Fund believes in having a strong risk control framework. The Fund will also use trading strategies via rebalancing of core portfolio positions as well as taking advantage of shorter duration inefficiencies in markets caused by an imbalance in demand and supply for global REIT and Infrastructure securities. The Fund focuses on generating absolute returns after fees of 12 to 15% pa over the medium to long term. The long-short nature of the Fund combined with Freehold's rigorous investment process ensures returns generated by the Fund are largely independent of rising or falling markets. Freehold is focused on providing investment opportunities primarily within core, value-add, opportunistic and development sectors of direct property and across listed and unlisted real estate and infrastructure securities. |
| Manager Comments | The portfolio's positive contributors in July were Westfield Group, Sydney Airport and Macquarie Atlas. Negative Contributors were Bunnings Warehouse, Asciano and Aurizon. Over June and July the AREIT market returned +1.3% whilst the broader equities market declined 1.1%. The Fund returned +3.3% over the same period with considerably lower volatility. Click below to view the latest Fund & Market commentary. |
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31 Aug 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 | At month-end, the Fund's geographical exposure was 54.4% in US, 13.9% in Asia, 10.6% in Western Europe, 3.9% in other and rest 17.2% as cash. The portfolio concentration in the top 10 holdings were 61% of NAV. Click below to view the July 2015 Fund Report. |
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31 Aug 2015 - 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 | At the end of July, the Fund had a net exposure of 37.5% and a gross exposure of 261.0%. The Fund was diversified across a number investment themes and geographies with 114 positions (53 long and 61 short).No single position contributed more than 1% to the July performance. Top contributors in July were their short positions in LNG +0.95% (promoter) and Newcrest +0.72% (Gold). A long position in CSL added +0.64% (USD Beneficiary). The biggest detractors were the short positions in S&P Futures -0.65%, G8 Education -0.27% (Promoter) and Nanosonics -0.24% (Earnings Risk). Click below to read the latest Fund's Monthly Report. |
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29 Aug 2015 - Hedge Clippings
Boring bonds vs. Volatile equities
Australia seems to be a bit player in a wildly fluctuating equity market, with daily swings in either direction of between 2 and 4%, or if you're in China, double that. What's been more difficult to fathom are the intraday swings on the Dow of 400 points - or up to 2% on the day.
It is hard to work out what is really driving the market's volatility, but it certainly seems sound logic is not. There may be an element of buying the dips, and with high yielding stocks such as Commonwealth Bank off around 20% that might not be surprising. However the more likely answer is a combination of a lack of liquidity, a surplus of fear, combined with quant/ETF trading and traders moving the market while having to negotiate the mayhem.
What is amazing is how quickly markets have become disorderly, and how quickly equity investors have come around to understanding that while equities might take up the majority of the financial media, they're not always orderly.
This week Hedge Clippings met with Charlie Jamieson and Angus Coote of (the appropriately named) Jamieson Coote Bonds, who reminded us of the Economics 1.01 lesson that bonds remain a cornerstone asset class in both European and US markets, provide stable income plus return of principle if held to maturity, plus some potential for capital gains (or losses) if realised before their stated maturity.
One problem for Australian investors is that there's minimal understanding of these low risk "boring" fixed income and bond markets and how they operate. Globally the bond market is many, many times larger, and in many ways far more influential, than the equity market. Another is that there has been much negative press around fixed income and bonds in the face of rising US interest rates. In spite of this bond returns remain positive, and with low volatility. In fact last Monday and Tuesday bond prices rose significantly as equities suffered substantial losses.
Are bonds without risk? Of course not, as investors in Greek Government Bonds would no doubt agree. However, like any market, different security selection comes with differing risk profiles of credit quality and liquidity dynamics. However bonds can generate a significant counter weight to equity portfolios, bringing low volatility and excellent liquidity from high quality issuers such as Governments or highly rated corporates. In fact the 10 year Australian Government bond (often referred to as the risk free rate) returned over 15% in 2014 from a combination of capital appreciation plus paid interest income.
Last week Hedge Clippings advised that August would become a critical test for many equity investors and managers. Evidence to date is that while many have performed well in protecting investors' capital, others will have failed the test. We await the final returns with interest. However for investors not prepared to accept the current levels of market volatility, a dose of boring bonds might just be the answer.
Bonds: Stirred maybe, but not shaking!
Specific results received this week include the following PERFORMANCE UPDATES:
FUND REVIEWS released this week: Bennelong Kardinia Absolute Return Fund; Optimal Australia Absolute Trust; Aurora Fortitude Absolute Return Fund
26 - 28 August 2015 - The 15th Annual Wraps, Platforms & Masterfunds Conference will provide solutions for succeeding in a distribution world of endless possibilities, showcasing strategies to help business achieve the biggest bite of market share, use innovation to overcome problems and support opportunities. Australian Fund Monitors is pleased to offer a discount of $300 to all investors and advisors using coupon code promoFM on registration.
17 September 2015 - The 14th Annual Hedge Fund Rock and Australian Hedge Fund Awards 2015 as the industry lets its hair down with some drinks, music and great videos. All proceeds go to Redkite helping childern with cancer and their families.
And Now for Something Completely Different: I try to avoid parking fines - sadly with limited sucess. But when I do get them I usually find it easier to pay them than spend the time and frustration of fighting the bureacrats. Not this fellow...
On that note, have a good week-end.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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28 Aug 2015 - Supervised High Yield Fund
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| Fund Overview | The fund may also invest in interest rate swaps, options over authorized investments and exchange traded futures contracts. All these will be either listed or traded in a market where they can be independently valued. Fundamental to the investment procedure is the tenet that no debt security will qualify for investment unless it can repay 100% of its principal and interest in a worst case economic scenario. |
| Manager Comments | More than half of the portfolio's composition as a percentage (%) of NAV was invested in Residential Mortgage-Backed Securities (RMBS) 66.29%. The rest of the portfolio composition was in the US Corporate Loans at 22.06%, Cash at 7.45% and AUD Corporate Loans at 4.20%. Click below to view the latest Fund Manager Report. |
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28 Aug 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 | Despite the volatility, the Fund produced a positive monthly return. This was helped by the Fund having a low weighted average credit duration (1.87 years as at July 31)/ The Fund Manager expects this low credit duration should help avoid significant volatility going forward, which could seen when the US Federal Reserve raise rates. In July, majority of the Fund's portfolio composition was in Residential Mortgage Backed Securities (RMBS) at 69% and Short-dated loans at 19%. Click on the link below to read the latest Fund Manager's Report. |
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27 Aug 2015 - Fund Review: Aurora Fortitude Absolute Return Fund July 2015
- The Aurora Fortitude Absolute Return Fund (AFARF) has a 10 year track record investing in ASX listed equities. A Market Neutral overlay is used across a multi strategy approach which allows for flexible asset allocation to maximise returns and minimise risk under a variety of market conditions and cycles.CIO John Corr has over 20 years financial market experience with a strong focus on risk.
- Significant use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. Risk statistics are impressive and shows the Funds risk philosophy; over 85% of monthly performances have been positive with no losing months in 2008, the Fund's largest drawdown is -2.09% and the Sharpe ratio 1.07.
- ASX listed Aurora Funds Limited was established on the merger of three existing fund management businesses, managing approx. $230m on behalf of more than 2,500 retail and wholesale investors.
27 Aug 2015 - APN Asian REIT Fund
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| Fund Overview | 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 likely 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. |
| Manager Comments | The Fund under-performed the Bloomberg Asian REIT Index (Index) by 0.03%. Over the month, the top detractor contributing to the Fund's under-performance was their underweight position on Link REIT, which is the biggest constituent of the Index.The Fund had over 37% invested in the Retail REITs section and over 37% in Japan, geographically. Click below to read the latest Fund's July commentary. |
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