• Totus Capital is a Sydney based long short fund manager established in 2012 by Ben McGarry which aims to place equal emphasis on performance and capital preservation.  The Fund invests mainly in Australia, but also in other developed economies, with a primary exposure to equity markets.
• The Totus Alpha Fund's investment strategy is to identify structural themes, and then seek to drive performance by investing in securities that have concentrated exposure to those themes.  Single stock short positions are used to generate alpha, frequently in under researched parts of the market such as the small and mid-cap space. Index derivatives are used to hedge the portfolio's market risk.
• McGarry qualified as a Chartered Accountant with PWC in 1999 and has 14 years market experience, commencing his career covering European building materials and construction sectors at Morgan Stanley in London. Previous experience included analytical roles at Ausbil, a Sydney based $10bn+ long-only manager, and sell side emerging companies experience at UBS. McGarry's emerging company research with UBS included exposure to a range of sectors including energy, materials, industrials, tech, financials, retail and telecommunications.
• The Fund has delivered an annalised return of 24.97% since inception in March 2012 as compared to 12.14% for the ASX 200 Accumulation Index. The standard deviation has been higher than the Index at 13.44% as compared to 11.48% and the Sharpe ratio is 1.53.  

ATTACHED FILESFund Review: June 2015 (pdf format)

• The Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with an nine year track record. 

• The Fund has significantly outperformed the ASX200 Accumulation Index since its inception in April 2006 and also has significantly lower risk KPI's. The Fund has an annualised return of 12.70% p.a. with a volatility of 7.32%, compared to the ASX200 Accumulation's return of 4.93% p.a. with volatility of 14.19%.

• The Fund also has a strong focus on capital protection in negative markets. Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while Bennelong Funds Management provide infrastructure, operational, compliance and distribution capabilities.

ATTACHED FILESFund Review: Bennelong Kardinia Absolute Return Fund June 2015 (pdf format)

GST finally on the table

It took New South Wales Premier Mike Baird to get the subject of raising and broadening the GST onto the front pages, and I expect we will never know if this was at the behest of Tony Abbott or Joe Hockey, or if he did it off his own bat. In any event at least it's done, and maybe there can now be a sensible debate about proper tax reform.

Regular readers of Hedge Clippings would know that we have been advocating for (or some would say banging on about) the need to expand the GST since Joe Hockey's first budget was released back in May 2014. In our view the rate could be increased to 15% and broadened across all goods and services, which would merely bring it into line with most other developed countries. In fact at 15% it would still be well under the rate charged in many parts of the world.

Of course the immediate response from some sections of the community, including a couple of State Labour Premiers, was that the GST was an unfair tax because it took a larger proportion of poorer people's incomes compared with higher earners. For some reason they completely ignored (presumably because they chose to) the logical suggestion put forward by Baird that there should be appropriate compensation for those on lower incomes, or on pensions.

They also ignored the fact that higher income earners are also higher spending consumers, and therefore would generate greater GST revenue. They also ignored the fact that now the system is installed, increasing the rate or broadening it is very simple from an administrative and collection perspective.

The risk now would seem to be that either the proposal doesn't make it through to reality, or worse still that a further compromise is done and it will take another 10 or 15 years before anyone has the political will to do it properly. One has to remember that the current system is a compromise in itself, with John Howard giving in to pressure from the Greens to apply GST to only half the economy in order to get it through Parliament.

Assuming the GST does get into the mix at the upcoming Taxation Review, which Abbott had previously indicated would not be the case, it might be helpful if the government allowed other taxation sacred cows, such as negative gearing and superannuation concessions, to be debated at the same time. There seems little point in having a taxation review, like the one organised by the previous government under the care of Ken Henry, if the entire system can't at least be explored.

Specific results received this week include the following PERFORMANCE UPDATES:

Pengana Absolute Return Asia Pacific Fund finished -2.39% for the month, compared to the Asia Pacific markets which fell -3.3%. Since inception the Fund has an annualised return of 10.90% p.a.

FUND REVIEWS released this week: Bennelong Long Short Equity Fund; Morphic Global Opportunities Fund

UPCOMING EVENTS:

20 - 21 August 2015 -The 2nd Superannuation Fund Investment Operations Forum 2015 is a two day forum providing invaluable technological, regulatory compliant and best practice insights into improving back and middle office efficiency to drive member loyalty, bottom line profitability and a competitive edge

26 - 28 August 2015 -The 15th Annual Wraps, Platforms & Masterfunds Conferenc ewill 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 $300to all investors and advisors using coupon codepromoFMon registration.

15 September 2015 -The AIMA Australia Hedge Fund Forum 2015 is the annual non-profit hedge fund conference organised by the industry for the industry.

And finally, best wishes for a happy and healthy week-end ahead,

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.