23 out of 27 Economists can't be wrong - could they?

The Aussie dollar's brief resurgence above 80 US cents this week would not have pleased the RBA governor Glenn Stevens. Or maybe it would have pleased him, given that he will have one more justification to cut rates at the bank's next board meeting.

He is not alone in thinking that the A$ is too high, and it seems that 23 out of 27 economists surveyed by Bloomberg this week (that's an increase of one since the previous survey) are of the view that a 25 bps cut to just 2% is in store at 2:30 on Tuesday. The consensus is that the only thing preventing the rate cut is the red-hot property market, particularly in Sydney, where the median house price is now over $900,000.

That is over 12 times the annual average full time wage of $74,724 so no wonder there is concern over housing affordability. Granted there are regional differences both in property prices and wages, but housing prices in Sydney have risen 16% over the past 12 months to the point where just over 35% of a Sydneysider's income is spent on mortgage repayments.

Other statistics this week indicated that a significant proportion of the housing push, particularly in Sydney, is coming from overseas buyers, particularly from Asia. The reality of course is that overseas buyers have been pushing the price of real estate up in Australia, since the First Fleet landed in 1788 with only the occasional pause for a recession, and there hasn't been one of those for close to 20 years.

However it does mean that for a significant portion of the population the great Aussie dream of a house on a quarter acre block will remain just that - a dream.

While most of the focus on the effect of a rate cut next week will be on housing affordability and mortgage rates, spare a thought for the number of people dependent on term deposits for their income. As Philip Carden from the Supervised High Yield Fund pointed out this week, the current one-year bank term deposit is 2.65%, and one can safely assume that that will fall below 2.5% if or when the RBA moves. Meanwhile ten-year Australian Treasury Bonds are already yielding less than this at 2.25%.

With the current debate over superannuation and concerns about "wealthy" retirees with million-dollar lump-sum payouts, consider that the income on $1 million in the bank doesn't provide income equivalent to the aged pension.

Therein lies part of the Treasurer's challenge when he hands down his second budget in a couple of week's time. Joe Hockey and the government are between a rock and a hard place, albeit much of their own making given they failed to grasp the nettle this time last year.

Specific results received this week include the following MARCH PERFORMANCE UPDATES:

Allard Investment Fund increased 0.90% during March, to bring the Fund's last twelve month performance to 25.22%.

Over the quarter to the end of March, Cor Capital Fund returned 4.20%, bringing the Fund's 12-month return to 7.70%.

The Insync Global Titans Fund decreased 0.50% in March bringing the Fund's prior 12 month performance to 18.55%.

The Paragon Fund  returned 2.10% (ASX 200 Accum -0.09%). The Fund's annual return since inception has been 21.54% p.a. versus the Index's 11.95% p.a. 

Chris
CEO, AUSTRALIAN FUND MONITORS

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• 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 1.06.

• 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.

ATTACHED FILESAurora Fortitude Absolute Return Fund Fund Review March 2015 (pdf format)

MORPHIC GLOBAL OPPORTUNITIES FUND

ATTACHED FILESFund Review: Morphic Global Opportunities Fund February 2015 (pdf format)

OPTIMAL AUSTRALIA ABSOLUTE TRUST

AFM have released the most recently updated Fund Review on the Optimal Australia Absolute Trust.

CPD Points are now available for all AFM Fund Reviews. Read the review and answer 5 questions to earn half a point toward your continuing professional development.

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

• Optimal Australia is a specialist Australian equity investment manager and the Fund has a long/short equity strategy typically with a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200. 

• The investment team comprising George Colman, Peter Whiting supported by Stephen Nicholls and Justin Hay have over 100 years combined experience in equity markets.

• The Fund's approach to risk is shown by the Sharpe ratio of 1.36, Sortino ratio of 3.02, both of which are well above the ASX 200 Accumulation Index and has recorded 80% positive months.

For further details on the Fund, please do not hesitate to contact us.

Sean Webster
Research and Database Manager
Australian Fund Monitors

ATTACHED FILESFund Review: Optimal Australia Absolute Trust February 2015 (pdf format)

• 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 27.45% since inception in March 2012 as compared to 15.79% for the ASX 200 Accumulation Index. The standard deviation has been higher than the Index at 13.06% as compared to 11.22% and the Sharpe ratio is 1.72.  

ATTACHED FILESTotus Alpha Fund AFM Review March 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 Bennelong Kardinia Absolute Return Fund returned 1.24% in March and has volatility of 7.35% pa, compared to the ASX200 Accumulation's 14.23%.

• 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 the Bennelong Group provide infrastructure, operational, compliance and distribution capabilities.

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