NEWS
30 Jul 2013 - Fund Review: Aurora Fortitude Absolute Return Fund
- ASX listed Aurora Funds Limited established on the merger of three existing fund management businesses, managing approx. $480m on behalf of more than 2,500 retail and wholesale investors.
- The Aurora Fortitude Absolute Return Fund (AFARF) has a 8 year track record investing in ASX listed equities. CIO John Corr has over 20 years financial market experience with a strong focus on risk.
- 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.
- Strong use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation.
- Over 87% of monthly performances have been positive, with no losing months in 2008 and a largest drawdown of -2.09%.
Research and Database Manager
Australian Fund Monitors
Fund Review: Aurora Fortitude Absolute Return Fund (pdf format)
29 Jul 2013 - Fund Review: Morphic Global Opportunities Fund
MORPHIC GLOBAL OPPORTUNITIES FUND
Attached is our most recently updated Fund Review on the Morphic Global Opportunities Fund.
We would like to highlight the following aspects of the Fund:
- The Morphic Global Opportunities Fund is an early stage, boutique, Sydney-based fund established in 2012 with experienced CIO's, and an investment team of 6 including a risk manager.
- The Board has a majority of independent members with significant risk and investment experience.
- The Fund is a global equity long/short manager with a long bias and a macro-economic overlay. The mandate allows the Fund to short sell, use derivatives and invest in assets such as commodities & currencies.
- Portfolio construction is stock selection agnostic with a bias to valuebased and momentum strategies. Risk management is a primary consideration in portfolio construction.
- Morphic's philosophy is that only funds with flexible hedging strategies will be able to deliver acceptable, steady, real, absolute returns over the investment cycle.
Research and Database Manager
Australian Fund Monitors
Fund Review: Morphic Global Opportunities Fund (pdf format)
26 Jul 2013 - Hedge Clippings
Averages can be dangerous, or misleading, and frequently both. Take the average 12 month performance of absolute return and hedge funds in AFM's database compared with the ASX200 accumulation index.
Firstly it's not always logical or correct to compare the performance of a fund investing in commodity futures or currencies with an equity index such as the ASX200. Secondly the range of performances, and the underlying range of strategies differ so widely that averages, or conclusions are frequently meaningless. As of course is the performance range of ASX200 companies where the performance of top and bottom stocks varied from +381% to -90.3%
In simple terms the ASX200 Accumulation index has returned 22.67% in the 12 months to June, compared with an average return of 12% for all funds in AFM's database. Drilling down by strategy shows a wide divergence, with the average Equity 130/30 fund returning 23.71%, closely followed by Equity Long funds at 21.10%. At the other end of the scale Commodity funds and CTA's lost an average of -5.19%, and Currency funds averaged a loss of -4.29%.
Unfortunately (or fortunately as the case may be) the performance divergence doesn't end there. In the 12 months to June the best performing fund returned 65.9%, and the worst -59.9%. Performance spreads within strategies are equally diversified, with the best Long Only funds (investing in industrials) returning over 34% while the worst (which invested in gold) fell 45%.
What's the point of all this? Smart investors need to look beyond the headlines and drill down to the details, as they do when considering the detailed analytics of each fund's performance and risk profile.
Some specific results received this week include the following Performance and News Updates:
The Pengana Australian Equities Market Neutral Fund rose 5.00% during June bringing its since inception (September 2008) return to 9.22% pa as compared to the Fund's equity benchmark return of 3.2% pa.
Aurora Fortitude Absolute Return Fund returned 0.46% during June for a full year return of 5.70%. The Fund's risk profile is notable with an annualised standard deviation of 2.81% pa compared to the benchmark S&P/ASX 200 Acc with 14.42% pa.
The Pengana Asia Special Events (Onshore) Fund returned -0.92% during June bringing its 12 month return to 10.65%, outperforming both the RBA Cash Rate and the HFR Event Driven Index.
BlackRock Australian Equity Market Neutral Fund reported 1.15% during June with it's since inception (August 2001) return now 12.14% pa.
Fund Reviews updated this week include:
Insync Global Titans Fund is a concentrated, long only equities strategy investing in 15 to 25 large cap ($2 billion and above) global companies. Current average market cap of stocks in the portfolio is USD89bn. These are selected for their ability to consistently increase shareholder value based on return on invested capital (ROIC), and a strong track record of expanding dividends.
And finally, for something completely different - a story on inspiration and self worth.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
26 Jul 2013 - Fund Review: Insync Global Titans Fund
INSYNC GLOBAL TITANS FUND
Attached is our most recently updated Fund Review on the Insync Global Titans Fund.
We would like to highlight the following aspects of the Fund:
- Boutique Sydney-based fund manager established in 2009 with an investment team of 3, with additional input from the CEO who is responsible for all operational, risk and compliance management.
- The Global Titans Fund invests in a concentrated portfolio of 15-25 stocks, targeting exceptional, large cap global companies with a strong focus on valuation and downside protection.
- Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.
- Emphasis on limiting downside risk through extensive company research, the ability to hold cash and long protective index put options.
- Strong track record of above MSCI ($A) benchmark performance with limited drawdowns.
Research and Database Manager
Australian Fund Monitors
Fund Review: Insync Global Titans Fund (pdf format)
19 Jul 2013 - Hedge Clippings
Last week the SEC, the US regulator announced a lifting of the ban on hedge funds being able to advertise. The news was greeted with horror in some quarters, with predictions that the move would lead to unscrupulous fund managers and promoters setting out to fleece unsophisticated investors.
In Australia there's been no such ban, and while not perfect, in its place is a much more manageable and effective licensing regime by the local regulator, ASIC. In reality there's no surefire way to prevent those intending to dupe investors from doing so, as shown by Bernie Madoff in the US, or Trio's Astarra in Australia. However, a combination of the widespread dissemination of information, standardised reporting, transparency, and the education of investors and advisors all go a long way to limiting, if not preventing the problem.
So while the cynics might say that the art or science of advertising is to persuade consumers to purchase products or services they might otherwise not have done, advertising does at least open up the industry, or the advertiser to increased scrutiny. Our opinion has always been that the greater a fund's transparency the better, particularly for the less sophisticated investor.
That's not to say that there isn't a need for investor education or advisor knowledge, or the availability of more objective, in depth and better quality research. However, without transparency none of those will be achieved. For the record the transparency of Australian funds, with very few exceptions, is excellent, and investors are generally (or should be) the better for it.
Some more specific results received this week include the following Performance and News Updates:
The Totus Alpha Fund returned a sound 7.21% during June with a net exposure at June 30 of 24%.
Monash Absolute Investment Fund recorded +1.1% after fees in June despite another negative month for the market. Over the Fund's first 12 months, to 30 June, the return was +18.6%.
The Pengana Australian Equities Fund returned -2.50% during June and 12.88% pa over the last five years, against the average RBA cash rate over the same period of 4.1% pa, and the All Ordinaries Accum Index return of 2.2% p.a.
Auscap Long Short Australian Equities Fund returned a solid 8.32% during June with an average net exposure over the month of 116.8%.
Australian hedge funds don't always fit the global mould - commentary on the never ending stream of negative headlines.
Fund Reviews updated this week include:
BlackRock Multi Opportunity Fund is an Australian domiciled multi strategy fund of funds which allocates investors' capital into underlying BlackRock funds at the discretion of the Sydney based investment team. The Fund offers broad diversification across asset classes including equities, fixed income, currencies and commodities with an attractive risk profile, having provided double digit returns since 2009 with low volatility.
The Bennelong Long Short Equity Fund is research driven, market and sector neutral, "pairs" trading strategy investing primarily in large cap stocks from the ASX/S&P100 Index, with a ten year track record and annualised net returns of 20.97% since inception. The Fund's Investment history commenced in January 2002 and has positive annual returns each year, including an 11.95% return in 2008 and 20.6% in 2011, both of which were negative years for the ASX200. A consistent return across the investment history indicates the Fund's ability to provide positive returns in volatile and negative markets and significantly outperform the broader market.
AFM Prism Active Equity Fund comprises a portfolio of 5 to 10 underlying Australian absolute return managers each investing in ASX listed equities. The Fund's objective is to achieve double-digit annualised returns with significantly lower volatility than the underlying equity markets, with a focus on capital protection. Fund selection is made based on a combination of quantitative analysis of past performance and risk, coupled with extensive analysis and due diligence of the underlying manager's processes and pedigree. The Prism Active Equity Fund had a sound month, with a return of 1.66% compared to the market decline of 4.5% for the ASX 200 Accumulation Index.
The Optimal Australia Absolute Trust is a long/short equity strategy portfolio typically has a low but variable net market exposure comprising 40 to 65 stocks broadly selected from within the ASX200. The Trust has recorded consistent out-performance of the market with approximately 83 % of monthly performances have been positive with a largest drawdown of -1.38%.
Bennelong Kardinia Absolute Return Fund is long biased, research driven, active equity long/short strategy investing in listed ASX companies with a seven year track record and an annualised return of 14.10% net of fees. Consistent top decile long short equity sector performance, with sound risk statistics indicate an attractive risk/reward profile, and a strong focus on capital protection in negative markets.
And finally, for something completely different - and you thought our lot in Canberra were a rabble.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
19 Jul 2013 - Fund Review: Bennelong Kardinia Absolute Return Fund
BENNELONG KARDINIA ABSOLUTE RETURN FUND
Attached is our most recently updated Fund Review. You are also able to view the Fund's Profile.
Key points regarding the Fund are:
- Kardinia is a boutique Australian based Fund Manager established in August 2011 in conjunction with the Bennelong Group to continue the management of the Herschel Absolute Return Fund.
- Long biased, research driven, active equity long/short strategy investing in listed ASX companies with a six year track record and an annualised return of 14.10% net of fees.
- Portfolio Managers Mark Burgess and Kristiaan Rehder have significant market experience, while the Bennelong Group provide infrastructure, operational, compliance and distribution capabilities.
- Consistent top decile long short equity sector performance with Key Performance and Risk Statistics indicating an attractive risk/reward profile. There is a strong focus on capital protection in negative markets.
Research and Database Manager
Australian Fund Monitors
Fund Review: Bennelong Kardinia Absolute Return Fund (pdf format)
18 Jul 2013 - Fund Review: Optimal Australia Absolute Trust
OPTIMAL AUSTRALIA ABSOLUTE FUND
Attached is our most recently updated Fund Review on the Optimal Australia Absolute Fund.
We would like to highlight the following aspects of the Fund:
- Optimal Australia is a specialist Australian equity investment manager established in 2008.
- The Fund's long/short equity strategy portfolio typically has a low but variable net market exposure comprising 40 to 65 stock broadly selected from within the ASX200.
- The investment team comprising George Colman, Peter Whiting and Stephen Nicholls have close to 90 years combined experience in equity markets.
- Consistent out-performance of the market: Approximately 84 % of monthly performances have been positive with a largest drawdown of -1.38%.
Research and Database Manager
Australian Fund Monitors
Fund Review: Optimal Australia Absolute Trust (pdf format)
17 Jul 2013 - Australian hedge funds don't always fit the global mould
The seemingly never-ending stream of negative headlines relating to global hedge funds is at odds with the reality of the Australian hedge fund sector. This not only relates to performance and risk (surely the most important measures for any investor) but also to size, liquidity, availability and fees.
Most recently there have been reports that this underperformance will lead to the age of multibillion-dollar hedge funds drawing to a close. The reality is that there are very few multibillion-dollar hedge funds in Australia, and while performance varies significantly from fund to fund, as a whole their performance has been in line with expectations.
According to a report by Goldman Sachs, global hedge fund performance lagged the S&P 500 by approximately 10% over the past year, and as at the end of June hedge funds had gained just 1.4% in 2013. By comparison, Australian based funds investing in global equities returned 16.52% (net of fees) in the 12 months to June, against the S&P 500 which returned 17.58%. That's a marginal underperformance of 1%, but achieved with a much lower volatility.
Hedge funds are continually reported as being illiquid, with redemption terms frequently running between three months and one year. By comparison over 95% of all Australian-based funds have liquidity of one month or less, and 50% of those have daily liquidity.
Most recently there has been considerable comment, much of it negative, regarding the SEC's decision to permit US hedge funds to advertise to the general public. In Australia all funds have to be registered or licensed with ASIC, increasingly offering better transparency and investor reporting than many traditional "long only" funds.
Hedge funds might not be suitable for all investors, and their depth and breadth of strategies and risks certainly require additional research, understanding, and due diligence. Once that's done however, the best funds provide outstanding performance with significantly lower volatility than traditional managed funds.
Chris
CEO, AUSTRALIAN FUND MONITORS
17 Jul 2013 - Fund Review: AFM Prism Active Equity Fund
AFM PRISM ACTIVE EQUITY FUND
Attached is our most recently updated Fund Review on the AFM Prism Active Equity Fund.
We would like to highlight the following aspects of the Fund:
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The Prism Active Equity Fund ("PAEF" or "Prism") comprises a portfolio of 5 to 10 underlying Australian absolute return managers each investing in ASX listed equities.
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The Fund's objective is to achieve double-digit annualised returns with significantly lower volatility than the underlying equity markets, with a focus on capital protection.
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Fund selection is made based on a combination of quantitative analysis of past performance and risk, coupled with extensive analysis and due diligence of the underlying manager's processes and pedigree.
Research and Database Manager
Australian Fund Monitors
AFM Prism Active Equity Fund - May 2013 (pdf format)
16 Jul 2013 - Fund Review: Bennelong Long Short Equity Fund
BENNELONG LONG SHORT EQUITY FUND
Attached is our most recently updated Fund Review on the Bennelong Long Short Equity Fund.
We would like to highlight the following aspects of the Fund:
- Research driven, market and sector neutral, "pairs" trading strategy investing primarily in large cap stocks from the ASX/S&P100 Index, with a ten year track record and annualised net returns of over 20% .
- Portfolio Manager Richard Fish has over 25 years market experience, while Bennelong Funds Management, who have over $4.5 billion in FUM across various funds, provide infrastructure, operational and compliance functions.
- The Fund's Investment history commenced in January 2002 and has positive annual returns each year, including an 11.95% return in 2008 and 20.6% in 2011, both of which were negative years for the ASX200.
- 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.
Research and Database Manager
Australian Fund Monitors
Fund Review: Bennelong Long Short Equity Fund (pdf format)
