NEWS
16 Mar 2015 - Hedge Clippings
IMR moves a little closer, and what's Joe Hockey up to?
This week we're pleased to see that a little more than five years after the Johnson Report's recommendation, Treasury has announced Element 3 of the Investment Management Regime, or at least draft legislation relating thereto, and is inviting comment on the design of the amendments, the purpose of which is to enable offshore investors to invest via local fund managers without being penalised as a result of Australia's peculiar, if not unique, managed fund tax structures.
For those wanting more information, please click here.
Regular recipients of Hedge Clippings would be well aware that our weekly commentary can stray from the topic of managed funds, occasionally commenting on the economy, markets, regulations, and even politics, or at least the impact of our various political masters on such matters, although we do try to keep on track (up to a point).
There are reasons for this, including the obvious one that such matters, particularly regulations, do impact on markets and therefore managed funds. There are others of course, including the fact that our Friday lunchtimes are spent writing and editing Hedge Clippings, and thus we might possibly still be appropriately focussed, while many recipients of Clippings will hopefully be significantly more realxed, or well on thier way to getting there.
So for those less interested in the IMR mentioned above, has anyone else been concerned that our erstwhile treasurer, Joseph Benedict Hockey, seems to have spent the best part of the past week in court defending his reputation, rather than attending to the business of running the country's finances?
Maybe it's because his first budget, introduced a full ten months ago, was so inept, imbalanced, and, even according to his own colleagues, poorly sold (sorry, "communicated" to the electorate) that it has yet to be passed in full, while many of the more contentious issues have been dropped that he's trying to divert attention away from his performance as Treasurer.
Maybe, in spite of the fact that as a long term (although maybe not that much longer) politician he really is so thin skinned that he was genuinely offended by the suggestion that allowing some lucky constituents to pay $22,000 for the benefit of having privileged access to him questioned his integrity.
Maybe it's because payments received as a result of successful defamation actions are, we understand, not taxable.
Whichever or whatever it is, we're not sure the electorate is getting its money's worth.
Specific results received this week include the following PERFORMANCE UPDATES:
KIS Asia Long Short Fund returned -0.35% in January bringing the Fund's annual return since inception to 14.83%.
FUND REVIEWS released this week, with the potential for earning CPD points: Supervised High Yield Fund; Insync Global Titans Fund; Alpha Beta Asian Fund.
FUND IN FOCUS VIDEO released this week: Understanding Hedge Fund - Episode 3 explaining the Hedge Fund Strategies and Fund Types.
25-27 May 2015 - Digital Marketing for Banking and Financial Services Summit
And now for something completely different and continuing our theme from last week's hedge clipping, for all those frustrated parents and office colleagues, we bring you this instructional video.
On that note, I hope you have a happy and safe week-end.
Kind regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
Connect with me on LinkedIn Twitter
| Registration to AFM is free and provides general information and performance data on Absolute Return, Hedge Funds and Alternative Investments. | Fund Managers and paid Subscribershave access to details on Individual Managers and Funds, with historical results, key performance indicators, latest news and performance reports. | Prism Select provides self-directed investors and their advisors with factual information, performance data and opportunity to apply for funds online using OLIVIA123. |
Tune into Foxtel's Sky Business every Monday at 2:15pm for AFM's weekly comment. |
16 Mar 2015 - Bennelong Kardinia Absolute Return Fund
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| Fund Overview | The Fund's discretionary investment strategy commences with a macro view of the economy and direction to establish the portfolio's desired market exposure. Following this detailed sector and company research is gathered from knowledge of the individual stocks in the Fund's universe, with widespread use of broker research. Company visits, presentations and discussions with management at CEO and CFO level are used wherever possible to assess management quality across a range of criteria. Detailed analysis of company valuations using financial statements and forecasts, particularly focusing on free cash flow, is conducted. Technical analysis is used to validate the Manager's fundamental research and valuations and to manage market timing. A significant portion of the Fund's overall performance can be attributed to the attention and importance given to the macro economic outlook and the ability and willingness to adjust the Fund's market risk. |
| Manager Comments | The net equity market exposure of the Fund (including derivatives) was decreased to 40.80% (81.80% long and 41.0% short). Ramsay Health Care, SurfStitch,Bank of Queensland and APA were all significant contributors to performance, whilst Share Price Index Futures (hedging long positions), a long position in Genworth and a short position in ASX were the major detractors. |
| More Information | » View detailed profile of this fund |
16 Mar 2015 - Understanding Hedge Funds - Episode 4
Chris Gosselin, CEO of Australian Fund Monitors explains Hedge Funds and in particular helps answer the questions asked by investors to determine which Fund Manager with whom to invest.
Take a look at the earlier videos in the series here.
13 Mar 2015 - Fund Review: Alpha Beta Asian Fund Review January 2015
ALPHA BETA ASIAN FUND
AFM has updated the Fund Review on the Alpha Beta Asian Fund.
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.
Key points include:
- The Fund The Alpha Beta Asian Fund invests in Asian listed equity markets with a focus on liquid companies in Australia, Japan, Hong Kong, Indonesia, Philippines and Thailand. The Fund uses a systematic approach to evaluate macroeconomic, company fundamental and price data, all of which are evaluated through a series of quantitative models.
- Sydney based Alpha Beta Capital was established by Andrew Barry and Ken Lewis in May 2012. Both Barry and Lewis have significant qualifications and international experience in funds management, including working together at Coronation International, a global multi-strategy hedge fund group in London.
- The Strategy relies on a number of core beliefs: Firstly that a well designed systematic investment process, operating within a multi-strategy framework will be able to extract consistent returns, on average, with low volatility. Secondly, by utilising holding periods substantially shorter than the industry-norm, profit opportunities consistently arise. Finally, a strategy that holds a large number of small positions versus a small number of concentrated positions, will remove much of the emotional angst of trading, and the investment process becomes repeatable.
- In keeping with the Manager's overall systematic approach the Risk Management includes real time monitoring of positions and market exposure, and is combined into a proprietary and automated system called PARMS (Portfolio and Risk Management System). PARMS is a centralised and integrated system which provides full functionality including stress testing.
For further details on the Fund, please do not hesitate to contact us.
Sean Webster
Research Manager
Alpha Beta Asian Fund AFM Fund report Jan 2015 (pdf format)
12 Mar 2015 - Fund Review: Insync Global Titans Fund January 2015
INSYNC GLOBAL TITANS FUND
Attached is our most recently updated Fund Review on the Insync Global Titans Fund.
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:
- The Fund's unit price increased by 1.3% in January. The performance was driven by positive contributions from our holdings in Nestle, Reckitt Benckiser, Experian and Sanofi as well as the weaker Australian dollar. The main negative contributors were Time Warner Cable, Microsoft and Discover Financial Services. The Fund continues to have no foreign currency hedging in place as Insync consider the main risks to the Australian dollar to be on the downside.
- The Global Titans Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth 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 is through extensive company research, the ability to hold cash and long protective index put options.
For further details on the Fund, please do not hesitate to contact us.
Sean Webster
Research Manager
Australian Fund Monitors
Insync Global Titans Fund AFM Review - January 2015 (pdf format)
11 Mar 2015 - Monash Absolute Investment Fund
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| Fund Overview | The fund seeks to identify opportunities in the share market to make positive returns (long and short) irrespective of market conditions. It is style agnostic, as compelling investment opportunities exist across all investment styles from time to time. The Fund places a high priority on capital preservation, and has an absolute return focus in accepting market risk. The Manager's experience across value, growth and discounted cash flow styles allows them to use a comprehensive approach to investment decisions that applies all three. They also have the patience to seek out only compelling opportunities, rather than settling for relative value. The portfolio is somewhat concentrated, looking to diversify across industries and themes, rather than by trying to stay near an index. The portfolio may at times have a large amount of cash or other protection. However once investments are made turnover may be relatively high in order to lock in gains and avoid losses. |
| Manager Comments | The Manager's month-end exposure was net 84%, gross 99% and the VAR 1.1%, with a beta of 0.62 for the portfolio. Some of the highs for the month came from strong gains in Next DC and Silver Chef stocks, while the lows came from losses in Netcomm Wireless and Energy Action. In depth details of the Fund's holding is available on the Australian Fund Monitors website |
| More Information | » View detailed profile of this fund |
Alpha Beta Asian Fund AFM Fund report Jan 2015 (pdf format)
10 Mar 2015 - Fund Review: Supervised High Yield Fund January 2015
We would like to highlight the following aspects of the Fund:
- The Supervised High Yield Fund (SHYF) has a 5 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 32 years, 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.
Research and Database Manager
Australian Fund Monitors
Supervised High Yield Fund AFM Review Jan 2015 (pdf format)
10 Mar 2015 - Understanding Hedge Funds - Episode 3
Chris Gosselin, CEO of Australian Fund Monitors explains Short Selling and how it relates to Hedge Funds.
View our other videos here.
9 Mar 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 | The portfolio gained 17bp due to the convertible bonds strategy on Elders Ltd & PaperlinX Limited. The portfolio's long/short, portfolio hedge and currency class FX hedge strategies lost a total of 85bp in January. The Fund suffered on short positions on Australian banks (NAB.AX, CBA.AX, ANZ.AX) and long position in Comba Telecom. However, the loss in this strategy was minimized by having long positions in two small cap holdings. The portfolio hedge strategy lost 47bp as the Fund did not expect the ECB to be such a strong and cohesive organization to be able to propose QE measures that markets would react positively to. To hedge the fund, and to profit from our expectation of disappointment from the market to the announcement we had purchased index put options. Investments are received in US$ and spot exchanged to A$. The impact of interest rate differentials reduced the performance of the US$ series by 27bp. |
| More Information | » View detailed profile of this fund |
6 Mar 2015 - Hedge Clippings
The Intergenerational Report seems to state the bleedin' obvious!
One of the clearest (and concerning) presentations we have seen in the past few months on the problems that Australia is facing was given by John Daley, the CEO of the Grattan Institute. His views were reaffirmed in Wednesday's Editorial & Opinion section of the Australian Financial Review.
Put simply Daley's argument is that based on current facts and future assumptions the government's income and expenditure outlook is broken. The current budget deficit of around $40 billion a year is not going to be fixed in short-term, and unless it is addressed, it's going to get worse.
We have an ageing population, which apart from the social, health and demographic issues is going to result in increasing pressures on the budget, with a larger proportion of the population relying on welfare, and a smaller proportion (62% by 2050) of the population in the workforce and therefore contributing tax revenue.
As Janine Perrett from the Switzer Report noted today governments need the vision and political will (both of which in her opinion are totally lacking today) which enabled superannuation and the GST to be introduced which were both big picture innovations that have had significant ramifications since.
Whether either side of politics currently has either vision or political will is debatable. However the current system where everyone wants more from the government, either in the form of handouts or taxation concessions, while paying less tax, is simply not going to solve the problem.
Sooner or later the current sacred cows such as concessional superannuation taxation in retirement phase, negative gearing, and welfare for the wealthy are going to have to be addressed. Sooner or later one side of politics or the other, preferably both, are going to have to bite the bullet and increase and broaden the GST.
In our mind the sooner the better because in the meantime we are just digging the hole, out of which we will all have to climb, deeper.
Specific results received this week include the following PERFORMANCE UPDATES:
In January, Alpha Beta Asian Fund returned -1.30%, bringing the Fund's return since inception to 20.90%.
Allard Investment Fund increased 5.5% during the month of January and 24.73% over the previous twelve month performance.
In January, Insync Global Titans Fund returned 1.30% bringing the Fund's prior 12 month performance to 12.81%.
FUND REVIEWS released this week, with the potential for earning CPD points: Totus Alpha Fund; Bennelong Long Short Fund
FUND IN FOCUS VIDEO released this week: Understanding Hedge Funds - Part 2 explains the basics Short Selling.
25-27 May 2015 - Digital Marketing for Banking and Financial Services Summit
And now for something completely different and continuing our theme from last week's hedge clipping, for all those frustrated parents and office colleagues, we bring you this instructional video.
On that note, I hope you have a happy and safe week-end.
Kind regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
Connect with me on LinkedIn Twitter
| Registration to AFM is free and provides general information and performance data on Absolute Return, Hedge Funds and Alternative Investments. | Fund Managers and paid Subscribers have access to details on Individual Managers and Funds, with historical results, key performance indicators, latest news and performance reports. | Prism Select provides self-directed investors and their advisors with factual information, performance data and opportunity to apply for funds online using OLIVIA123. | Tune into Sky Business on Foxtel every week on Monday at 2:15 pm for AFM's weekly comment |
