NEWS
10 Apr 2014 - Morphic Global Opportunities Fund
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| Manager Comments | Manager commentary notes the following regarding fund performance 'The Fund's main gains came from some of its longest held positions. The overweight in US financials generally benefited from better macroeconomic data over the month, and more upbeat commentary from new Reserve Bank Chairman Janet Yellen. Its two largest positions, Wells Fargo and US Bancorp did even better after strong scores in the US Federal Reserve's annual "Stress test" review paved the way for them to raise dividends and increase buy-backs. Reversing last month's under-performance, the long held Japanese drugstores basket, also rose sharply on good sales data, and reduced fears about the impact of higher Japanese sales tax rates.' |
| More Information | » View detailed profile of this fund |
9 Apr 2014 - Optimal Australia Absolute Trust
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| Fund Overview | The Fund's bias is likely to be net long under normal market conditions, with the core strategy being to construct a portfolio of listed equity securities priced at levels that do not adequately reflect their underlying value. The Fund will seek to boost returns and limit potential market downside by selective short selling of individual stocks which are priced at levels that are viewed as materially above their underlying value. The Fund will also use certain trading strategies both within its core portfolio (through rebalancing stock weights and overall market exposure in response to price movements) and in certain other situations (typically of a shorter-duration and/or opportunistic nature) with the objective of further increasing returns. |
| Manager Comments | The Manager Monthly report comments 'The S&P/ASX200 index finished the March quarter up 0.8% the Australian market's worst start to the calendar year since 2010. March's performance is largely at odds with some of the acclaim greeting the February reporting season(characterized as the 'best in five years'), suggesting that investors are not entirely convinced. Earnings have been re-rated about as far as they can be as a result of interest rate suppression and liquidity creation. Early-stage normalisation of the term end of the yield curve is occurring. For equity prices to advance further, growth has to step up, and the signs on that remain mixed at best.' |
| More Information | » View detailed profile of this fund |
8 Apr 2014 - BlackRock Multi Opportunity Fund
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| Fund Overview | - Australian and International Equity Long/Short - Global Fixed Income Long/Short - Global Macro - Commodity Alpha - Alpha Transport The Fund's goal is to provide investors with a source of consistent, risk-controlled, absolute returns that are over time, expected to have low correlations with the returns of major asset classes. The Fund aims to achieve a return of 8% p.a. before fees, above the RBA Cash Rate Target over rolling 3 year periods. In order to achieve its expected return objective, the Fund will target a total expected risk of between 4-6% p.a. over the same rolling 3 year period. |
| Manager Comments | The Fund Update comments 'Strong positive contributions from Fixed Income Global Alpha, European Equity Long/Short and Australian Equity Long/Short were offset by detractions from the Global Macro, Global Equity Long/Short and International Alpha Transport strategies. The Australian Equity Long/Short strategy added value in February benefitting from stock selection in the gold sector and a takeover bid in the oil stock Aurora Oil & Gas Ltd (AUT). The underweight exposure in mining services was again a positive contributor. Stock selection in infrastructure, consumer cyclicals and insurance detracted.' |
| More Information | » View detailed profile of this fund |
8 Apr 2014 - Bennelong Kardinia Absolute Return Fund
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| Fund Overview | The Fund consists of a concentrated long/short portfolio typically comprising 20 to 50 ASX300 listed stocks, generally with a long bias aligned to the overall market direction. There is a slight bias to large cap stocks in the long side of the portfolio, although in a rising market the portfolio will tend to hold smaller caps, including resource stocks, more frequently. On the short side, the portfolio is particularly concentrated, with stock selection limited by both liquidity and the difficulty of borrowing stock in smaller cap companies. Short positions are only taken when there is a high conviction view on the specific stock. The Fund uses derivatives in a limited way, mainly selling short dated covered call options to generate additional income. These typically have less than 30 days to expiry, and are usually 5% to 10% out of the money. ASX SPI futures and index put options can be used to hedge the portfolio's overall net position. |
| Manager Comments | The Manager's update notes that Long positions in Donaco and the major banks, and a short position in Metcash were the largest positive contributors to performance, whilst long positions in Crown, CSL and Twenty-First Century Fox were the largest detractors. |
| More Information | » View detailed profile of this fund |
7 Apr 2014 - Fund Review: Morphic Global Opportunities Fund
MORPHIC GLOBAL OPPORTUNITIES FUND
AFM has updated the Fund Review on the Morphic Global Opportunities Fund.
Key points include:
- 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 value based and momentum strategies. Risk management is a primary consideration in portfolio construction and the strong emphasis on risk is evidenced by the Fund's since inception annualised standard deviation of 9.05% (10.29% ASX 200 Accum Index), maximum drawdown of 1.66% (6.72% Index) and downside deviation of 2.26 (5.50 Index).
- Morphic's philosophy is that only funds with flexible investment and hedging strategies will be able to deliver acceptable, steady, real, absolute returns over the investment cycle.
- The 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.
For further details on the Fund, please do not hesitate to contact us.
Sean Webster
Research Manager
4 Apr 2014 - Hedge Clippings
April fools' day came and went this week with little surprise, but luckily for the recently departed Assistant Treasurer, Arthur Sinodinos his appearance at the Independent Commission Against Corruption (ICAC) didn't occur until two days after. The media and others would have had a field day with the headlines covering the story.
For those not familiar with the details, Sinodinos received $200,000 a year to act as chairman of a company seeking a NSW state government contract to deliver water infrastructure to a growing region of Sydney's north west. As such his role took an annual total of 45 hours, or nearly $4,500 on an hourly basis.
Not a bad gig if you can get it, particularly as it only required him to be, in his words "a door opener", but it appears one without a very clear memory based on the number of times he couldn't remember or recall many details to assist the Commission. Adding to his memory lapse was that he forgot to mention to the NSW Premier, presumably one of the doors he opened, that if successful he was personally in line to pick up $20 million for his troubles.
Regular readers of "Hedge Clippings" might wonder if this is relevant to our weekly update on managed funds, but given that as Assistant Treasurer Sinodinos was until very recently the champion of changing the FoFA regulations, we think it is. What is relevant that he was trying to soften the FoFA legislation around conflicted remuneration (otherwise known as commissions) not strengthen them. If anyone was better placed, or more personally involved, to understand conflicts of interest I'd like to know who.
Having said there was a significant amount of misinformation and fear mongering in the campaign against the FoFA changes, but that in itself was caused by the lack of clarity and transparency on what the REAL effects would be. And as the previously mentioned Sinodinos would now realise, transparency is essential if one is to avoid confusion, or misinterpretation. Unless of course clarity and transparency are not in your best interests.
This week's "and now for something completely different" is probably topical.
And now to matters financial. Equity markets both here and in the US saw very narrow trading ranges in March, with the S&P500 trading in a 49.3 point range even as it topped new highs. By comparison January and February ranges were 111.18 and 130 respectively. Meanwhile the ASX200 equivalent was 173 points in March, compared with 224 points in January, and 409 points in February. Volatility has collapsed accordingly, and given the concerns over the credit situation in China, military activity in Eastern Europe, and the growing realisation that interest rates can only rise, albeit possibly not for another 12 months.
Against this backdrop the ASX200 Accumulation index rose 0.29% in March to take the YTD return to just 2.08%. Early indication of March fund returns are significantly positive with the Monash Investment Fund the standout to date with an estimated +4.6%.
Specific results received this week include the following PERFORMANCE and NEWS UPDATES:
The Pengana Australian Equities Fund recorded a 1.44% return during February 2014 and 7.30% for the preceding 12 months with a volatility of 6.41%.
The Monash Absolute Investment Fund returned a solid 4.6% during March (Index 0.20%) and 27.72% (Index 12.0%) over the last 12 months.
Updated FUND REVIEWS released this week included:
AFM's updated Fund Review for the Optimal Australia Absolute Trust has been released. The fund is characterised by very low risk with an annualised standard deviation 3.55% (Index 15.07%) and a Sharpe Ratio since inception of 1.76.
Insync's Global Titans Fund Review shows the Fund delivering an annualised return of 11.33% and annualised standard deviation of 7.59% (since inception in October 2009) with sound risk-reward statistics.
Aurora Fortitude Absolute Return Fund - The Fund is characterised by steady returns and very low risk. Since inception (March 2005) the Fund has returned 8.12% pa.
If you know of any upcoming hedge fund industry Events, or would like your Event listed in our calendar, please contact us.
And now for something completely different this week, although this clip is about a golf situation it presents a real-life dilemma regarding ethics. The real question is: What would the aforementioned Sinodinos do in this situation?
On that note, I hope you have a safe and happy weekend.
Best wishes,
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. To celebrate the 20th anniversary of their #CBDGolf Escape! charity golf event, Cerebral Palsy Alliance are holding an online raffle. The prize will be a Toyota Yaris YR Hatch 3 Door, plus many amazing prizes inside the car - A total prize value of $22,000...See more
For more information visit www.cpresearch.org.au or contact me by email.
4 Apr 2014 - 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. |
| Manager Comments | The Manager's report comments on the portfolio results and characteristics and covers 4 portfolio stocks. |
| More Information | » View detailed profile of this fund |
2 Apr 2014 - Fund Review: Insync Global Titans Fund February 2014
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:
- The Global Titans Fund invests in a concentrated portfolio of 15-25 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.
- The Fund's unit price increased by 2.4% in February. The solid performance was fairly broadly based across the portfolio, with the biggest positive contributions coming from our holdings in Reckitt Benckiser, BAT, GlaxoSmithKline, BSkyB and DirecTV. Small negative contributions came from Comcast, Safran and Zimmer Holdings. The Fund continues to have no foreign currency hedging in place.
- 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
Insync Global Titans Fund AFM Review - February 2014 (pdf format)
1 Apr 2014 - Pengana Australian Equities Fund
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| Manager Comments | As at 28th February 2014, cash (including notes and preference shares) represented 20% of the Fund. The top five holdings by value were: DUET Group, ANZ Bank, Telstra, NAB and Resmed. The Fund's exposure to non-Australian dollar earnings streams (inclusive of companies with global earnings profiles such as Resmed, Fox Group, CSL, Crown Resorts, NZ based companies and US dollar exposure) stood at 25%. |
| More Information | » View detailed profile of this fund |
1 Apr 2014 - Advent Connect Melbourne 2014
Advent Connect, 2014
3 April 2014 - Taxi Kitchen, Melbourne
Stay up to date on industry trends with fresh insights from industry thought leaders, your peers, and Advent¹s executive management team.
Event highlights include:
- Advent Overview with Chris Momsen, Executive Vice President, Global Sales & Solutions Management
- Panel on Cloud Computing and the Future of Financial Services, moderated by Alex Wise, Select Funds
Panelists include:
- Brian Smith, Risk Metrics and Chris O¹Connor, Eze Castle Software
Keynote presentations on:
- Regulatory issues by Nikki Bentley, Partner at Henry Davis York
- Current economic conditions in the region by Savanth Sebastian, Equities Economist at Commonwealth Bank
- Regional Advent Community and Global Services Update
Being held in MELBOURNE on Thursday 3 April 2014: 5-9pm at the Taxi Kitchen. Register Here.
