NEWS
Meet the Manager
26 Apr 2013 - Australian Fund Monitors
Meet the Manager presentations showcase all of AFM's Fund Manager clients and are held each month over either breakfast or lunch.
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26 Apr 2013 - Meet the Manager
By: Australian Fund Monitors
In 2012, AFM hosted a series of lunch presentations entitled "Understanding Hedge Funds" which provided investors with a more balanced view on the sector than is sometimes portrayed in the media. Following feedback from a number of our guests we also organised briefings and presentations for a small group of investors to "meet the manager" and hear from individual fund managers in person.
Our "Meet the Manager" briefings will be held every month, over breakfast or lunch and will showcase AFM's Fund Manager clients, their available Funds and views of the current market and opportunities ahead.
If you are interested in attending any of AFM's "Meet the Manager" briefings, please reply by email.
Fund Managers wishing to participate in the presentation series are invited to contact Chris Gosselin, CEO, to discuss the opportunity.
Monash Absolute Investment Fund
26 Apr 2013 - Australian Fund Monitors
The Monash Absolute Investment Fund returned 2.00% during March and its six month return to 17.17%.
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26 Apr 2013 - Monash Absolute Investment Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund places a high priority on capital preservation, and have an absolute return focus in accepting market risk. The Manager employs a comprehensive approach to making investment decisions utilising value, growth and discounted cash flow styles. The portfolio is somewhat concentrated and the manager looks to diversify the portfolio across industries and themes rather than staying near an index. The portfolio may at times have a large amount of cash or other protection. |
| Manager Comments | At the end of the month the portfolio had nine Outlook Driven stocks, nine Event Driven stocks and two sets of Pairs Trades. Gross exposure was 71% and our net exposure was 61%. The portfolio continues to avoid well covered defensives, preferring cash if there is no better alternative. It has no Telstra, consumer staples or utilities. However, the manager would be happy to invest in yield stocks with reliable growth at the right price as a result the Fund owns only one bank, NAB (apart from a CBA/Westpac pair trade). At the other end of the risk spectrum, there are no large miners and the Fund continues to look for more growth stocks with compelling valuations. |
| More Information | » View detailed profile of this fund |
Allard Investment Fund
24 Apr 2013 - Australian Fund Monitors
The Allard Investment Fund was impacted by the weaker Australian dollar, falling 2.1% for the month.
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24 Apr 2013 - Allard Investment Fund
By: Australian Fund Monitors
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| Manager Comments | The Fund's performance is notable for its low level of volatility with five year annualised volatility of 9.7% as compared to the MSCI Asia Pacific ex Japan volatility over the same period of 14.8%. In terms of geographic exposures the Fund was allocated; China/Hong Kong 29.7%, Singapore 12.5%,Korea 9.7%, India 6.3% and others 2%. Notably cash and fixed income was 31.7% of the portfolio. In terms of industry the largest exposure was financial services 15.7% followed by conglomerates 12.2%, telecomms 8.0% and retail 6.4% with other sectors 26%. The Fund's top 5 holdings are 36.4% with the next five holdings 15.7%. |
| More Information | » View detailed profile of this fund |
Auscap Long Short Australian Equities Fund
23 Apr 2013 - Australian Fund Monitors
The Auscap Long Short Australian Equities Fund recorded a strong return of 1.46% over March, well above the Fund's benchmark return of 0.25%.
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23 Apr 2013 - Auscap Long Short Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund focuses on fundamental long and short investments. The Fund may utilise a multi-strategy approach if short term opportunities to increase returns, hedge the portfolio, protect capital or minimise volatility are found. The Fund is a high conviction fund and the combined portfolio will typically have 25-45 positions, investing primarily in stocks in the ASX200. The Fund may be net long, short or neutral depending on the strategies employed at the time. The Fund may hold cash so that it is in a position to take advantage of market volatility and compelling investment opportunities as and when they arise. The Fund may be geared up to 200% gross long or short and up to 150% net long or short. |
| Manager Comments | Average gross capital employed by the Fund was 161.7% long and 45.2% short. Average net exposure over the month was +116.5%. At the end of the month the Fund had 29 long positions and 11 short positions. The Fund’s biggest exposures at month end were spread across the consumer discretionary, industrials, property trust (financials subset), healthcare & materials sectors. The Fund’s positive performance was a result of exposure to a number of particular sectors. On the long side, the Fund was invested in select property trusts, telcos and utilities for their strong growing dividends and earnings certainty. The Fund also had positions in the media and consumer discretionary space as a play on a slowly recovering east coast economy. On the short side the Fund had select positions in the healthcare space where high expectations had not been met through the reporting season. The Fund has largely avoided sectors with a high degree of uncertainty and low visibility around future earnings, such as the mining sector. |
| More Information | » View detailed profile of this fund |
Alternatives category "meaningless"
22 Apr 2013 - Katarina Taurian
Placing investments into an alternatives cateogory because they vary from standard categories is a "flawed logic", according to Pengana Capital.
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22 Apr 2013 - Alternatives category "meaningless"
By: Katarina Taurian
Alternatives category "meaningless" (pdf format)
Alternatives category 'meaningless'
By Katarina Taurian, Investor Daily
Mon 22 Apr 2013
Pengana recommends 'uncorrelated' category
Placing investments into an alternatives category because they vary from standard categories is a "flawed logic", according to Pengana Capital.
Some portfolio constructors have created an alternatives category to hold investments that differ from standard categories, resulting in that category becoming "meaningless", according to Russel Pillemer, chief executive officer at Pengana Capital.
"If you're using it as a category to throw in all orphan investment opportunities - everything that doesn't fit anywhere else - then you just end up with a collection of strategies where there's no logic for them to be together," Mr Pillemer told InvestorDaily.
Read the entire article here.
Alternatives category "meaningless" (pdf format)
Magellan Global Fund
22 Apr 2013 - Australian Fund Monitors
The Magellan Global Fund recorded a return of 1.92% during March 2013 taking the 12 month performance to 19.78%.
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22 Apr 2013 - Magellan Global Fund
By: Australian Fund Monitors
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| Manager Comments | The five largest stocks in the portfolio at the end of March were; Google Inc 6.1%, Tesco Plc 5.8%, Microsoft Corp 5.7%, Lowe's 5.3% and eBay Inc 5.2%. The top ten holdings were 52% of the portfolio. Over the quarter, all stocks held within the portfolio produced positive local currency returns. Within the top ten holdings, the three stocks with the strongest returns in local currency were Novartis (+22%), Target Corp (+16%) and McDonalds (+14%) while the three stocks in the top ten holdings with the weakest local currency returns were eBay (+6%), Lowes (+7%) and Microsoft (+8%). The significant changes to the portfolio during the quarter were the result of active portfolio management regarding relative valuation and opportunity cost. The Fund sold the entire position of General Mills which had appreciated materially since investment and purchased a new stock, Microsoft which is trading well below our assessed intrinsic value. The Microsoft position was subsequently increased to the top ten holdings during the quarter. The portfolio remains fully invested, reflective of the manager's comfort with the current macroeconomic environment and subsequent view that it remains an attractive time to be investing in a select portfolio of extremely high quality multinational companies. The manager remains focused on prudent portfolio construction with emphasis on the avoidance of aggregation of risk within the portfolio and believe that it is likely to exhibit substantially less downside risk than the market in the event that global markets deteriorate materially. Within the current macro environment the manager sees value in high quality companies exposed to certain investment themes. The portfolio has material exposure to the following themes: - Emerging market consumption growth via investments in multinational consumer franchises. - The move to a cashless society. There continues to be a strong secular shift from spending via cash and cheque to cashless forms of payments, such a credit cards, debit cards, electronic funds transfer and mobile payments. - Internet/e-commerce convergence. There are a number of internet enabled businesses that have very attractive investment characteristics with increasing competitive advantages. - US housing Recovery. A recovery in new housing construction should drive a strong cyclical recovery in companies exposed to US housing and also provide a strong boost to the overall economy. - US interest rates normalising over the next 3-5 years as the US economy recovers. |
| More Information | » View detailed profile of this fund |
Hedge Clippings
19 Apr 2013 - Chris Gosselin, Australian Fund Monitors
Weekly commentary and opinion from AFM's CEO, Chris Gosselin.
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19 Apr 2013 - Hedge Clippings
By: Chris Gosselin, Australian Fund Monitors
Risk comes roaring back.
Over the past few weeks we have ignored market risk, focusing instead on the risk facing the retirement incomes of more Australians than the treasurer would have us believe.
This is a good lesson, as investors generally ignore risk at their peril. Looking back through March editions of 'Hedge Clippings' we were pointing to the historically low levels of the VIX 'fear index' and the tendency for markets to wobble when that occurs.
Of course low volatility might not cause markets to fall, but it does indicate that investors as a whole are optimistic enough to put risk to the back of their minds. Cyprus gave investors some cause to pause, and then it was back to the fray. However as the past week or so has shown, while it takes a while for investor confidence to build, it can evaporate very quickly.
March performance from Australia's absolute return sector reinforced its risk averse nature. With 80% of all returns to hand the average fund fell -0.15%, against the ASX200's fall of -2.7% or the ASX200 Accumulation's decline of -2.27%. Overall 91% of funds in the database outperformed the index, and 55% were in positive territory.
It is too early to call the ASX200 as negative in April, but if it turns out that way it will be two in a row, heading into 'sell in May and go away'. The real issue seems to be the exit from the resources sector, which will only create more focus on the yield and defensive areas, particularly while rates seem destined to stay low for some time to come.
Performance and News Updates on www.fundmonitors.com this week:
Insync's Global Titans Fund was up 1.17% in March, and 14.5% for the past 12 months as global markets were mixed with rises in the US and Japan offset by subdued returns in Europe thanks to Cyprus, China and Hong Kong.
Optimal's Australia Absolute Trust was broadly flat in March with small losses on long positions being offset by similar gains on their shorts. The manager continues to be confounded by the performance gap between defensive industrials and resources stocks, and finding difficulty finding value at current pricing
BlackRock's Australian Equity Market Neutral Fund was up 1.29% in March after being caught in the first half of January by the sharp rally in specific sectors such as building materials and diversified financials.
Platinum's Unhedged Fund returned +0.69% in March, taking 12 month performance to +8.33%, in line with annualised performance of 8.25% since inception in January 2005. As above, and in common with many other manager's comments, Platimum noted that complacency was creeping back into markets.
And now for something completely different, a short clip showcasing one of the greatest magicians in the world, the Great Flydini!
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
| AFM's Featured Fund profiles provide thorough research and performance data on the best Funds across Australia. This week, we look at BlackRock Australian Equity Market Neutral Fund. | Fund Managers and paid Subscribers also have access to details on Individual Managers and Funds, with historical results, key performance indicators, latest news and performance reports. | Tune into Sky Business on Foxtel every week on Monday at 2:20pm for AFM's weekly comment on Hedge Funds. |
Platinum Unhedged Fund March 2013 performance report
18 Apr 2013 - Australian Fund Monitors
The Platinum Un-hedged Fund returned 0.69% during March 2013 and 8.69% pa since inception.
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18 Apr 2013 - Platinum Unhedged Fund March 2013 performance report
By: Australian Fund Monitors
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| Fund Overview | The Fund's Portfolio will typically have about 90% exposure to stocks. The Fund's Portfolio is constructed in accordance with 'Platinum's Investment Methodology', except that no market risk management of either markets or currencies will be undertaken. The geographic disposition of the assets will determine the Fund's currency exposure. The Fund's Portfolio is constructed by the senior analysts of Platinum's investment team under one analyst's chairmanship. Since inception, the Portfolio has generally held 50 stocks with limited commonality to the Platinum International Fund. On account of the relatively concentrated nature of the Portfolio, holdings that carry great conviction will generally be larger than in the Platinum's risk managed products (i.e. the other Platinum Trust Funds). The Fund may use Derivatives to achieve long equity exposure. |
| Manager Comments | The Fund is 94% invested (with no shorting) and its major exposures are 29.6% North America an 26.3% to Japan. Major sector exposures are to Information Technology (19.9%), Consumer Discretionary (15.6%) and Financials (14.2%). Exposures to Utilities and Telcos are both under 2% of the portfolio. Notably the two largest exposures are to Microsoft at 4.6% and Toyota at 3.3%. The manager's recently released quarterly report notes that while the Fund is built one stock at a time for the purpose of investor communication it is useful to group some of these holdings by theme. Currently these themes include; US capital spending renaissance driven by a globally competitive supply of natural gas, Explosive growth in mobile data, The rise of local emerging world consumer giants, Consumer globalisation - western brands, retailers and service providers positioned for global growth, Post-patent cliff pharmaceuticals and personalised medicine, Japanese relation driven by a broad consensus on the need for change, Gold- a hedge against a self-reinforcing cycle competitive quantitative easing (QE) from the three large developed world currency blocs. The manager's outlook for markets notes that there is some complacency creeping back into markets in the face of data disappointments, particularly, in the Japanese and European periphery. However Platinum remains cautiously optimistic that a combination of a continued recovery in US investment spending and loosening global monetary policy will be sufficient to offset a moderate level of global fiscal tightening. |
| More Information | » View detailed profile of this fund |
BlackRock Australian Equity Market Neutral Fund
17 Apr 2013 - Australian Fund Monitors
The BlackRock Australian Equity Market Neutral Fund records a return of 1.29% during March and 7.69% for the twelve months to March 2013.
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17 Apr 2013 - BlackRock Australian Equity Market Neutral Fund
By: Australian Fund Monitors
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| Fund Overview | The Fund's portfolio primarily consists of long and short Australian equity positions. The Fund may also invest in other funds managed by BlackRock. Derivative securities, such as futures, forwards, swaps and options, can be used to manage risk and return Key insights into the investment process include: Analyst Expectations, Relative Valuation, Earnings Quality, Market Signals and Timing. Short-Term return enhancing opportunities including: Dividend reinvestment plans, Manging index changes, Managing cash flows and Arbitrage, Initial public offerings and Seasoned Equity Offerings and Off Market Buybacks. |
| Manager Comments | The S&P/ASX200 rose 6.8% (8.1% accumulation) over the March quarter, but finished March down -2.7%, the worst month for the market since May 2012. There was some profit taking across much of the industrials after a very strong quarter, with the Cypriot banking crisis renewing global nervousness about the fragility of the European financial system. March also saw continued weakness in the resources sector due to uncertainty over the Chinese growth outlook and fears that rising commodity supply over the next two years could drive much weaker commodity prices. Domestically the economy showed some muted signs of strength, with improvements in consumer confidence, housing market activity and labour data causing the RBA to pause its easing cycle. Domestic cyclicals, especially consumer discretionary stocks, continued to outperform in March on anticipation of a turnaround in consumer spending. The search for yield was another theme that continued into March, concentrated largely in banks (+16.4%). The February reporting season highlighted companies’ focus on cost cutting, with margin expansion driving significant stock specific earnings improvements. The portfolio was largely unaffected by the global macro themes this quarter, however the Fund was caught in the first half of January by the sharp rally in specific domestic cyclical sectors (building materials, diversified financials) on anticipation of a domestic recovery. Performance since then has been dominated by stock specifics. The contribution from industry and risk factors was positive, while security specific returns detracted value over the quarter. |
| More Information | » View detailed profile of this fund |
Optimal Australia Absolute Trust
16 Apr 2013 - Australian Fund Monitors
The Optimal Australia Absolute Trust had a flat return for March 2013 and a return of 1.37% for the year-ended March.
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16 Apr 2013 - Optimal Australia Absolute Trust
By: Australian Fund Monitors
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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 | Australian equities gave back part of their recent strong gains in March, and underperformed most other developed world equity markets. The Trust finished the month with a flat return. The manager comments that they had felt markets were due a pause, and maintained low net exposure for most of the month. Further they comment that investors need to be clearly aware that equity markets remain in thrall to central bank bond-buying and the consequent strangulation of interest rates. The impact of these policies on economic growth is unconvincing, but they have certainly served to distort liquidity flows and capital allocation on a grand scale. This has come as a boon to equity markets, which have re-rated earnings yields and dividend yields downwards in step with falling bond yields. But, in the absence of real growth, equity markets may be worshipping a false god. This environment is dangerous from the perspective of capital preservation, and increasingly so, because it requires wilful suspension of any risk consideration by equity investors other than “relative value” as measured against a highly artificial bond/cash yield construct. The manager has previously written at length about the unusually narrow breadth of market leadership in Australia, and the unusual concentration of returns in a handful of defensive/yield leaders. These trends continued through most of March, with Financials finishing the month flat, and Materials down another 10.5%. On a rolling year basis, Financials are up 29% and Materials are down 15%, while Consumer Staples are up 30%, Telcoms 37%, and Healthcare 43%. The manager comments that with an investment process grounded to a large extent in fundamental valuation, they are unable to buy grocery retailers at between 18-20x forward earnings, with low and declining earnings growth, with asset level ROIC that has already been rebased up sharply, and with the prospect of increasing competition and regulatory risk. Similarly, they could not regard dividend yield sourced from highly-leveraged financial equity featuring 70%+ payout ratios, astonishingly low credit loss provisions, and price-to-book multiples of 2-3x as a logical substitute for fixed income yield, even ignoring the apples/oranges duration mismatch. Yet it has been just those investments that have clearly paid, but, again, to an overwhelming extent, only due to the revaluation of yield. The performance gap between defensive industrials and resources stocks continues to confound the manager. This gap has reached levels unprecedented in Optimal's experience, at least for those time intervals when Chinese demand data points seem to be stabilising, and when the market has already worked itself into lather over well-advertised supply additions in the bulk commodity group. Major contributors to the Trust’s return for the month by industry sector included: Longs (-0.26% attribution) Positive: transport, media, gold, banks Negative: resources, energy, REITs. Shorts (0.29% attribution) Positive: REITs, staples, index futures Negative: gaming, diversified financials. |
| More Information | » View detailed profile of this fund |
