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| Fund Overview | - The Fund is managed 'opportunistically'. Investments are made throughout Australia and New Zealand across sectors that the investment team believes will add greatest value. - Typically the Fund will hold between 50 and 70 listed equities. - If deemed appropriate, the Fund may be 100% invested in cash. - To implement the Fund's Long/Short investment strategy, K2 is able to use leverage or gear the Fund. However, the net invested position of the Fund shall not exceed the Net Asset Value (NAV) of the Fund. |
| Manager Comments | The manager notes that the All Ordinaries Accumulation Index pushed higher for the 9th consecutive month, gaining +5.18%. Domestically, the RBA left cash rates unchanged at 3.00% and noted that the current outlook for inflation “would afford scope to ease policy further, should that be necessary to support demand.” While the RBA acknowledged domestic activity will fall well short of their expectations, positive global developments in recent months has caused a ‘wait and see approach’ from the Board. Consequently expectations for further rate cuts have been pushed out. For six consecutive months the manager has maintained net exposure over 90%. Now that the All Ordinaries Accumulation Index is within 5% of its all-time high the question is “…is it time to prune back exposure?”. Given that the current strength in the Australian equity market has been delivered without any meaningful earning momentum there is a need to assess whether profits are at a cyclical low and about to commence an upward trend. The manager's view is that the economy will now surprise on the upside and hence we have seen the low point in the profit cycle. In addition, revenue growth will outstrip cost growth and DPS growth will outstrip EPS growth. It is this growing dividend income stream that will lure retail investors out of term deposits. Overlaying this is the fact that the average term deposit for less than 6 months is now below 3.30% whereas the average yield of the top 20 listed stocks is over 4%, and therefore it is likely that equities will re-emerge in most retail investment portfolio’s this year. The portfolio had it's largest contributions from Bank of Queensland Ltd, ANZ Banking, Flight Centre and National Australia Bank with the smallest contributions from Aurizon Holdings, BHP Billiton, Miclyn Express Offshore and Panaust. Largest holdings were National Australia Bank at 8.6%, BHP Billiton 8.4%, RIO Tinto 6.3%, Flight Centre 6.1% and ANZ Banking 5.7%. The fund was 97% invested at month-end. |
| More Information | » View detailed profile of this fund |
