We recently reviewed an article in The Economist which provided an excellent summary of the challenges of establishing a hedge fund in the current environment, even if the article's title, "Launch Bad" left a little to desired, assuming it wasn't a simple typo. Actually the first sentence was somewhat off the mark also, claiming that when starting a hedge fund "bar inheritance or winning the lottery, there are few swifter paths to immense riches".
However, back to the excellent article which (excluding the title and the first sentence) does paint an accurate picture of the challenges facing not only any aspiring fund manager, but the vast majority of the existing funds as well.
Although the Economist's focus was naturally on the challenges in the US and Europe there are many parallels in Australia for aspiring managers, with increased due diligence, a focus on fees, and regulations all featuring to a greater or lesser degree. What is interesting to us is that there have been a number of start up funds in the past 12-18 months, with the trend being towards better levels of strategic thought, business process, and risk management than in the past.
As a result the investors who back early stage managers continue to do so partly because research shows that while not without some risks, early stage, smaller or boutique fund managers provide significantly better returns, better transparency and more personal investor relations. Read the balance of our review here.
Performance and News Updates on www.fundmonitors.com this week:
Magellan Global Fund was up 1.92% in March 2013 taking its 12 month performance to 19.78% as compared to an index (MSCI World Net) return of 11.1%. All stocks in the portfolio produced positive local currency returns and the portfolio was fully invested.
Auscap Long Short Australian Equities Fund had a strong return of 1.46% over March with an average next exposure of 116.5%. Performance benefited from exposure to property trusts, healthcare and materials sectors and avoiding the mining sector
Allard Investment Fund fell 2.1% over March impacted by the $A and generally weaker Asian markets. Twelve month performance was 6.72% and since inception performance 8.47% net compound annual return. Notable is the Funds low volatility at around two-thirds of the MSCI Asia Pacific ex Japan Index.
Monash Absolute Investment Fund returned a solid 2% over March bringing its six month return to 17.17%, achieved with an average net exposure of 62%. The portfolio avoided defensives, Telstra, consumer staples and utilities.
Continuing our successful Meet the Manager presentation series on Thursday 16 May, AFM is holding a city lunch time briefing featuring Jack Lowenstein from Morphic Asset Management. Contact us to reserve your seat.
As a tribute to yesterdays ANZAC Day, we would like to show this short clip of The Last Post from the Sydney Symphony.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
