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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's view is that the low point in the Australian earning cycle has now been past. Even during April analysts reduced forward estimates for just 6% of Australian top 100 companies; the lowest level in 20 years. This is an encouraging trend and the manager expects that this will continue throughout the year and that cost out programs will be the dominant earnings driver for at least the next 6 months. The manager was surprised that 40% of Australia’s leading stocks fell on average by 6% during April. Accordingly, excess performance was all about what you didn’t own. Given that the manager had anticipated declining inflation and subsequently lower interest rates, they had tilted the portfolio towards industrial stocks that exhibit appreciating dividend streams. The manager was particularly pleased when the Fund's largest holding, ANZ Bank, announced in its 1H’13 profit release that it would be lifting its dividend pay-out ratio from 60% to about 70%. As a result, ANZ’s interim dividend per share for 2013 was 10.6% ahead of last year. As always, “sell in May and go away” echoes through financial markets. However, the Fund's equity exposure will only change near term if some of the important lead indicators that are due to be released within the next 2 weeks turn unfavourable. Specifically, prior to the RBA interest rate decision on 7th of May, the manager expects ANZ job advertisements to remain weak, retail sales to remain below trend and trade data to be relatively weak. Hence the RBA could justify cutting the official cash rate by 25 bpts. |
| More Information | » View detailed profile of this fund |
