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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/ASX 200 rose 4.5% (4.5% accumulation) in April to reach its highest level since June 2008. This was largely driven by the seemingly insatiable appetite for yield, with high yield stocks outperforming and Australian Government bonds rallying strongly. Resources, however, slumped further amidst weaker than expected US and Chinese economic data and softer commodity prices. Domestically, the under-performance of resource stocks was most notable amongst gold stocks following the spectacular fall in the gold price. Small capitalisation miners with higher leverage to commodity prices were also hit particularly hard, and a number of mining service companies issued profit warnings. The search for yield was well evidenced by the remarkable turnaround (+9.7%) of WPL on the day it announced it will pay a special dividend and raise its dividend payout ratio. The portfolio benefited from the resource under-performance due to a tilt toward producers versus explorers, with significant contribution coming from short positions in Kingsgate Consolidated, Newcrest Mining and Oz Minerals, amongst others. The yield theme also proved profitable via our exposure to property trusts and telecoms. Elsewhere, the portfolio also had positive contributions from stock selection in domestic cyclicals, such as Flight Centre, Trade Me, Super Retail and Qantas. Losing stocks generally came from the same sectors, with long positions in Resolute Mining and St Barbara amongst the largest detractors. |
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