Skating on thin ice:
My old friend Patto was the master of market sayings which became known to those who followed him as "Pattoisms". One of his favourites was "when skating on thin ice, the speed at which one has to skate is directly proportional to the thickness of the ice."
Markets have seemed a bit like that this week. In the US the ice appears to be very thin every time Ben Bernanke goes off cue and suggests that QE might end at some stage. The ice in China appears thin whenever the numbers indicate growth might slow below 7%. And in Australia it seems that without the mining and resources sector, we are skating on thin ice as significant parts of the rest of the economy (manufacturing, retail) are struggling.
Over the past couple of weeks the ice actually cracked under those companies whose earnings are reliant on the mining sector. In the last couple of days it seems that even the yield driven rotation into the banks might also be on thin ice.
April Fund Performance:
Close to 90% of single funds have now reported April results as follows:
| Strategy | April | 12 months |
| All funds | +1.61% | +9.28% |
| Equity based funds | +2.01% | +11.69% |
| Non equity based funds | +0.56% | +3.47% |
| ASX200 Accumulation | +4.54% | +23.58% |
| % of funds outperforming ASX200 | 15.28% | 18.8% |
| Range of fund performances | -21% to +22% | -57% to +58% |
From a Strategy perspective the best performances are:
| April | % | 12 months | % | |
| 1 | Equity Income | +4.5% | Equity Income | +20.59% |
| 2 | Equity 130/30 | +3.35% | Equity 130/30 | +18.08% |
| 3 | Managed Futures | +2.15% | Equity Buy/Write | +14.17% |
Performance and News Updates on www.fundmonitors.com this week:
The BlackRock Australian Equity Market Neutral Fund had a sound April returning 2.18%, bringing its 12 month return to 8.71%. The portfolio benefitted 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.
Pengana Australian Equities Market Neutral Fund delivered -0.9% for April and has an annualised return of 8.82% since inception in September 2008. Two of the largest long positions in April were BC Iron and Skilled Group, while two of the largest short positions were Macquarie Atlas Roads Group and AWE.
The 8IP Asia Pacific Partners Fund delivered -1.17% during April bringing its six month performance to 21.57%. After five months of strong gains, a number of stocks in the Fund ran into profit taking. Largest sector exposures were financials, real estate and consumer discretionary.
Allard Investment Fund recorded 0.80% over April with it's since inception (July 2003) performance at 8.49% pa. At end-April the asset breakdown was 68.6% equities and 31.4% cash and fixed income. The geographic breakdown was HK/China 32.1%, Sing 12.4% and Korea 9.3% with other countries at lower percentages.
The Pengana Asia Special Events (Onshore) Fund returned 1.31% during April and had a twelve month return of 8.23%. The Fund maintained an average net and gross exposure of 16% and 164% respectively. Largest month end net exposures were China, Japan and Indonesia and biggest gross exposure by strategy was Merger and Acquisitions. April was very eventful led by a significant pick up in M&A activity and the earnings seasons in some markets. Japan was the most active M&A market in Asia, accounting for 6 of the 14 new deals during the month.
And finally, for something completely different, the latest Evian commerical, also featured on Alan Kohler's Eureka report (if you are not a subscriber, I recommend it) last week.
On that note, I hope you have a happy and healthy weekend!
