Averages can be dangerous, or misleading, and frequently both. Take the average 12 month performance of absolute return and hedge funds in AFM's database compared with the ASX200 accumulation index.
Firstly it's not always logical or correct to compare the performance of a fund investing in commodity futures or currencies with an equity index such as the ASX200. Secondly the range of performances, and the underlying range of strategies differ so widely that averages, or conclusions are frequently meaningless. As of course is the performance range of ASX200 companies where the performance of top and bottom stocks varied from +381% to -90.3%
In simple terms the ASX200 Accumulation index has returned 22.67% in the 12 months to June, compared with an average return of 12% for all funds in AFM's database. Drilling down by strategy shows a wide divergence, with the average Equity 130/30 fund returning 23.71%, closely followed by Equity Long funds at 21.10%. At the other end of the scale Commodity funds and CTA's lost an average of -5.19%, and Currency funds averaged a loss of -4.29%.
Unfortunately (or fortunately as the case may be) the performance divergence doesn't end there. In the 12 months to June the best performing fund returned 65.9%, and the worst -59.9%. Performance spreads within strategies are equally diversified, with the best Long Only funds (investing in industrials) returning over 34% while the worst (which invested in gold) fell 45%.
What's the point of all this? Smart investors need to look beyond the headlines and drill down to the details, as they do when considering the detailed analytics of each fund's performance and risk profile.
Some specific results received this week include the following Performance and News Updates:
The Pengana Australian Equities Market Neutral Fund rose 5.00% during June bringing its since inception (September 2008) return to 9.22% pa as compared to the Fund's equity benchmark return of 3.2% pa.
Aurora Fortitude Absolute Return Fund returned 0.46% during June for a full year return of 5.70%. The Fund's risk profile is notable with an annualised standard deviation of 2.81% pa compared to the benchmark S&P/ASX 200 Acc with 14.42% pa.
The Pengana Asia Special Events (Onshore) Fund returned -0.92% during June bringing its 12 month return to 10.65%, outperforming both the RBA Cash Rate and the HFR Event Driven Index.
BlackRock Australian Equity Market Neutral Fund reported 1.15% during June with it's since inception (August 2001) return now 12.14% pa.
Fund Reviews updated this week include:
Insync Global Titans Fund is a concentrated, long only equities strategy investing in 15 to 25 large cap ($2 billion and above) global companies. Current average market cap of stocks in the portfolio is USD89bn. These are selected for their ability to consistently increase shareholder value based on return on invested capital (ROIC), and a strong track record of expanding dividends.
And finally, for something completely different - a story on inspiration and self worth.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
