Markets powered ahead in July, with risk taking a back seat once more as the US economy continued its recovery, aided by QE and the absence of any powerful negative forces. Fears that QE might end seemed to dissipate, or maybe investors began to get used to the fact that it must do so sooner or later.
Fresh highs on the S&P500 make a stark contrast to the performance of the Australian market which has been dogged by China and the resources perception, and more recently lower rates, both of which have accelerated the decline of the $A as offshore investors repatriated funds. Along with this local investors are increasingly looking to diversify offshore, possibly too little too late, but the experts seem to think the trend will continue for a while yet.
Three pieces of news this week related to the funds management industry: ASIC released Phase 2 of their review of financial advice industry practice, specifically covering the 21st to 50th largest financial services licensees. The 20 largest practices were covered under Report 251.
The new Treasurer, the Hon Chris Bowen released an exposure draft & explanatory memorandum on the proposed final element (stage 3) of the Investment Management Regime, or IMR which resulted from the Johnson report into Australia's standing as a financial services centre, completed in 2009. It still sounds complicated to me, particularly when the objective was to encourage offshore investors into Australia's financial services industry, which incidentally accounts for over 10% of GDP.
Finally the Treasurer also announced a planned five year freeze on major changes to Superannuation (excepting those recently announced) if re-elected. Legislative certainty is essential for investors' confidence, so maybe the taxation of both local investors in superannuation, and offshore investors in Australian managed funds should both be formalised by whichever party wins the upcoming election.
Some specific results received this week include the following Performance and News Updates:
BlackRock Multi Opportunity Fund recorded a return of 0.10% during June 2013 and an annual return of 9.02%. The Fund is notable for its low risk attributes with a sixty month Sharpe ratio of 1.02, annualised standard deviation of 4.45% and Sortino Ratio of 1.24.
The Intelligent Investor Value Fund returned -0.69% over June and 36.89% over the financial year. The Fund has an annualised return of 11.3% pa since inception (31 October 2009), more than double the 5.1% pa return of the All Ordinaries Index.
Monash Absolute Investment Fund was up 5.6% after fees in July, bringing the 12 month return to 23.4%. The portfolio continued to more than keep up with the broader market this month despite action taken to protect returns by: trimming some holdings; increasing cash, and; adding to the short positions.
Fund Reviews updated this week include:
Morphic Global Opportunities Fund is an early stage, boutique, Sydney-based fund established in 2012 with experienced CIO's, and an investment team of 6 including a risk manager. The Board has a majority of independent members with significant risk and investment experience. The Fund is a global equity long/short manager with a long bias and a macro-economic overlay. The mandate allows the Fund to short sell, use derivatives and invest in assets such as commodities & currencies. Portfolio construction is stock selection agnostic with a bias to value based and momentum strategies. Risk management is a primary consideration in portfolio construction. Morphic's philosophy is that only funds with flexible hedging strategies will be able to deliver acceptable, steady, real, absolute returns over the investment cycle.
The Aurora Fortitude Absolute Return Fund has an eight year track record and has consistently applied a low risk market neutral strategy focusing on ASX listed equities designed to provide investors with returns of 5% to 10% over cash, with low volatility and minimum drawdowns during varying market conditions. The overall strategy is Market Neutral, but the Manager uses five broad sub strategies with uncorrelated returns to build diversification into the portfolio. Over 87% of monthly performances have been positive, with no losing months in 2008 and a largest drawdown of -2.09%.
BlackRock Australian Equity Market Neutral Fund is managed by a 12 person Sydney based investment team following a systematic global research process investing in ASX listed stocks. The Fund's portfolio generally consists of approx. 180 stocks in equally weighted long and short portfolios to maximise potential returns while minimising market volatility. Blackrock's scientific approach is based on their philosophy that by blending highly qualified investment professionals (people skills) with the information, processing power and data collection capacity of powerful computer systems (quantitative) the result will be faster and better investment decisions and therefore outcomes.
For something completely different - getting it wrong: I'm sure we have all done this at some stage!
And for those not familiar with the dubious joys of NSW politics, this week saw the release of ICAC's findings and recommendations for the prosecution of former state Labour ministers Eddie "he who must be obeyed" Obeid, and Ian "Sir Lunchalot" Macdonald.
Not to be outdone, the current State Premier, liberal Barry O'Farrell gave his Finance Minister Greg Pearce his marching orders, admittedly for relatively insignificant misdemeanors. We have to take our hat off therefore to the editor of the Daily Telegraph for today's photo and accompanying headline.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
