Recent market volatility, which saw the ASX200 fall in March, May and June gave way to a much improved month in July, with the ASX200 Accumulation Index rising 5.2% to take 12 month performance to 23.75%. Equity based hedge funds have on average only marginally underperformed, with average returns for July of +4.24%, and 12 months of 20.61%.
Based on the 39% of funds reported for July, returns to date 35% outperformed the ASX200, with that figure falling to 23% over the past 12 months. The best performing strategy for July was Equity 130/30 at 6.34% taking 12 month performance to +27%.
That the bulls are out in force in a market which has risen over 20% is positive news, although significant further gains seem to be at odds with some current fundamentals. The past week has seen the RBA cash rate fall to 2.50% on the back of a weaker overall economy, business confidence has reached a four year low, and unemployment a four year high.
Add to that an election campaign where the outcome is not the forgone conclusion that it was a month or two ago, and a revised budget deficit of $30 billion, up from the previous estimate of $18 billion which was only provided 10 weeks ago. Given both sides of politics will no doubt be wanting to tempt voters with further welfare generosity and/or tax concessions over the next four weeks of the campaign, it would seem that whichever party wins the election will have to deal with further increases in the deficit.
Some specific results received this week include the following Performance and News Updates:
Allard Investment Fund returned 0.2% during June and 17.65% for the 12 months to June 2013. Returns since inception (July 2003) are 9.02% annualised.
The AUI Wingate Global Equity Fund returned 3.69% during June bringing the financial year performance for FY 13 to 29.79%. On a monthly basis for the past 12 months, the portfolio captured 91% of the market's gain when the market was positive but only 54% when the market was negative.
Bennelong Kardinia Absolute Return Fund returned 1.31% during July bringing it's twelve month return to 15.20%. The since inception (May 2006) return is 14.13% pa.
The Morphic Global Opportunities Fund returned 7.71% during July and 41.16% over the previous twelve months. The Fund is fully invested and overweight in the US and Japan, although the latter overweight has been reduced. The Fund remains un-hedged into Australian dollars and has slowly increased its short position in the currency versus the US dollar and the Euro.
Bennelong Long Short Equity Fund returned 3.52% during July. Fund performance was solid with the long portfolio comfortably outperforming the negative impact from the short portfolio. At the sector level, the best positions were in Consumer Discretionary, Energy and Materials which were all strong but partially offset by negative returns in Industrials and Financials.
For something completely different - Oh What a Feeling?
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
