Hey! Big spenders.
Thankfully we only have one more week (well eight days if you want to be pedantic) of this election campaign to endure. I have to say it's been pretty colourless given the leadership events of the past three years. Even (or maybe particularly) the leadership debates between PM Rudd and PM in waiting Abbott have been tedious, save perhaps for one brief "won't this guy ever shut up" moment.
Most people think the outcome's a foregone conclusion, and today's AFR reported that one bookie has already paid out on a bet that the coalition will win. I'm presuming that no-one, not even the man himself, backed Clive Palmer to win his seat, but who knows, stranger things have happened.
What is a certainty is that there'll be a big black budget hole whoever wins, and at the risk of carrying on where we left off last week, sooner or later governments either need to spend less, or increase income (aka tax), to prevent it becoming larger.
Expenditure on health, education and welfare runs at around 60% of federal government's total payments. This has remained reasonably constant since 2007/8, and is forecast to remain so out to 2017. However, in dollar terms these three areas have increased by 38% since 2008, and are forecast to increase by a further 20% by 2017.
That's a compound increase of 66% in ten years, assuming the forecasts are correct, which I doubt.
The difficulty the politicians face, and indirectly the country faces, is that outlining the inevitable solution as part of an election manifesto is likely to see you spend the next three years in opposition, and probably the three beyond that as well.
Anyway, roll on next week's election. After that I promise not to mention it again. By the way, that's likely to be as good as a politician's promise.
In other news, the AIMA Hedge Fund Forum will be held on Tuesday 10th September at Hilton Hotel, Sydney. For further details visit AIMA Australia's website or register here.
Some specific results received this week include the following Performance and News Updates
Pengana Asia Special Events (Onshore) Fund returned 1.09% over July 2013 and 11.35% for the previous 12 months with the Fund maintaining average net and gross exposure of 11% and 179% respectively over the month. Capital Management trades contributed over half of the Fund's absolute performance during July and in terms of country positions Japan and Hong Kong / China proved the most fruitful, while Australian positions detracted slightly.
The Auscap Long Short Australian Equities Fund had a strong July returning 4.70% with an average net exposure of 53.1%. Average gross capital employed by the Fund was 107.1% long and 54.0% short. The Fund's performance since inception is now 25.35%.
BlackRock's Multi Opportunity Fund returned 0.40% for July and 7.18% for the last 12 months and notably this was achieved with a remarkably low risk profile and very strong risk-adjusted statistics. The annualised volatility is 1.59% vs 10.99% for the ASX 200 Accumulation Index over the last 12 months and a Sharpe Ratio of 2.50 as compared to 1.74 for the Index over the same time frame.
Updated AFM Fund Reviews were also completed on the following funds this week:
The Insync Global Titans Fund invests in a concentrated portfolio of 15-25 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection with portfolio selection driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets... more..
BlackRock's 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... more..
The Aurora Fortitude Absolute Return Fund has an 8 year track record investing in ASX listed equities with a strong focus on risk. The Market Neutral overlay is used across a multi strategy approach which allows for flexible asset allocation to maximise returns and minimise risk under a variety of market conditions and cycles. Strong use of low risk "long" derivatives and option overlays has provided positive returns with low volatility during periods of market dislocation. The success of this strategy is shown by the fact that over 87% of monthly performances have been positive and most notably the Fund did not record any negative months in 2008, with the largest drawdown since inception in March 2005 of -2.09%.
For something completely different - following on last week from the photo of a nesting Falcon, we feature this clip featuring a different type of Falcon.
On that note, I hope you have a happy and healthy weekend!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
