The overnight rally on Wall Street, and the follow on today from the ASX200 would indicate that the "market" is confident that the political stalemate in the US is going to be resolved without, or before, the US defaults on its debt at the end of next week.
While most people would desire that to be the outcome, it would seem to stem more from hope than certainty. The two sides appear to be coming from the opposite ends of the spectrum, and there seems little goodwill between them. If anything, toes have been dug in on both sides, and talk of a six week debt extension to the ceiling wouldn't seem to justify the market's overnight rally.
Maybe the confirmation of Janet Yellen's appointment had something to do with it, but following Larry Summers's previous withdrawal that was a forgone conclusion anyway. Yellen's more likely to extend QE than start any early move to taper, but that would still not justify the extent of the Dow's overnight movement.
Meanwhile at home there seems to be improved confidence at the big end of town that is yet to filter down to small business and consumers. As yet there's no clarity on where earnings improvements are going to come from to replace the mining capex and investment boom, and no clarity on how the government will manage its minority in the Senate. What does seem clear is that the Palmer United Party, now with an effective four senators from next July, will have significant influence on any outcomes.
Equally clear is that Palmer himself will certainly liven things up. Hopefully both he and his senators will be more constructive and flexible than the members of the Tea Party within the Republicans in the US.
Specific results received this week include the following PERFORMANCE and NEWS UPDATES:
The Insync Global Titans Fund has just completed it's fourth year with a return of 9.26% (ASX 200 Accumulation 7.03%) and annualised volatility of 8.34% (index 12.35%) since inception.
Bennelong Kardinia Absolute Return Fund returned 0.93% for September bringing it's since inception (May 2006) return to 14.08% pa as compared to the ASX 200 Accumulation return of 4.44% pa. The Fund's annualised volatility is 7.85% which is low compared to the Index?s volatility of 14.79%, over the same time frame.
Updated FUND REVIEWS this week included the following Fund Managers:
The AFM Prism Active Equity Fund comprises a portfolio of 5 to 10 underlying Australian absolute return managers each investing in ASX listed equities with the objective of achieving double-digit annualised returns with significantly lower volatility than the underlying equity markets, and a focus on capital protection. To date the Fund has delivered 5.59% and, in keeping with the low volatility mandate, has an annualised standard deviation of 2.48% (since inception in October 2012). The Fund's maximum drawdown is 1.42% as compared to 6.72% for the ASX 200 Acc Index.
Bennelong Long Short Equity Fund is a research driven, market and sector neutral, "pairs" trading strategy investing primarily in large cap stocks from the ASX/S&P100 Index, with a ten year track record and annualised net returns of over 20%. The Fund has had positive annual returns each year, including an 11.95% return in 2008 and 20.6% in 2011, both of which were negative years for the ASX200. The Fund's risk statistics are also sound with maximum drawdown of 12.22% and 71% positive months. Both the Sharpe Ratio at 1.27 and the Sortino ratio at 2.21, indicate a high reward-to-risk ratio.
The BlackRock Australian Equity Market Neutral Fund portfolio consists of approx. 180 stocks in equally weighted long and short portfolios to maximise potential returns while minimising market volatility. The strategy has recorded a return of 12.14% since inception (Sept 2001) as compared to the ASX 200 Accumulation Index return of 8.37% and with a volatility less than one-half that of the Index at 5.7% pa as compared to 13.23% pa. The Fund has also recorded a maximum drawdown of 12.41% as compared to 47.19% for the Index and has had 78% positive months since inception.
An upcoming event that may be of interest for Superannuation member administration and investment operation service providers is the Superannuation Fund Back Office conference coming up on 21-22 October. Visit the International Business Review Conferences website for more details.
If you are visiting Hong Kong, the UCITS Asia 2013 Conference is on 9-10 October. AFM have a 10% discount coupon available, more details here.
The Asset Allocation Conference is also coming up from 30th October to 1 November 2013 at the Grace Hotel in Sydney. Details are here.
Back in Hong Kong, the 26th Annual AVCJ Private Equity and Venture Form is at the Four Seasons Hotel from 12-14 November 2013.
IPARM Australia 2013 is being held in Sydney on 18-19 November on Investment Performance Measurement Attribution and Risk. Speakers include Dr Thomas Gillespie from Aurora Funds Management.
Also on 19 November, is the Art of Asset Management industry event for the asset management community, being held in Hong Kong, more here.
On that note, enjoy the week-end!
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
