Buy the rumour, Sell the fact - or in the case of the reaction to the FED's announcement of the start of the tapering process, Sell the rumour, Buy the fact has never seemed more accurate, even if it does turn out to be a one day rally. The taper news probably overshadowed the decision, or indication, that interest rates would stay close to zero for longer, but in any event US investors and the market should break for Christmas with a reasonably positive outlook heading into 2014.
Having enjoyed a solid 2013 I would expect they'll be reasonably pleased about the year just past, unless they were long resources, and gold in particular. Looking at the average returns of funds in AFM's database as an example, although only to the end of November, equity based funds are up 19.19% year to date, neck and neck with the ASX200 accumulation index which gained 19.18% over the same period. Non-equity funds have struggled meanwhile, rising only 4.06% YTD to the end of November.
Meanwhile on the regulatory front, Australia's new government probably hasn't had the best press since its election in September. Today's announcement by the Assistant Treasurer, Senator Sinodinis of significant amendments (aka watering down) of the Future of Financial Advice (FOFA) legislation is likely to receive mixed reactions. The proposed changes will undoubtedly reduce the cost and inconvenience to the industry created by the original FOFA, but various measures designed to protect, or inform investors and consumers would seem to have been significantly reduced in the process.
As a result the reaction will no doubt depend on which side of the desk you happen to be sitting. Or as former PM Paul Keating once famously quoted: "In the race of life, always back self-interest, at least you know it's trying."
This will be the last edition of "Hedge Clippings" for 2013 as we head to the sand and the surf to work off the excess intake that is likely to take place next week, past performance in this case being a very reliable guide to future consumption. We'll be back bigger (as usual) and hopefully better than ever, with some exciting developments in store for investors and fund managers alike.
In the meantime thank you for your readership and interest over the past year, and wishing you a wonderful Christmas, and a safe, healthy and prosperous New Year.
Specific results received this week include the following PERFORMANCE and NEWS UPDATES:
Optimal Australia Absolute Trust returned -0.52% during November bringing the twelve month performance to 1.61% and annualised returns since inception (Sept 2008) to 10.45% p.a. with a volatility of 3.62% p.a. The Fund's net risk exposure was 4.0% while gross exposure was 67.2%. Long investments returned -0.58% while short investments returned 0.04%.
The Aurora Fortitude Absolute Return Fund continues to deliver low risk returns recording 0.52% during November and 6.80% for the last 12 months with a volatility of 1.67%. The Fund has a Sharpe ratio of 2.33 and a maximum draw-down of 0.19% over the last twelve months as compared to the S&P/ASX 200 Accumulation Index draw-down of 6.72%.
Bennelong's Long Short Equity Fund returned -1.80% during November and 20.32% for the previous twelve months with a below market volatility of 9.36% p.a. (S&P/ASX 200 Accumulation Index 11.51%). The Fund's long-term performance remains strong with a since inception (Jan 2003) annual return of 20.82% as compared to the Index of 10.08% p.a. with a slightly below Index volatility. The Fund's maximum draw-down is notable at -12.22% as compared to the Index value of -47.19% as is the Fund's Sharpe ratio at 1.25 as compared to 0.43 (Index).
The Cor Capital Fund returned -0.90% during November, a weak month for equity markets which returned -1.31% (S&P/ASX 200 Accumulation Index). The Manager comments 'During November the Fund's cash holdings made the largest positive contribution to performance (+0.08%) with equities (-0.26%) and precious metals (-0.64%) making negative contributions to the overall return.'
FUND REVIEWS updated this week include:
Morphic's Global Opportunities 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 as Fund's philosophy is that only Managers with flexible investment and hedging strategies will be able to deliver acceptable, steady, real, absolute returns over the investment cycle.
12 February 2014: Investment Administration Conference - Efficiency in a Regulated World.
If you know of any upcoming hedge fund industry Events, or would like your Event listed in our calendar, please contact us.
We hope that you have a wonderful Christmas and if you are going away, a safe and happy holiday. Here are the AFM Christmas elves with a little bit of song and dance:
On that note, Merry Christmas and we will see you again in the new year!
Best wishes,
Chris
CEO, AUSTRALIAN FUND MONITORS
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Australian Fund Monitors are helping to raise awareness to support research into prevention and cure for cerebral palsy. For more information visit www.cpresearch.org.au or contact me by email.
