One month into 2014, and one day into the Chinese Year of the Horse, and volatility is back with a vengeance. Not being an expert in such things as lunar cycles, and not believing too much in tea leaves or horoscopes to determine our futures I won't try to draw any conclusions between the two. What is clearly apparent is that markets and investors knew US tapering would have to start eventually, and with the first round occurring in December the next one would be sooner rather than later.
One old market adage is that they (markets) don't repeat themselves, but they do tend to rhyme. When readily foreseen or well telegraphed events finally occur, how come the markets react after, rather than leading up to the tipping point? A primary cause of this must be the psychology of many participants not changing over the decades, or down the centuries. For all the advanced technology available to investors, or maybe in part because of it, markets continue to rhyme.
So volatility has spiked, with emerging markets and currencies being particularly hard hit. No reasonable investor should be surprised given a number of well-known managers and market commentators have been saying for the last few months that the 20% returns from the ASX for each of the past two years would be a hard act to follow in 2014.
Risk will becoming a driving force once more, and with some exceptions, absolute return and hedge fund managers will once again prove their worth as being more adept at avoiding unpleasant surprises. For the record the average equity based fund in AFM's database has matched or bettered the annualised performance of the ASX200 accumulation index over the past one (20%), five (12.5%) and 10 years (9.6%) but with half or less the market's volatility.
The challenge, as always is knowing which are the exceptions, and which are exceptional.
Specific results received this week include the following PERFORMANCE and NEWS UPDATES:
Auscap's Long Short Australian Equities Fund delivered 2.57% during December and, taking full advantage of buoyant equity markets, returned 51.86% for the year.
The Pengana Australian Equities Market Neutral Fund returned 3.6% during December and 19.11% for the year to December 2013, a sound performance given it's correlation of -0.03 and neutral market exposure.
Allard's Investment Fund had a flat December and returned 11.64% for the previous twelve months with a low standard deviation of 6.99%, in line with its conservative investment philosophy.
FUND REVIEWS RELEASED THIS WEEK:
AFM's updated Fund Review for Insync Global Titans Fund for December 2013 shows the Fund delivering an annualised return of 11.41% and annualised standard deviation of 8.50% (since inception in October 2009) with sound risk-reward statistics.
Bennelong's 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%.
Last days to register for the HFA Sydney Institutional Investor Roundtable on 5 February 2014: This event is a roundtable discussion with refreshments provided. It is the second of the HFSB 2014 series of global institutional investor roundtables where investors and managers present practical case studies on topical issues. Held at the KPMG offices in Sydney, this is a FREE event, all welcome.
12 February 2014: Investment Administration Conference - Efficiency in a Regulated World. Doltone House, Hyde Park, Sydney.
27-29 March 2014: Superannuation Fund Back Office: 2014 Forum in Sydney convenes those responsible for superannuation member administration and investment operation services. It has been designed to explore emerging efficiencies and best practice in a number of key areas.
If you know of any upcoming hedge fund industry Events, or would like your Event listed in our calendar, please contact us.
And now for something completely different to celebrate the Super Bowl this weekend, here is one of the cute commercials newly released for the occasion, and another that's just plain funny (and gross).
On that note, I hope you have a happy and safe weekend and Happy Chinese New Year (Kung Hei Fat Choi) as we move forward into the year of the Horse.
Best wishes,
Chris
CEO, AUSTRALIAN FUND MONITORS
Connect with me on LinkedIn Twitter Facebook
| Registration to AFM is free and provides information and performance data on Absolute Return, Hedge Funds and Alternative Investments, plus detailed infomation on Featured Funds. | Fund Managers and paid Subscribers also have access to details on Individual Managers and Funds, with historical results, key performance indicators, latest news and performance reports. | Tune into Sky Business on Foxtel every week on Monday at 2:20pm for AFM's weekly comment on Hedge Funds. |
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.
