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| Fund Overview | Whilst the Fund's primary strategy is focused on long/short equities, the ability to retain discretionary powers to allocate across a number of other investment strategies is reserved. These strategies may include, but not be limited to: convertible bond investments, portfolio hedging, equity related arbitrage, special situations (e.g. merger arbitrage, rights offerings, participation in international public offerings and placements, etc.). The Fund's geographic focus is Asia excluding Japan, but including Australia). The Fund may invest outside of this region to the extent that: 1. The investment decision is driven from the Asian region or; 2. The exposure is intended to mitigate risk or enhance return from factors external to the Asian region. |
| Manager Comments | There is an old stock market adage of "sell in May and go away". Academic studies have found that there is some degree of seasonality over this period but this is skewed by some extreme movements such as the collapse of LTCM in 1998 and the October 1987 stock market crash. This May, equity markets were generally higher with the MSCI world index +1.6%, the US Markets were a notable outperformer with the S&P500 +2.1% and the NASDAQ composite +3.1%. One notable weak area was the price of Iron Ore which continued to fall in May as it has for the year so far. This is obviously detrimental to Australia as Iron Ore represents circa 20% of Australia's exports. This may lend itself to a softening bias from the RBA, especially if the Australian budget leads to slower growth as well. Anecdotally we have recently noticed that Australian assets, such as the Australian dollar itself and Australian equity index futures, seem to 'catch a bid' during US market hours but this fades in Australian market hours. This would seem to indicate a more positive external view of Australia. That is also seen in the M&A events announced this month with more than 80% of the buying coming from offshore entities. |
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