There is now sufficient July performance data in from fund managers to be able to make some meaningful comments regarding performance not only for July but also year-to-date and over the past 12 months.
The ASX 200 Accumulation Index rose 4.4% in July to take YTD performance to 7.57%, more than the first six months of the year put together. Against that, with 74% of results in to date, equity base funds rose 2.14% in July to take year-to-date returns to 4.44% which in the current environment is a reasonably significant underperformance.
Over 12 months the performance differential is not so stark, with equity based funds returning 13.82% against the ASX 200 Accumulation Index which has risen 16.54%. Before the disbelievers jump on these numbers as proof that absolute return and active managers fail to justify their fees, it's worth looking at the distribution of returns both within individual funds and between various strategies.
Taking individual funds first, in July the best performing fund across all strategies (Paragon) rose 12.5%, while the worst fell 8.8%. Year-to-date the best performing fund has returned 37%, and the worst -34%. Over 12 months the best performing fund has returned 101%, and the worst -24%.
While only 10% of funds in the AFM database outperformed the ASX 200 in July, that figure rises to 16% year-to-date and just over 30% over the past 12 months.
Returns by strategy are less diverse, with funds within the Equity 130/30 group averaging 3.57% in July, 10.22% year-to-date and 26.64% over the past 12 months to be the top performing strategy overall three periods. On the negative side Global Macro funds which have been struggling for some time on the back of government intervention fell 1.13% in July, while managed futures trailed the pack at -2.27% year-to-date, and currency funds the worst of the 12 months at -2.07%.
While Equity 130/30 has certainly been the standout there remains a significant spread of distribution between the underlying funds within the strategy, indicated by 12 month performances with the best up 50%, while even the poorest managed a pretty impressive 23%.
All this goes to prove what a diverse group of underlying assets, managers, funds, strategies and skills go to make up what some still choose to lump into an overall category of "alternatives".
Obviously research is an essential key to the puzzle, although as I heard at a presentation from a fund manager this week "you can't buy last years returns". However as we've seen in the media even the best research can come unstuck as shown by the problems with Van Eyk's Blueprint Funds, four of which have had redemptions frozen.
Hedge Clippings has to admit to not being across the details, why's and wherefores in this case, but they will no doubt emerge over time. However it does indicate that conflicts of interest in the financial services sector, whether tested or not, are not restricted to the well published retail advisory space. Rightly, or or probably wrongly, the whole sector suffers from potential conflicts at every turn,, and it will be interesting to see if the final report of David Murray's Financial System Inquiry will come up with a any solutions to the problem.
Personally we doubt it. The system is too entrenched, leaving it to a combination of regulation, and personal ethics to resolve the problem.
Specific results received this week include the following PERFORMANCE UPDATES:
The Forager Australian Shares Fund recorded an out-performance of the Index 2.30% (Fund 6.70%) during July and 13.73% for the previous 12 months.
Totus Alpha Fund returned 3.55% during July with an annual return of 37.86% and a volatility of 15.62%.
With a standard deviation of 8.64%, the Morphic Global Opportunities Fund returned 11.34% over the prior 12 months.
The Alpha Beta Asian Fund returned 1.02% during July and 10.61% for the previous 12 months with a volatility of 4.18%.
AFM are now accredited by the Financial Planning Association of Australia to issue CPD points for FUND REVIEWS.
This week's updated reviews include:
Microequities Deep Value Microcap Fund, Bennelong Kardinia Absolute Return Fund, Optimal Australia Absolute Trust and also Insync Global Titans Fund
Read the most recent Fund Review for any of our research clients, and then answer 5 straightforward questions, these are presented in multiple choice format. An 80% or more success score will provide 0.5 CPD points, with a certificate provided as proof of completion. There is no charge for this service.
Tuesday 26 August in Melbourne and also Tuesday 9 September in Brisbane , from 12pm to 4.30pm - ARRIA is hosting a further round table discussion, providing a valuable opportunity to meet with like-minded advisers. Free to Financial Advisors.
Wednesday 27 - Friday 29 August Money Management's Platforms and Wraps conference in the beautiful Hunter Valley, NSW. Covers the latest industry trends and innovation, while also exploring technology iniatives, client segmentation, data ownership, analytics, marketing and distribution, regulatory reform and consolidation. Pre-conference golf and wine tour of Hope Estate included. Special rate for fundmonitors.com members.
Tuesday 16 September in Sydney AIMA Australia's Hedge Fund Forum - and event by the Industry for the industry featuring quality Australian and international speakers.
If you would like your Event listed in our calendar, please contact us.
This week's Now For Something Completely Different is a gentle reminder that today is Daffodil Day. Every dollar raised goes into cancer research, something that touches us all.
Best wishes for a happy and healthy weekend,
On that note, have a good weekend.
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.
