24 Oct 2014 - Hedge Clippings

In what was an interesting week, hedge clippings met with Steve Hall from Brookvine, a Sydney-based group who specialise in the distribution of alternative and private equity type funds to family offices (FO's) and high net worth (HNW) investors. Steve was good enough to provide some insights gleaned from a recent discussion that he organised with a group of experienced Chief Investment Officers and advisers to high net worth and family offices in Australia.

While not all recipients of hedge clippings necessarily fall into this category, much of what was discussed, and the resulting report that Brookvine produced has significant relevance to self-directed investors. One of the major aspects of the discussion was the objective of encouraging fresh investment thinking, particularly with a view that much of what is known and used in Australia depends on the theory, data, practice, experience and characteristics of large institutional US investors.

It was therefore relevant to question whether this US influence is necessarily relevant in an Australian environment. Whilst much of it is, and there is much to learn from the US, it seems there are specific requirements of HNW/FO's in Australia that are relevant in a local context. In particular the question was asked what investment advantages do Australian HNW/FO's have over larger institutions, whether it be here or offshore. Amongst other things:

1. Overall it appeared there was a broad endorsement for alternative investments, with most participants favouring active management supported by a strong belief in their ability to identify and access top tier managers;
2. Equally the group whilst being very cost conscious, focussed more on net of fees returns, rather than a blind (could we call it an obsessive) opinion approach by some local institutions that fees were more important than performance;
3. When it came to risk, the loss of capital dominated the opinions of local investors, broadly in line with the approach of most local managers.

Brookvine have kindly allowed us to upload the full report, entitled "Whiteboarding 1.0 ... The Report", which can be found here.

Specific results received this last fortnight include the following PERFORMANCE UPDATES:

Alpha Beta Asian Fund returned -0.70% during September, a difficult month in which global equities fell 2.9%, with an annual return of 7.07% and a volatility of 3.99%.

The Paragon Fund returned 0.30% in September as compared to the ASX 200 Acc Index which fell 5.38% and the twelve month return was 33.18% (Index 5.93%).

Auscap Long Short Australian Equities Fund delivered -2.09% in weak month for equities, 34.01% for the year with volatility of 7.61%.

The Totus Alpha Fund returned 1.02% bringing the annual performance to 30.85%.

Nanuk Global Alpha Fund returned -1.69% in September, with the Fund's twelve month return at 8.86%.

The Aurora Fortitude Absolute Return Fund returned -0.07% with a volatility of 0.98%.

CPD points are available for all FUND REVIEWS released this week including:

Monash Absolute Return Fund; Bennelong Kardinia Absolute Return Fund; Morphic Global Opportunities Fund; Supervised High Yield Fund

UPCOMING EVENTS:

5-6 November, Grace Hotel, Sydney. Alternative Investments Conference - Investigating the rise of non-traditional high yield and low risk investment products, strategies and allocation in an era of prolonged volatility and low returns.

Thursday 13 November in Sydney Best Cellars Night of Global Investment Themes. Presented by Insync Funds Management, enjoy an evening presentation on some of the powerful global investment themes that will help to build your wealth offshore, together with a tasting of some truly interesting wines from all corners of the world.

This week's Now For Something Completely Different... I'm sure many of you have seen this clip before, it's a feel good moment. All the best to Nick and his beautiful bride Courtney this weekend, and forevermore.

Best wishes for a happy and healthy weekend,

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.