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| Fund Overview | The core investment strategy of the Fund consists of the active selection of a series of paired long/short investments in Australian listed equities based upon the Investment Manager's fundamental research. The strategy seeks to capture stock Alpha whilst limiting portfolio exposure to market risk by adopting a dollar neutral portfolio market exposure position with the tactical capability to take net exposure of up to +/- 20% of gross assets. Stock selection is based on fundamental analysis to derive a view of a pair of individual stocks. The Investment Manager is style neutral in determining the stock's positioning. This primary 'pairs' strategy may be enhanced by other complementary strategies, including event driven, security and takeover arbitrage, thematic and momentum trading. The paired stock positions comprise long and short correlated securities that are in most cases simultaneously opened. A portfolio of approximately 30-100 stocks will be selected and actively managed in 15-50 pairs to comprise the core minimum (60%) of the Gross Asset Value. Up to a maximum of 40% of the portfolio's Gross Asset Value may be invested in uncorrelated securities and/or uncovered (long and/or short) positions. These 'satellite' positions are intended to enhance returns and to balance overall portfolio risk. In this regard, the Investment Manager recognises that it is not always possible to achieve a suitable paired proļ¬le within the S&P/ASX 200, and that a high conviction long or short stock idea might not always have a suitable pair. |
| Manager Comments | Fund performance was solid in a stronger month for the market. The bulk of the return was derived from the long book, notwithstanding the short book made a small positive contribution which was pleasing in a rising market. A broad range of pairs made a strong contribution to the return, while only one of the negative pairs was significant. Austal / Downer was our largest contributor with both sides making a positive contribution. Downer was weighed down by the sombre mood in the mining industry. Our poorest pair was Altium / UXC, SMS Management, caused by a weak half year sales announcement by Altium. The result was sufficiently different to our forecasts for us to cut the position. We are assessing a new pairing with UXC, SMS. |
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