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| Fund Overview | In a typical environment the Fund will hold around 70 stocks comprising 35 pairs. Each pair contains one long and one short position each of which will have been thoroughly researched and are selected from the same market sector. Whilst in an ideal environment each stock's position will make a positive return, it is the relative performance of the pair that is important. As a result the Fund can make positive returns when each stock moves in the same direction provided the long position outperforms the short one in relative terms. However, if neither side of the trade is profitable, strict controls are required to ensure losses are limited. The Fund uses no derivatives and has no currency exposure. The Fund has no hard stop loss limits, instead relying on the small average position size per stock (1.5%) and per pair (3%) to limit exposure. Where practical pairs are always held within the same sector to limit cross sector risk, and positions can be held for months or years. |
| Manager Comments | The mining services was a strong contributor to the Fund's performance, where the Fund benefited from shorts on Orica and Downer, as the firms issued weak full-year result and FY16 outlook. Return from their bottom pair was driven by Seek long as the company announced plans to increase investment in business and expand, resulting in a downgrade to profit guidance. Fund activity for the month was minimal and at month-end the long exposure at 51.7% and short exposure at -48.30%. Click below to read the Fund Manager's complete commentary and future market outlook. |
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