Cayman Funds on the front pages, and an unforseen rate rise
This week hedge funds made the front pages in Australia as the opposition tried to embarrass the newly appointed PM Malcolm Turnbull over his investments there. As usual they didn't let the facts get in the way of a good story, and as it turned out it backfired on them as most who understand the industry thought it would.
The reality is that the "tax free" status of the Cayman's is to all intents and purposes the same as the tax free status of Australian unit trusts. Where they differ significantly is that Australian trusts have to distribute their earnings annually, whereas their Cayman counterparts can accumulate earnings until redeemed. In other respects unit holders, or in the case of the Cayman vehicles, shareholders, are responsible for paying tax in their own jurisdiction a the applicable rate.
As a result of that, and withholding tax, Australian unit trusts aren't that attractive to offshore investors which is why local managers wanting to attract them need to establish an offshore, normally Cayman, vehicle.
Simple enough even for the opposition to understand, as the PM was able to explain to them!
Meanwhile Westpac raised variable interest rates on mortgages this week in a surprise decision given the general view that official rates in Australia are likely to remain flat or possibly fall over the coming months. I guess that is covered by the adage of expect the unexpected!
Specific results received this week include the following PERFORMANCE UPDATES:
The Paragon Fund rose 1.60% after fees for the month of September 2015, to bring annualised performance since inception to 17.54% p.a.
QATO Capital Market Neutral Long/Short Fund rose 4.25%, to significantly outperform the S&P/ASX 100 Price Index, by 7.91%.
Aurora Fortitude Absolute Return Fund returned +0.59%, to outperform the ASX200 Accumulation Index by 3.55%.
FUND REVIEWS released this week: Optimal Australia Absolute Trust; Jamieson Coote Bonds Active Fund; Bennelong Kardinia Absolute Return Fund
Apologies to those who enjoy it, but we have nothing completely different to add this week but we hope youenjoy the week-end anyway.
Regards,
Chris
CEO,AUSTRALIAN FUND MONITORS
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