"Beta" Rally does some damage, and so long Ronnie Corbett. RIP.
While no fund performances for March are available as yet, anecdotal evidence suggests it has been a pretty tough month for many active managers courtesy of a "beta" rally, particulary in stocks of pretty dubious quality, or those that had previously been oversold. This can make it difficult for non index type funds, such as hedge or those seeking absolute returns, as they normally have good reason to either avoid, or short stocks with poor management or a poor outlook, only to see a significant bounce in the price against all apparent logic or fundamentals.
These situations work themselves out over time as the cream always floats to the top, and the dregs sink to the bottom. However, it can take a while for the turbulence to end, and the froth to subside before the end product declares itself and is worth consuming. In this environment investors are best either sitting tight in funds which have a sound long term track record and good risk adjusted performance, or sitting on the sidelines, as many SMSF's have done over the past few years.
The problem with sitting on the sidelines in the current interest rate environment is evident, and sooner or later investors will have to lower their targeted returns from the previously acheivable double digits, to a more realistic single digit number. And if cash is only hovering around 2-3% (and unlikely to move higher in the foreseeable future) then a return of 2 to 3 times that, provided it doesn't come with excess risk, is likley to be pretty attractive.
On a different note we have uploaded an excellent piece to our library by Hugh Dive of Aurora Funds Management on the subject of short selling. Clear and concise the article takes you through the history, mechanics, logic and rationale for short selling in a brief 3 pages which won't send you to sleep or have you reaching for a glass of something.
Against a backdrop of further volatility in March the ASX200 rose 4.17% for the month to halve the YTD losses to 4.02%. Meanwhile:
APN AREIT Fund rose 3.13%, outperforming the S&P/ASX300 Porperty Trust Accumulation Index's return of 2.81%, by 0.32%.
Jamieson Coote Bonds Active Fund rose 1.08% to take annualised performance since inception to 6.10% p.a., achieved with low volatility of 2.53%.
NWQ Fiduciary Fund fell 2.53% bringing the net performance for the trailing 12 months to 9.27%.
The Bennelong Twenty20 Australian Equities Fund returned -2.67% against the ASX 200 Accumulation Index which returned -1.76%.
Affluence Investment Fund returned -0.20% against the Australian equities market return of -1.76%, to give an outperformance of 1.56%.
Pengana Absolute Return Asia Pacific Fund rose 1.10%, compared to FTSE All World Asia Pacific Index which fell 2.05%.
Newgate Real Estate and Infrastructure Fund delivered a negative 0.70% outperforming the ASX200 Accumulation Index, by 1.06%.
Insync Global Titans Fund returned -1.80%, compared to the MSCI All Country World ex-Australia Net Total Return Index in $A, which returned -1.6%.
Pengana PanAgora Absolute Return Global Equities Fund returned -1.62% for the month of February. The Fund has low systematic risk (beta) to the ASX200 and the MSCI World Indices of 0.10.
FUND REVIEWS released this week: Bennelong Kardinia Absolute Return Fund; Meme Australian Share Fund; APN Asian REIT Fund; Totus Alpha Fund; Pengana Absolute Return Asia Pacific Fund; Bennelong Twenty20 Australian Equities Fund
We have not been publishing our usual "and now for something completely different" for some time, partly due to the time it took to find original, and hopefully funny, or original content. However the sad passing of Ronnie Corbett overnight, the "little" half (or should that be one third) but the remaining one of the Two Ronnies should have provided plenty of material.
Sadly the choice was so great it was difficult to choose, but here's a selection put forward by the Independent. Meanwhile I couldn't find my own favourite, although I can't recall which of the two Ronnies delivered it, dead pan as only they could:
"And now some late news in from Sydney, Australia where a woman has been taken to hospital after being bitten on the funnel by a finger-web spider."
And on that note, have a great week-end.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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