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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. The Bennelong Market Neutral Fund, with same strategy and liquidity is available for retail investors. |
| Manager Comments | The fund under-performed mainly due to the short book. Two companies in the beginning of the month in the short book performed well by issuing meaningful earnings downgrades. However, these returns were later compromised across a handful of pairs within mainly the financials and energy sectors. Performance was also set back following a disappointing trading update from Qantas in which the company guided the market lower due to a recent softening in activity across both the international and domestic leisure businesses. Click below to read the Fund Manager's commentary and market outlook. |
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