Dear [FirstName],
Who won the election?
I noticed a comment in today's media by Graham Richardson, surely one of the more interesting and surprisingly non-partisan political minds around. To paraphrase "Richo", his view is that the government is sounding as if they won the recent election by a significant margin, rather than by one lower house seat and failing to control the Senate, while Bill Shorten is acting as if he won the election, rather than losing it.
Meanwhile, the Treasurer has suddenly worked out that the budget has both an income and an expenditure problem. Amazing that no one had worked that out before. It could be a long three years until the next election - or alternatively not long at all.
But that's not what Hedge Clippings should be all about - so back to fund performances which, again as reported in the media earlier in the week, have been pretty average.
Average. Who wants average?
Courtesy of the stellar post BREXIT bounce giving the ASX 200 a return of 6.29% in July, the local equity market has just managed to keep its nose above water since January, and has now returned 7.45% - although on a rolling 12-month basis the Index is only up 2.37% on an accumulation basis.
Without taking dividends and distributions into account the figures are even less impressive, with the ASX200 falling -2.4% over 12 months to the end of July. In other words dividend yields and distributions are running at over 4.5%, in large part explaining the resilience of the market in a low-interest rate environment, even if the overall performance is flat or negative.
Meanwhile, on the face of it's the average performance of equity-based absolute return funds has also been disappointing, with a January to July year-to-date performance of just 1.63%, and a 12-month rolling performance of 4.43%.
However, averages can be deceiving, particularly in a sector as diversified as actively managed, absolute returns, and hedge funds. While almost 60% of all funds have outperformed the ASX 200 accumulation index over the past 12 months (which based on the ASX200 returns noted above is not all that difficult), individual fund returns have ranged between -29% and +121%.
Importantly out of the 240 funds which have reported their July numbers so far, 74 have returned 10% or more over the past 12 months, and 31 have returned over 20%. The opportunities to gain excellent returns are alive and well, frequently with lower risk than the ASX and individual stocks, provided you do your research correctly. Some examples are shown below.
Bennelong Kardinia Absolute Return Fund rose 2.95% in July to take annualised return since inception to 11.92% p.a.
Cyan C3G Fund returned a positive 5.80% in July to take latest 12-months return to 42.41%.
The Paragon Fund returned a positive 2.90% after fees for the month of July. Since inception, the Fund has an annualised return of 24.45% p.a.
Optimal Australia Absolute Trust returned -2.3% in July to take annualised return since inception to 8.71% p.a.
APN Asian REIT Fund rose 2.07% in July, outperforming the Bloomberg Asia REIT Index which returned 0.77%, by 1.30%.
Pengana PanAgora Absolute Return Global Equities Fund rose 1.08% in July.
QATO Capital Market Neutral Long/Short Fund returned 3.71% for the month of July.
APN AREIT Fund rose 4.94% in July, to take annualised return since inception to 19.38% p.a.
Bennelong Twenty20 Australian Equities Fund returned +6.43% against the ASX 200 Accumulation Index's return of 6.29%.
KIS Asia Long Short Fund rose 2.99% in July to take latest 24-months return to 25.09%.
Pengana Absolute Return Asia Pacific Fund returned -0.97% after fees for the month of July. Since inception, the Fund has an annualised return of 8.70% p.a.
Signature Quantitative Fund recorded a flat return (0.003%) in July. Since inception, the Fund has an annualised return of 6.41%.
Affluence Investment Fund returned +2.98% in July to take the latest 12-months return to 12.28%.
Totus Alpha Fund rose 8.82% for the month of July, outperforming the ASX 200 Accumulation Index which returned 6.29%, by 2.53%
NWQ Fiduciary Fund returned 1.88% in July and returned +6.54% over the last 12 months.
Touchstone Index Unaware Fund returned +5.82% in July. Since inception in April 2016, the Fund has returned +7.4%, net of fees and expenses.
King Tide NZ/Australian Long/Short Equity Fund returned +4.29% to take latest 12-months return to 11.29%.
Pengana Global Small Companies Fund rose 2.80% in July 2016, compared to a +3.3% return for the MSCI AC World SMID Cap Index.
FUND REVIEWS released this week: Meme Australian Share Fund; Bennelong Long Short Equity Fund; Optimal Australia Absolute Trust; Bennelong Kardinia Absolute Return Fund; APN Asian REIT Fund; QATO Capital Market Neutral Long/Short Fund; Pengana Absolute Return Asia Pacific Fund; Bennelong Twenty20 Australian Equities Fund;
And on that note, have a great weekend.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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