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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 | Performance this month featured a broadly even number of winning versus losing pairs but on balance, gains from the short book didn't quite compensate for losses in the long book. In terms of strongest contributors, the best pair was in healthcare, a short position in Healthscope (a private hospital operator), which fell -28% following a profit downgrade at its Annual General Meeting. Also, two pairs in the financial sectors, particularly the short position in AMP, were strong contributors. Some of the pairs that detracted from performance came from the consumer, energy, and the resources sectors. Click below to read the Fund Manager's commentary and market outlook. |
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