| Report Date | 19 January 2017 |
| Manager | QATO Capital |
| Fund Name | QATO Capital Market Neutral Long/Short Fund |
| Strategy | Equity Market Neutral |
| Latest Return Date | December 2016 |
| Latest Return | 0.70% |
| Latest 6 Months | 4.02% |
| Latest 12 Months | -11.27% |
| Latest 24 Months | -12.80% |
| Annualised Since Inception | 4.93% |
| Inception Date | 01 August 2014 |
| FUM (millions) | AU$180 |
| Fund Overview | QATO's Market Neutral Long/Short strategy is managed via an objective, consistent and replicable process utilising Qato Capital's proprietary 'Q-Score' methodology. The Q-Score process is fundamentally based, evaluating improving and deteriorating fundamentals within each business from a variety of financial metrics, such as valuation, growth, risk, quality, earnings & price. The strategy is designed to produce returns uncorrelated to major global equity markets. Moreover, the strategy is designed to produce strong positive returns in times of market distress/volatility, whilst also performing well in normal market conditions.
The Fund seeks to preserve capital and maximise absolute returns through active and constant risk management, targeting monthly a net market exposure of 0% to hedge broader market risks with up to 50 S&P/ASX-100 positions (up to 25 long positions & 25 short positions). Historically, the strategy has been uncorrelated to traditional asset classes with a negative beta to equity markets. Qato Capital's process is entirely systematic - stock selection and risk management are all employed in a rules based approach. Positions in Qato's long-portfolio and short-portfolio are rotated monthly dependent upon their Q-Score ranking. The strategy employs no financial leverage/gearing to purchase securities, no derivatives and no financial products to imitate leverage. |
| Manager Comments | Qato Capital Market Neutral Long/Short Fund returned +0.70% for the month of December, to take latest 6 months to 4.02%. At a portfolio level, the long book was benefited from the December's rally. Ansell (ANN) was Qato's best performing long, returning +10.14% in December. Harvey Norman (HVN) rallied as the company enjoyed stronger than normal sales since July 2016, partly due to the demise of Dick Smith, returning +8.39%. REIT's also had a strong December, with Qato holding long positions in Goodman Group (GMG), Scentre Group (SCG) and Stockland (SGP), finishing December up +6.74%, +9.43%, +5.77% respectively. Qato's Q-Score picked up the three worst performing stocks of December for its short book; Sirtex (SRX), Blackmores (BKL) and Vocus (VOC) and positively benefitted from the falling prices. |
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