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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 biggest contributors to the Fund performance in January were the long BlueScope /short Sims Metal Group and the long CSL Limited / short Sonic Healthcare pairs. The only pair of disappointment for the month was long Brambles / short Amcor, following an unexpected profit warning from Brambles in late January. During the month, the Fund made a few changes to the portfolio. It introduced a new pair in the energy sector, reduced a short position in one of the mining related pairs and replaced it with a new short position in another business with exposure to the resources sector. Also, decided to close one of the building materials pairs in response to a significant change in relative earnings prospects. |
| More Information |
