He may not fit the presidential mould, but the market likes the President
The US market is continuing to be buoyed overall by the "Trump Effect", albeit that certain sectors are benefiting considerably more than others. That's life in general, and it is certainly going to be life under this president. Any sector related to the $1 trillion intended to be spent on new infrastructure projects are looking positive. On the other side of the ledger, Trump's move against Obamacare, renewable energy and others are going to suffer.
As a result of the overall Trump Effect the US market has seen a significant upward trend, with hardly a pause, let alone a pull back, over the past three months. In fact since Trump won the November election, the US market hasn't had a one day fall of 1%. As a result volatility, as measured by the VIX index sits currently at 11.21, although that's fractionally higher than the 10.58 it touched at the end of January. Not even a 0.25% rate rise announced during the week in the US was able to upset Trump's rally, which has also reached across the Atlantic as the British market set a new record high overnight.
Compare the VIX to the PC (Political Correctness) Index which the Tweeting Mr Trump has sent into overdrive! In fact, we wonder if Trump is the beneficiary, or benefactor, of the Twittersphere?
Closer to home local funds managers have been making the headlines over the past couple of weeks. Bronte Capital's John Hempton won both the war of words with and bragging rights over Pershing Square's Bill Ackman based his short in US pharmaceutical company Valeant. Meanwhile, Russel Pillemer's Pengana Capital seems to have pulled off a coup with their bid (in conjunction with WH Soul Pattinson) for listed fund manager Hunter Hall, winning the backing of Hunter Hall's board.
Most in the industry are still wondering why founder and CIO Peter Hall chose to sell a 19.9% stake in Hunter Hall to Soul Patts back in December for $1 a share, way below the then market price, although he has since agreed to sell them the balance of 24% for a more respectable market price of $2.60 a share. If nothing else he did trigger the bidding war which ensued, will hardly be left penniless, and according to the Financial Review is committed to "making the world a better place", so overall not a bad result for him either.
From Pengana's perspective, the deal looks like one with excellent synergy. They add an additional $900m in funds under management to their current $2.2b without having to cannibalise their existing suite of managers, with a similar target client base of premium investors, while gaining a foothold in the increasingly interesting ethical investing space.
We're not sure how ethical investing fits with The Donald's casino empire, but we think investors will like it.
Bennelong Long Short Equity Fund returned +2.07% in February, to take the annualised return since inception to 16.47% p.a.
Paragon Australian Long Short Fund returned -5.0% for the month of February and +9.96% for the latest 12 months. The Fund has an annualised return since inception of 13.63% p.a.
APN AREIT Fund rose +3.02% in February, to take the latest 12 months return to +8.68%. The S&P/ASX 300 Property Trust Accumulation Index also gained in February, returning +4.13%. Since inception in January 2009, the Fund has an annualised return of 16.71% p.a.
Allard Investment Fund increased 0.75% for the month of February. The Fund has gained +18.54% over the latest 12 months, taking the annualised return since inception to 9.03% p.a.
Bennelong Kardinia Absolute Return Fund returned +0.25% in February, taking the annualised return since inception to 11.07% p.a.
Cyan C3G Fund returned +0.1% in February, taking the Fund's one year return to 22.44%. Since inception, the Fund's has an annualised return of 26.16% p.a.
APN Asian REIT Fund returned -0.19% in February, outperforming the Bloomberg Asia REIT Index which returned -0.81%, by 0.62%. Since inception, the Fund has an annualised return of 13.99% p.a.
Quay Global Real Estate Fund increased +3.1% for the month of February and +4.84% for the prior 12 months. The Fund has an annualised return since inception of 15.35% p.a. Global real estate returned +1.8% for the month in AUD terms, with around 3.2% in underlying stock returns, while the stronger AUD deduced -1.4%.
Totus Alpha Fund fell -0.46% in February, to take the latest 24 months return to +23.02%. Since inception in April 2012, the Fund has an annualised return of 19.63% p.a.
Bennelong Twenty20 Australian Equities Fund increased 2.03% in February and 18.2% over the latest 12 months.
NWQ Fiduciary Fund returned -0.35% in February, to bring the annualised return since inception in May 2013 to +5.87% p.a.
Optimal Australia Absolute Trust returned -0.98% in February, a rare negative month for one of the most consistent performers, to take the annualised return since inception to 8.11% p.a.
FUND REVIEWS released this week: Bennelong Long Short Equity Fund; Bennelong Kardinia Absolute Return Fund;
And on that note, have a great, and if you're in Sydney, a wet and windy weekend.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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