Sell in May and go away? Maybe, or take a lead from a hedge fund.
The old adage relating to avoiding the equity market in May looked as if it was true - and good advice if taken at the start of the month, possibly less so by the end, by which time the ASX200 accumulation index had fallen 2.75% as a number of clouds were threatening on the horizon.
Meanwhile the average fund on the Fund Monitors database had gained 0.79%, outperforming the local index by over 3.5% clearly indicating their defensive nature, and no doubt bringing a smile to the faces of their investors, and a sense of relief to the managers themselves after the tough times of the past 12 months or so.
Tough for most, although not for all, but with equity valuations being bolstered to record levels by a combination of Trump, complacency and most importantly by record low interest rates and the TINA (There Is No Alternative) effect it has not been the easiest of times for active managers who have been reluctant to hold stocks at unrealistic, or at least unheard of levels.
Locally there has been some recovery, reportedly supported by pre-end of FY and legislative changes resulting in asset allocations from the SMSF sector, but the market, both here and overseas, remains prone to shocks as outlined in last week's Hedge Clippings, including varying political fortunes. On that note it was interesting to see that in the first round of the French elections, voter turnout was less than 50%.
That may be an indication of voter apathy, but it also reinforces the danger of changes in government being decided by minorities who choose, or can be bothered to vote under a voluntary system. As opposed to Australia's compulsory system where it seems minorities are destined to rule the day!
See below for a selection of positive returns for May, or visit AFM the website.
APN Asian REIT Fund rose 3.37% for the month of May, outperforming the Bloomberg Asia REIT Index which returned +3.14%, by 0.23%. The Fund has an annualised return since inception of 14.7% p.
Cyan C3G Fund posted a small 0.2% gain in May, outperforming the S&P/ASX 200 Accumulation Index's return of -2.75%. Since inception, the Fund's has an annualised return of 25.03% p.a.
NWQ Fiduciary Fund returned +0.81% in May and has returned +5.82% p.a. since its inception in May 2013.
Optimal Australia Absolute Trust reported a net return of +0.17% in May 2017, to take the annualised return since inception to 8.02% p.a.
Totus Alpha Fund rose 1.01%, outperforming the ASX 300 Accumulation Index which was down 2.7% for the month of May. Since inception, the Fund's has an annualised return of 19.7% p.a.
FUND REVIEWS: Bennelong Long Short Equity Fund;
And, on that note, have a great weekend.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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