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| Latest Return | |
| Latest 6 Months | |
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| FUM (millions) | |
| Fund Overview | The Fund's bias is likely to be net long under normal market conditions, with the core strategy being to construct a portfolio of listed equity securities priced at levels that do not adequately reflect their underlying value. The Fund will seek to boost returns and limit potential market downside by selective short selling of individual stocks which are priced at levels that are viewed as materially above their underlying value. The Fund will also use certain trading strategies both within its core portfolio (through rebalancing stock weights and overall market exposure in response to price movements) and in certain other situations (typically of a shorter-duration and/or opportunistic nature) with the objective of further increasing returns. *Formerly the Optimal Australia Absolute Trust |
| Manager Comments | The Fund's long positions drove performance in November, most notably from a number of long-held positions in JHG, WOW, CYB, AHG and ORE. Limiting the Fund's long exposure in banks to CBA, Macquarie and CYB was also a positive contributor, as was the broader short position in the sector with the Royal Commission announcement into banks. ARCO exited Pilbara Minerals and trimmed Orocobre, although they remain interested in EV and energy storage. Lynas Corporation was added to the portfolio during the month. The Fund exited its investment in FXJ and the Fund continues to be active in TLS, where ARCO believe a solid long investment case is emerging. The Fund's aggregate short positions detracted from performance, ARCO expect these positions to continue to protect investor capital in a market they believe is increasingly overvalued. Into 2018, ARCO believe the 'lower for longer' monetary policy of central banks will continue to be unwound and that the economic fundamentals of companies will play a greater role in their stock price valuations. ARCO noted Corporate Australia will continue to benefit from low domestic rates which should fuel their growth plans, though consumer weakness (indebtedness and sentiment) and tightening bank credit will be a challenge to broad market earnings. They believe volatility in the Australian market will likely rise. |
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