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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 as a Listed Investment Company (LIC) on the ASX. |
| Manager Comments | The majority of pairs were profitable in January despite the headwind of a very strong $A/$US. A strong quarterly profit update from Resmed contributed to the Fund's long Resmed / short Ansell pair being amongst the Fund's strongest pairs. Long JB Hi-Fi / short Super Retail was also amongst the strongest pairs on industry feedback that some retailers had experienced better Christmas sales than feared. Long BlueScope Steel / short Sims Metal was the Fund's weakest pair following recent months of strong positive contribution. Bennelong noted the Australian market was the exception in January, falling by -0.5% whilst the S&P 500 (+5.6%), Nasdaq Composite (+7.4%) and MSCI Asia ex Japan (+7.5%) experienced some of their strongest January gains seen in years. Bennelong believe this is in large part a reflection of the composition of our market. |
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