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| Fund Overview | Whilst the Fund's primary strategy is focused on long/short equities, the ability to retain discretionary powers to allocate across a number of other investment strategies is reserved. These strategies may include, but not be limited to: convertible bond investments, portfolio hedging, equity related arbitrage, special situations (e.g. merger arbitrage, rights offerings, participation in international public offerings and placements, etc.). The Fund's geographic focus is Asia excluding Japan, but including Australia). The Fund may invest outside of this region to the extent that: 1. The investment decision is driven from the Asian region or; 2. The exposure is intended to mitigate risk or enhance return from factors external to the Asian region. |
| Manager Comments | On the short side, key positive contributors in May included Treasury Wine Estates (+74bp contribution) and Metcash (+40bp). On the long side the Fund benefitted from owning call options on Petrochina Co Ltd (857 HK), as the stock rallied KIS sold stock to take profits as their options moved into the money (+38bp contribution). The Fund suffered a loss of -22bp on a short position in Qantas which KIS attribute to a share buyback, relatively cheap valuation, FYQ3 trading update and FY18 guidance giving the stock strong support and offsetting the long term impact of higher oil prices. In their latest commentary KIS point to risks in emerging markets, such as Brazil's truck driver's strike due to escalating fuel prices, the Italian election results and Turkish President Erdogan's decision to go to the polls early. KIS believe that, despite the apparent stability of developed markets such as HK, US and Australia, the close relationship between developed and emerging markets is often unclear until after the event, referencing the impact of LTCMs leveraged bond convergence trades in 1998 on the US financial system which is thought to have been triggered by defaults in Russian bonds. |
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