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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 | During the month the Fund benefited from long call option positions on the HSECI. KIS noted being long an index is unusual for them as they usually have an excess of long ideas that need to be hedged and hence are short indices. Due to weakness in the Hong Kong markets in the first half of September KIS stopped out of various equity long positions. To avoid the risk of a snap back in the market leading to losses on unhedged short equities KIS bought calls and, in tandem with having been short futures earlier in the month, this contributed +0.22%. Across all of the Fund's index hedges, the rest of which were either short futures or long puts, the Fund generated a total of +0.29%. Other positive contributors included GTN Ltd (+0.23%) and SembCorp Marine Ltd (+0.23%). KIS remain long GTN Ltd and have exited their long position in SembCorp Marine Ltd. Key detractors included Telstra (-0.23%) and Vocus (-0.21%). KIS still see the telecom industry in severe difficulty and expect operators such as TPG Telecom (a significant previous contributor delivering +1.06% on the quarter) to compete fiercely on price to gain market share. The Fund also suffered a -1.08% loss on a long position in Aveo Group (AOG.AX). KIS significantly reduced their holding in AOG after the Four Corners report on poor conditions for aged care residents and the Prime Minister's response of a Royal Commission. They believe the timeline for the Royal Commission would lead to a delay in any developments at AOG.AX. |
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