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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 | Bennelong say net improved fundamental news flows across the portfolio in May was a contributing factor to June's performance. At the sector level, Consumer Discretionary was the strongest, followed by Industrials, whilst Information Technology and Energy were the weakest. The number of positive pairs exceeded the number of negative pairs in June. Long Woolworths / short Metcash was the strongest pair after Metcash announced its full-year results which disappointed due to further weakness in its wholesale grocery business. Long Magellan / short Perpetual was also a solid contributor following consensus earnings upgrades to Magellan after strong fund performance. The weakest pair was long Link Administration / short Computershare following Link downgrading earnings. Long Challenger / short IOOF / short AMP was also a negative contributor following Challenger lowering its earnings outlook. |
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