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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 | Contribution from the top and bottom pairs was equal with overall positive performance an outcome of two thirds of portfolio pairs being profitable. The Fund's top pair was long WOW / short MTS, TWE. Metcash was the key contributor following a capital raising and a somewhat soft trading update. Long ORG / short AGL bounced following a weak prior month for the pair which reflected Origin's oil exposure through APLNG. The weakest pair was long MQG / short BEN, APT. Macquarie bounced along with the market but was more than offset by Afterpay which released a trading update which indicated that thus far they have not been negatively impacted by the current environment. Long LNK / short CPU was the next worst pair. Computershare downgraded guidance again, however, this time the outcome was no as weak as feared, and the stock bounced following an extended period of weakness. |
| More Information |
