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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 | Positive returns in May were broadly spread across sectors whilst negative returns were concentrated in Healthcare and Consumer, specifically in the three bottom pairs. The top pairs for the month were long TPG Telecom / short Telstra, long Pointsbet/Crown / short SkyCity, and long Xero / short TechnologyOne. The bottom three pairs were long ResMed / short Ansell, long CSL / short Sonic Healthcare, and long JB Hi-Fi / short Super Retail. Bennelong noted the enormous bond purchases by central banks has helped stimulate a 'risk on' environment in share markets since the lows of March which can present a headwind for the portfolio. |
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