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Hedge Clippings | Friday, 30 April 2021
All the world's a stage,
And all the men and women merely players;
They have their exits and their entrances;"
As You Like It, William Shakespeare.
It's been a month (and a week) when a few high profile members of the financial sector made their exits, while others seem to be perilously close to the door.
Joe Longo entered, taking over from ASIC's trouble prone Chairman James Shipton. Treasurer Josh Frydenberg looked as pleased as punch in the photo shoot, as Shipton had become somewhat of an embarrassment, particularly as Clive Palmer had been hammering away via a personal vendetta in the media.
Clive, who as one of Australia's most prolific litigants must keep a whole army of lawyers' offspring well educated, might not be so happy, as the ads seem a little pointless now - not that we think anyone other than Clive ever took any notice of them. Clive has actually had a pretty poor week really, having exited Federal Court today and ordered to pay $1.5 million for copyright infringement of Twisted Sister's song "We're Not Going To Take It".
Delivering her decision, Justice Katsmann gave Clive both barrels, including words such as "ludicrous, fanciful, high handed, contemptuous, false evidence, and concocting a story to exculpate himself". Namely that he made up the lyrics, and the tune was based on a Christmas carol. Or was that a fairy tale?
Ouch! However we doubt Clive was listening - more likely he was on his way to lunch.
Another high profile - and long overdue - exit this month was one James Mawhinney of Mayfair 101, rubbed out of financial services for 20 years by ASIC - so at least Shipton claimed one well deserved scalp before his exit. Not that the court ruling dented Mawhinney's self belief. Hedge Clippings received an email from him this week, still sporting the Mayfair 101 logo, which ran to 30 odd pages of self justification, and that the courts, and ASIC in particular, were the cause of his investors' losing millions.
Like Clive, Mawhinney never lets the truth get in the way of a good story.
Moving on.... Last week our research on the Top 20 Performing equity funds in Australia over one, three and five years created significant interest. We also indicated, as we normally do, that one of the best ways to reduce risk when investing in funds (actually, in anything) is to diversify - or in this case invest across multiple funds.
As such we analysed the performance of 2 portfolios made up of those funds as follows:
1. The four funds which made the Top 20 over all three time periods:
12-month return: 93.06%
60-month return: 21.46% p.a.
Std deviation: 16.51%
60-month Sharpe: 1.19
Largest drawdown: 27.32%
2. The eleven funds which made it in the Top 20 over three and five years;
12-month return: 61.57%
60-month return: 21.24% p.a.
Std Deviation: 12.64%
60-month Sharpe: 1.49
Largest drawdown: 17.33%
Obviously the performance of both portfolios was excellent - they were after all in the Top 20. And equally unsurprising is the fact that the 12-month performance of those in the Top 20 over one year was higher. The important factor from a diversification perspective is the greater the number funds, the lower the risk, especially over the longer term.
A copy of the detailed tables can be found here.
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